Independent Legal Advice (“ILA”) is where a lender requires you to obtain specific advice in relation to their transaction documents from an independent legal adviser.
When is Independent Legal Advice needed?
There are many different types of transactions where you will be required to obtain independent legal advice. Some examples include:
- Personal Guarantees – where you are purchasing a property through a company, obtaining a commercial loan, extending your commercial overdraft facility or guaranteeing a family member’s loan or mortgage
- Occupier’s Consent Forms – where you occupy a property but are not a party to the mortgage documents
- Providing Security – where you own a property or land, and a tenant (perhaps your company) is offering this as security to a lender
- Face to Face advice – where the solicitors acting on your behalf for a property purchase involving a mortgage (or a re-mortgage) are too far away to meet with you directly, you will need to find a local advisor to see you in person
This list is by no means exhaustive; we are seeing an increase in lenders seeking Personal Guarantees for a wide range of transactions.
Why is Independent Legal Advice required?
To answer this question, ask yourself if you have ever read through a mortgage, charge or loan agreement in detail to understand exactly what the lender can or cannot do?
If you have, you will know that their powers are usually far-reaching. You will also be in a minority! For this reason, lenders require you to obtain Independent Legal Advice to ensure that you have a full and frank understanding of the risks and obligations associated with taking on the loan, mortgage or other facility. You will not then be able to claim that you didn’t understand what you were signing if there is a dispute in future.
For you, the client, knowledge is power. You may choose to rethink your personal and business banking structures after reading through a guarantee, or at the very least see if there is a better deal available from another lender.
What is the process for Independent Legal Advice?
Obtaining Independent Legal Advice is a straightforward process and doesn’t take long to complete.
STEP 1: Find a solicitor who is not currently acting on your behalf in relation to the transaction requiring ILA and book your appointment.
STEP 2: Send them all the relevant paperwork at least 24 hours before the appointment so they can read it through.
STEP 3: Meet face to face with your adviser to review the transaction documents. You must be seen alone in these appointments, as the adviser must be able to confidently confirm that you are not being coerced into signing the documents. The meeting usually lasts between 30 minutes and an hour. This is your opportunity to ask your adviser any questions you may have in relation to the documents you are reviewing so take full advantage before you sign.
STEP 4: Your adviser will then witness your signature (should you wish to sign at that point) and will complete the required Adviser’s Certificate form.
STEP 5: If you wish, your adviser can send your completed paperwork back to your lender or transaction solicitor on your behalf.
STEP 6: The advice meeting is followed by a summary letter, which you should retain in case you need to refer to it in the future.
How much does Independent Legal Advice cost?
At Backhouse Solicitors we offer this service on a fixed fee basis of £500+VAT per person, per guarantee, reducing to £400+VAT where there are more than two guarantees. Our experienced, commercially minded advisors provide a fast, efficient and accurate service and will be able to answer all of your questions before you decide whether to sign your lender’s documents.
To find out more about Independent Legal Advice
If you would like to find out more about what is involved or would simply like to book an appointment, please contact us today to speak to one of our friendly team.
The Backhouse Solicitors Team
Tel: 01245 893400
Visit: 17 Duke Street, Chelmsford, Essex CM1 1JU
Or send us a message through the Contact Us page on this website