Independent Legal Advice, or ILA as it’s often referred to, is where a lender requires you to seek specific, independent advice in relation to transaction documents they are asking you to sign.
When is Independent Legal Advice needed?
There are several different types of transactions where an individual or individuals will be asked to obtain independent legal advice. Some common examples you might come across include:-
- Giving a Personal Guarantee – where you are purchasing a property via a company, obtaining a commercial loan, extending your commercial overdraft facility, or guaranteeing a family member’s loan/mortgage.
- Occupier’s Consent Form – where you will be occupying a property, but are not a party to the mortgage documents.
- If you own a property or land, and a Tenant (perhaps your company) is offering this as security to a lender.
- Where the solicitors acting on your behalf for a property purchase involving a mortgage, or a remortgage, are too far away to meet with you directly.
The above is not an exhaustive list, and we are seeing an increase in lenders seeking Personal Guarantees in particular for a whole range of transactions. This is perhaps a sign that they are concerned about a worsening economy leading to more defaults.
Why is Independent Legal Advice required?
Have you ever read through a mortgage, charge, or loan agreement term by term to understand exactly what the lender can or cannot do? If you have, you will know that their powers can be far reaching.
Lenders require you to obtain ILA to ensure that you have a full and frank understanding of the risks and obligations associated with the loan, mortgage, or other facility on offer BEFORE you sign on the dotted line. This gives them some protection because if there is ever a legal dispute over the documentation in the future then you will find it hard to say that you didn’t understand what you signed!
ILA also provides you the individual with an explanation of and advice on the risks you are taking. You may of course be happy with this risk, but then again knowledge is power and you may choose to rethink your personal and business banking structures after reading through a guarantee.
What is the Independent Legal Advice process?
There are 6 stages to the ILA procedure:
STEP 1: You must find a solicitor who is not currently acting on your behalf in relation to the transaction requiring ILA.
STEP 2: They will need to receive the paperwork at least 24 hours before any appointments so they can read and understand the contents.
STEP 3: You will 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 confidently to confirm that you are not being coerced into signing the documents. The meeting usually lasts between 30 minutes and 1 hour, and you can ask your adviser any questions you may have in relation to the documents you are reviewing.
STEP 4: The adviser will then witness your signature, should you wish to sign, and will complete the required form of Adviser’s Certificate.
STEP 5: If you wish, the adviser can also send your completed paperwork back to your lender or transaction solicitor as required.
STEP 6: The advice meeting will be followed by a summary letter, which you can retain and refer to in the future.
This can all happen quite quickly, particularly if you use Backhouse Solicitors!
How much does Independent Legal Advice cost?
At Backhouse Solicitors, our commercial legal team offer this service on a fixed fee basis of £350.00 per person, per guarantee. You can rest assured that you will be looked after by an experienced adviser, who will provide a fast, efficient, and accurate service.
To find out more about the process or to arrange an appointment you can contact us today and we will be happy to help.
The Backhouse Solicitors Team
Tel: 01245 893400
Email: [email protected]
Visit: 71 Duke Street, Chelmsford, Essex CM1 1JU (Currently only for pre-booked appointments)
Or send us a message through the Contact Us page on this website