Solicitor’s Certificates for Guarantors: Why It Is Not Just a Signature

What the solicitor needs to explain

The advice is specific to the actual documents. Your solicitor will discuss the terms of the loan and your obligations as guarantor. This ordinarily includes the loan amount, interest and default interest, the term, repayment obligations, secured property or other assets, and the potential consequences if the borrower defaults.

Depending on the documents, a guarantor may face enforcement action and a risk of losing secured assets. The appointment is for legal advice; it is not a financial assessment of whether the transaction is affordable or commercially worthwhile.

What you should provide

Provide the complete, final document set as early as possible. This may include the loan or facility agreement, guarantee and indemnity, mortgage or other security documents, schedules, terms and any relevant trust or company documents.

SMSFs and limited recourse borrowing arrangements

A transaction involving a self-managed superannuation fund (SMSF) and a limited recourse borrowing arrangement (LRBA) may involve additional parties, entities and documents. The solicitor may need to review relevant trust deeds, company documents and transaction documents before advising a guarantor. Supplying the complete documents early helps identify who is giving the guarantee, what obligations are being assumed and which assets may be exposed.

What happens at the appointment

Current Victorian risk guidance states that verification of identity and the certificate should be completed face to face and in person. The solicitor must also be satisfied that the guarantor understands the advice and is acting freely. If an interpreter is needed, an independent interpreter and the prescribed certificate may be required.

Why urgent requests can be difficult

A solicitor must review the documents, identify relevant risks, give tailored advice and make proper records. Missing documents, late changes or uncertainty about the client’s understanding can delay the process. Sending everything early gives the matter the best prospect of being completed within the lender’s timeframe.