Understanding Certificates of Independent Legal Advice: What You Need to Know
Q: What is a Certificate of Independent Legal Advice?
A: A Certificate of Independent Legal Advice is a document provided by a lawyer, confirming that they have explained the legal and financial implications of a transaction—such as a loan, mortgage, or guarantee—to the client. This ensures that the client understands the terms, risks, and obligations involved before they sign. Lenders usually require this certificate to confirm that you have received independent advice.
Q: Why do I need independent legal advice for loans, mortgages, or guarantees?
A: Lenders often require independent legal advice to make sure you are aware of the risks involved in transactions such as loans, mortgages, or guarantees. If you are using your property as security or acting as a guarantor, it’s essential that you understand the financial risks and legal responsibilities. A certificate of independent legal advice confirms to the lender that you have been fully informed.
Q: What’s involved in obtaining a Certificate of Independent Legal Advice?
A: The process involves several steps:
- Document Review: We thoroughly review all relevant documents, such as loan agreements, guarantees, or mortgages. To assist us in preparing, please provide these documents at least 48 hours before your appointment.
- Verification of Identity (VOI): At the meeting, we are required to conduct a verification of your identity (VOI). You will need to bring your passport and driver’s licence for this purpose.
- Advice Session: During the meeting, we explain the terms of the documents and the associated risks, ensuring you fully understand your legal obligations.
- Testing Understanding: We ask questions to confirm your understanding and ensure you are making an informed decision.
- Certification: After we are confident you understand the risks and obligations, we will sign the Certificate of Independent Legal Advice.
Q: Why is independent legal advice important if I’m providing security for someone else’s loan?
A: If you are offering your assets or property as security for someone else’s loan—such as a family member’s business loan—it’s critical to understand the risks. Without proper legal advice, you might not fully appreciate the financial exposure and potential consequences. We ensure that you are aware of all the risks so that you can make an informed decision.
Q: What happens after I receive my Certificate of Independent Legal Advice?
A: Once the certificate is issued, you can provide it to the lender or other relevant party. It confirms that you have been properly advised on the legal and financial risks, allowing the transaction to proceed with confidence.
Q: What should I bring to my appointment?
A: Please bring the following:
- Relevant documents such as loan agreements, guarantees, or mortgages (at least 48 hours before the appointment).
- Passport and driver’s licence for the verification of identity (VOI) process.
This will allow us to review everything in advance and ensure a smooth appointment.
Q: Why are Certificates of Independent Legal Advice expensive and time-consuming, and how much do they cost?
A: Providing a Certificate of Independent Legal Advice is a comprehensive process that involves far more than a simple 30-60 minute meeting. We invest significant time in reviewing the documents, ensuring you understand the transaction, and properly recording the advice given. This protects both you and us from any future legal risks.
To provide thorough and risk-free advice, we have recently increased our fees due to the time required to review the documents in detail and record all the necessary information. Our fees start from $1,760, which is the equivalent of 4 billable hours for a senior lawyer. If the documents relate to a superannuation fund, the fee is $2,200 including GST.
This is not just a quick conference; a lot of work happens behind the scenes to ensure all legal requirements are met and that you receive the best possible advice. While you are free to seek advice from someone who charges lower fees, such as $300 per hour, we value the quality of our work, our expertise, and ensure that we don’t take unnecessary risks.
These fees reflect the significant time spent reviewing documents, meeting with you, and ensuring everything is in full compliance with the law, which protects both your interests and ours.
Want to learn more? Go to: https://lplc.com.au/risk-advice/securities/solicitors-certificates
