Advice on a loan/security guarantee
We will help you understand what you are agreeing to before you sign a guarantee.
Signing a guarantee is one of the most significant financial commitments a person can make, yet most guarantors sign without fully understanding the consequences.
Banks and commercial lenders almost always require a guarantor to obtain independent legal advice before they will accept a guarantee. We provide that advice in plain terms: what you are guaranteeing, what the lender can do if the borrower defaults, and what your rights are as a guarantor, so you can decide whether to proceed with your eyes open.
What is a loan or security guarantee?
A guarantee is a legally binding promise to repay someone else’s debt if they fail to pay it themselves. When you sign as a guarantor, you become personally liable for the full amount of the debt, regardless of what you may have understood at the time of signing.
In many cases, a guarantee is secured against your own property (typically the family home), meaning the lender can take and sell that asset to recover what is owed. The consequence of signing a poorly understood guarantee can be financially devastating, which is why independent legal advice before signing is both critical and, in most circumstances, required by the lender.
What does it mean to be a guarantor?
As a guarantor, you agree to repay a borrower’s debt if they default. This is a personal obligation, the lender can pursue you directly for the full amount outstanding, even if the borrower has other assets. If your guarantee is secured against property you own, the lender can also enforce against that property. The obligation continues until the debt is fully repaid or the guarantee is formally released.
Can I limit my exposure as a guarantor?
What is independent legal advice, and why does the lender require it?
Independent legal advice (ILA) is advice given by a lawyer who is acting solely for you, not for the lender or the borrower. Most lenders require a guarantor to obtain ILA and sign a certificate confirming they received it, because this makes the guarantee much harder to challenge later. ILA protects the lender’s position, but it also means you have a genuine opportunity to understand what you are signing before you do so.
Can I be released from a guarantee once I have signed?
A guarantee can be released if the underlying debt is repaid in full, if the lender agrees to release you (which lenders are rarely willing to do while the debt remains outstanding), or in limited circumstances where the guarantee was obtained improperly. Simply withdrawing your consent is not sufficient. A guarantee is a binding contract and cannot be revoked unilaterally.
Know exactly what you are signing.
Understand your exposure before you commit.
Formal ILA certificate provided.
Before you sign, make sure you understand what you are agreeing to.
Most guarantors sign because they want to help. We will make sure that goodwill does not come at a cost you were not expecting.
A guarantee is not a formality. It is a personal financial commitment.
You are being asked to sign a guarantee, and it feels like a routine step in someone else’s financing arrangement. But a guarantee makes you personally responsible for a debt that may not be yours. If the borrower cannot pay, the lender will come to you. The stakes are too high to sign without understanding exactly what you are agreeing to.
- We will review the loan and guarantee documentation in full.
- We will explain your exposure, your rights, and your options in plain terms.
- We will advise whether any terms are negotiable and what to push back on.
- We will issue the independent legal advice certificate required by the lender.
Someone you trust is asking you to put your name and assets on the line.
A family member needs you to guarantee their business loan. Or your bank has asked you, as a company director, to personally guarantee the company’s borrowings. The request feels reasonable and you want to support them, but the paperwork is thick, the legal language is dense, and you are not sure what you are actually agreeing to. The lender has told you to get independent legal advice, and you need to do that before the finance can settle.
What's included in your loan guarantee advice service
- Review of loan and guarantee documentation.
- Plain-language explanation of your obligations as guarantor.
- Assessment of your personal financial exposure.
- Advice on terms that may be negotiable.
- Independent legal advice certificate.
What happens when guarantors sign without understanding the terms?
Guarantors who sign without proper advice often discover the full extent of their commitment only when the lender comes to enforce it. By then, the borrower is in default, the lender has exercised its rights, and you are being asked to pay a debt you may not have anticipated having to cover.
If your guarantee is secured against your home, the lender can move to sell it, the process of challenging an enforcement action is costly, difficult, and rarely successful once the guarantee was validly entered into.
This position takes an emotional toll, the conflict with family members, the uncertainty about your housing, the financial pressure. Getting advice before you sign can save physical and emotional costs.
Here is how we make sure you go in with your eyes open.
We sit down with you and go through the guarantee documentation, explaining what it means, what triggers the lender’s rights, and what you would be exposed to in a worst-case scenario.
We will tell you honestly whether the terms are standard or whether there is something worth pushing back on. If you decide to proceed, we issue your independent legal advice certificate and make sure the lender has everything they need to finalise the facility. And if you decide the risk is too great, we will help you articulate that position clearly to the borrower and the lender.
We walk you through every obligation before you commit.
Review the documents.
We examine the loan and guarantee paperwork in full. Understanding the structure of the debt, the security being offered, and what would happen if the borrower defaulted.
Understand your position.
We explain your exposure in plain terms: what you could be asked to pay, what assets are at risk, and whether any terms can be negotiated before you sign.
Proceed with confidence.
If you are comfortable proceeding, we issue your ILA certificate. If you have concerns, we help you raise them with the lender or borrower before committing.
Finance lawyers who have advised hundreds of guarantors across a wide range of transactions.
We know that most people asked to sign a guarantee are doing it to help someone they care about, and the last thing they want is a lengthy legal process standing in the way. Our guarantee advice appointments are efficient and straightforward: we get through the documents quickly, give you an honest assessment of the risk, and get the certificate issued without delay.
At the same time, we will not rush you through something this important. If there is a term in the guarantee you should push back on, we will tell you. Even if the pressure to sign quickly is coming from everyone else in the room.
We understand you want to know the cost, before we get started.
We will map out our process, from beginning to end, so you know what the journey will look like before you get started.
We will provide you with a clear and detailed Work Proposal covering each step along the way.
Our fair fees are all-inclusive. No hidden costs for telephone calls, emails, photocopying, couriers, or coffee.
Our great lawyer guarantee
We want to be part of your team over the long term. We achieve this by adhering to these core principles:
Take the time
We listen carefully to understand what you want to achieve. Then we thoroughly explain our advice and step you through the documents. You can be sure you know the full consequences.
Share our knowledge
We will pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.
Stick to our knitting
We only do what we're good at. You can be confident that we know what we're doing and don't pass on the cost of our learning.
Work as one team
Someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.
Fair pricing
For advice and documents, we provide a fixed or capped quote so you don't take price risk. If you're in a dispute, we map out the process and costs so you know what to expect.
It's your show
We're not in this for our egos. We're in it for a front row seat to witness your success.
