Why do I need independent legal advice? Understanding solicitors’ certificates in property and lending transactions

If you’re buying property, acting as a guarantor or entering into certain loan arrangements, you may have been told that you need to obtain independent legal advice and have a solicitor sign a certificate before your transaction can proceed. For many people, this comes as an unexpected step (and an unexpected cost) late in the process. Coast to Coast Conveyancing operates as part of the Patten Robins Group, and where a solicitors’ certificate is required, we can connect you with the team at Patten Robins Lawyers to assist with the required independent legal advice. Here’s why these certificates are required and why they aren’t simply a box-ticking exercise.

What is a solicitors’ certificate?

A solicitors’ certificate is a formal document in which an independent solicitor confirms that:

• They have explained the relevant document (such as a guarantee, mortgage or loan agreement) to you in plain terms
• You appeared to understand the nature and effect of what you were signing, including the risks involved
• The solicitor believed you were acting freely, without pressure from another party to the transaction.

The certificate is usually required by a bank, lender or another party to the transaction, most commonly where:

• You are acting as a guarantor (for example, a parent guaranteeing their adult child’s home loan)
• There is a power imbalance between the parties (such as a family or personal relationship where one party may be more vulnerable to pressure than the other)
• The lender’s terms require it as a condition of approving finance (particularly for non standard loan structures)
• You are entering a transaction on someone else’s advice or recommendation, and a third party wants assurance that you have independently turned your mind to the obligations you are taking on.

Why is this step required?

The requirement exists to protect parties from entering into significant financial commitments without properly understanding what they are agreeing to, in circumstances where there is a genuine risk of undueinfluence, that is, influence beyond what is ordinarily expected between parties to a close relationship. Courts have, on a number of occasions, set aside guarantees and mortgages where a party was found not to have received genuinely independent advice. For lenders, obtaining a solicitors’ certificate is one of the principal ways they protect themselves against a transaction later being challenged or unwound on that basis.

Why can it be costly?

You may be surprised that a seemingly short meeting and a one-page certificate can carry a substantial fee. A few reasons for this:

• The advice must be genuinely independent and properly documented. A solicitor cannot simply sign a certificate – they must turn their mind to the relevant documents, form a considered view as to your understanding of them, and keep a file note evidencing that the advice was actually given.
• Personal liability attaches to the certificate. By signing, the solicitor is putting their own professional judgment (and their professional indemnity insurance) behind the confirmation.
• The documents often require careful review beforehand, particularly where guarantee or loan terms are unusual or where the transaction structure is more complex than a standard purchase.
• These certificates are frequently required under time pressure, at short notice and close to settlement, which can also affect the fee for turning the work around.

Patten Robins Lawyers’ fees

Solicitors’ certificates are provided through Patten Robins Lawyers, part of the Patten Robins Group.

• Standardsolicitors’certificate:$1,250(incl.GST)percertificate
• Same-day/priority certificates (standard certificates only): an additional $250 expediting fee, provided all required documents and administrative materials are received by 10am that day*

Patten Robins Lawyers is happy to discuss the likely fee upfront and, in some circumstances, may be able to accommodate particular concerns. However, this will depend on the nature of the matter. Where your matter is more complex than a standard certificate, we recommend contacting Patten Robins Lawyers in advance so the likely scope and fee can be discussed before your appointment. Same-day requests received after 10am cannot be guaranteed and will be assessed on a case-by-case basis, subject to availability. Patten Robins Lawyers reserves the right to decline a same-day request at its discretion, including where the required timeframe cannot be accommodated.

Why independent legal advice matters

The solicitor providing the certificate must be able to provide genuinely independent advice in relation to the transaction. As Coast to Coast Conveyancing forms part of the Patten Robins Group, clients who require a solicitors’ certificate can be connected with Patten Robins Lawyers, who regularly assists with independent legal advice and solicitors’ certificates in property and lending transactions Whether Patten Robins Lawyers can provide the required independent advice will depend on the particular parties and circumstances of the transaction and will be assessed before the appointment.

Getting in touch

If you have been asked to obtain independent legal advice or a solicitors’ certificate as part of your transaction, contact Coast to Coast Conveyancing early. We can connect you with Patten Robins Lawyers to determine whether they can assist and arrange an appointment. Turnaround times for these certificates are often tight, and early contact gives the best chance of the advice being arranged without delaying settlement. This page is general in nature and does not constitute legal advice. You should seek advice specific to your own circumstances.