Independent Legal Advice

This is when equity from one property is transferred to a second property, usually through a remortgage. When raising funds to buy a buy-to-let property, equity transfers are popular. Both spouses must be aware of the dangers. A company could own the buy-to-let property. One of the original property’s owners may not be a director or shareholder of the property holding company.

Joint Borrower Sole Proprietor Mortgage – As more and more people aim to get on the housing ladder, this type of mortgage has become increasingly frequent. It allows an individual, such as a parent, to help their children own a property by acting as a supporting borrower on the mortgage, without taking ownership of the property. A huge advantage of this new mortgage is the saving in Stamp Duty Land Tax, as it means you avoid the higher rate that applies for additional properties. A supporting borrower will be required to take Independent Legal Advice.

In this type of mortgage, the supporting borrower will have no ownership of the property, but will be liable for the repayment of the mortgage. A lender will require the supporting borrower to take Independent Legal Advice because, the lender has to be certain that the supporting borrower understands the full extent of their liability before the mortgage is entered into. A Joint Borrower Sole Proprietor Mortgage is high risk for the supporting borrower, as they do not have the benefit of co-owning the property but are liable for the mortgage repayments. A lender will want to ensure the supporting borrower is clear of the implications of the mortgage. Independent Legal Advice ensures the supporting borrower is aware of their liability, whilst providing the lender with protection from any claims.

Are you guaranteeing a loan or mortgage to a limited company? This usually means one thing – the lender will insist that you take “Independent Legal Advice” on signing the guarantee before making the loan.

If you are trading as a limited company, as owner of that company you may be required to personally guarantee the repayment sums. This means you would be liable if the company were to default on payments. You may be asked to obtain Independent Legal Advice where your company is entering into a:

• Start-up loan, or other type of business loan;
• Mortgage;
• Company credit card or overdraft;
• Lease of premises;
• Lease, hire purchase or PCP agreement for a company vehicle or equipment; or
• Sale agreement for assets, or other commercial contract that contains warranties given by the company.

Whilst the purpose of a guarantee seems quite simple, it is still important for you to take Independent Legal Advice so a solicitor can inform you of all the salient terms of the guarantee, their effect and the potential implications. It is also likely to be a requirement of the lender, so they can ensure the guarantee is enforceable.

Whilst a limited company is supposed to be a ‘separate legal person’, with the right to incur its own debts and enter its own agreements, it may not be a credit-worthy borrower for the lender. The limited company may not have significant assets of its own right, meaning a lender, landlord or other party may require, as a condition for them entering into the agreement, that a director or shareholder give personal guarantees for the sums payable under the agreement. It means that you will be acting as ‘guarantor’ for your company.

There are a variety of ‘types’ of guarantees:

• Given solely by one guarantor, or by several, on a “joint and several” basis;
• For a limited sum;
• To cover current, existing as well as future liabilities; or
• To be for an unlimited amount.

A director or shareholder may be reluctant to spend money taking legal advice, especially if they are aware of the company’s financial circumstances, however a solicitor will provide a comprehensive insight into the guarantee that highlights all the risks. It is important that you are fully briefed on these risks, as if the company is unable to pay its debts, you could be required to repay large sums of money. Independent Legal Advice also provides the lender with protection, as it ensures the guarantee is enforceable in Court.

Guarantees should also be considered carefully, if you are required to use a personal asset as security. The lender may place a legal charge over your personal property, whilst the company repays the sums due under the agreement. If the company defaults, you could see the lender apply for a possession order of your property.

It is important to remember that commercial agreements can be complex. Taking Independent Legal Advice on your personal guarantee will leave you fully informed of your potential obligations.

Understanding legal documents or agreements can be complex and intimidating, particularly when it involves significant financial decisions or risks. Whether you’re a director signing a personal guarantee, or a small business owner involved in corporate loans, mortgages, or equity release, understanding your obligations and the implications of these documents is crucial. This is where Carter Bond’s independent legal advice (ILA) services can make all the difference.

The need for Independent Legal Advice can arise in several situations, including but not limited to:

• where you live at a property that you do not own and are not listed as a borrower on the mortgage. The lender will require an Occupier’s Consent Form that waives your right to remain in the property if they repossess and any financial interest you have in the property. Please see our FAQ on Occupier’s Consent Form above.
• where you are acting as a guarantor for a limited company’s borrowing. Please see our FAQ on Personal Guarantees above.
• where you act as a supporting borrower for a mortgage (Please see above); or
• an employment settlement agreement.

Unfortunately, there is no single answer to this as it depends on factors like:-

• Where you live
• What you require Independent Legal Advice for

However, by contacting us at Carter Bond Solicitors, we will be able to provide you with a fixed fee quote.

Independent Legal Advice can be organised quickly. If you reach out to us, we can arrange a time slot with one of our solicitors which will usually take place in the same week, provided we have received your documentation and had time to review it.

The short answer is no, if you want to satisfy the lender’s requirement and allow the transaction to proceed.
You can refuse to take this step, but in all likelihood, your lender will simply refuse to proceed unless you comply with its requirements.

Following the House of Lords case, the Etridge letter is a document used in the England and Wales to confirm that someone seeking a mortgage has received independent legal advice (ILA). It stems from the case, Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773, where the House of Lords established guidelines to protect borrowers acting as guarantors.

When you obtain an Etridge letter, you are supposed to have met the requirements for independent legal advice (ILA) to protect parties from disputes and undue influence allegations. By choosing us for your Etridge letter, you’re not just ticking a box; you’re ensuring a layer of protection and understanding that’s paramount for your position.

Many ask us ‘what’s different about you?’ and we like to reply, ‘because we go the extra mile’. We see our work as building and maintaining good business relationships rather than just earning fees. How we do this is by keeping in constant contact with our clients and intermediaries. From pre to post instruction we ensure that our clients are informed of all legal issues that may impact their business and therefore lives. That is why we provide daily or weekly updates to ALL of our clients whether there is anything to tell them or not (we don’t charge for this we just see it as part of our service). We like our clients to rest peacefully knowing that when we are instructed, and we say ‘we will take it from here’ they know we mean it.

The world is changing, and many individuals are realising that lifestyle is as vital to them as is income. We are the lucky ones who can hand pick lawyers who can provide the best quality advice but at outer city costs. Our offices are in North West London which may not be the most salubrious in the market but at the same time this allows us to charge our clients for what they pay for, our advice NOT our office space.

ALL our lawyers have previously worked in large city-based law firms and continue to practise and offer  the same high level service  they provided to clients in the City but without the pressure and demands often dictated by City law firm. This allows us to be competitive on our fees without compromising our service.

All in all, our clients win, which is the way we like it.

All our clients benefit from the same high level of care and attention whether the instruction is big or small. At the outset of each matter, we discuss the entire process with our clients, including the costs, potential outcomes and issues associated. This is to ensure clients are fully aware, knowledgeable and are in control always. Supporting and ensuring we provide the highest level of services, we offer our constant contact process with the partner or barrister leading  your file, a document log in for matters which are for larger and more complicated instructions and on-going support post transaction should our clients require it. Our aim is not just to get the work done, but to make our clients’ lives easier as we do it, which is why we ensure that our clients have regular access to the resources they need from us.