The term Independent Legal Advice is unbiased and unprejudiced advice given by a solicitor who is not in any way connected to the parties involved in a legal matter or transaction. Independent Legal Advice is required in order to protect the party deemed as not benefiting from the transaction, making sure that they understand the risks of being part of the transaction without undue influence before signing any binding documentation. Therefore, it is vital that you seek Independent Legal Advice before signing any documentations.
Where obtaining Independent Legal Advice is a condition by the Lender, then it is advisable that you seek and obtain Independent Legal Advice from a Solicitor who is not connected to the ongoing legal matter. The requirement for Independent Legal Advice is due to the fact that in the past, individuals have successfully argued at court that the legal documents they signed should not be enforced against then and they should not be bound by a mortgage or loan because they did not understand and were not advised on the nature or implications of the documents that they were signing. Some individuals were also able to argue that they were unduly influenced by someone else into signing the relevant document. Therefore, the requirement for Independent Legal Advice arose.
The case of Royal Bank of Scotland v Etridge (No 2) and other appeals [2001] 3 FCR 481 has emphasised on the importance of obtaining independent legal advice where the transaction is not benefiting one or multiple persons. Should you choose not to obtain Independent Legal Advice as stipulated by the Lender, there may be consequences which could include:
- It may be considered that you have not understood the nature of the transaction and that you are not freely entering into it.
- There may be dispute in the future as to whether undue influence was placed on you to sign the document without understanding the nature of the document.
- The agreement/document that you sign may not be legally enforceable should it be determined that you were not properly informed. It is important that you understand your circumstances before you make a decision.
- Failure to receive independent legal advice from an independent Solicitor/Conveyancer, could mean that the advice provided may be deemed not to be adequately provided and the terms and risks not explained as there may be conflict of interest.
- The lender may be unwilling to make a loan to the Borrower unless an independent Solicitor or Conveyancer provides a confirmation letter or certificate to confirm that Independent Legal Advice has been provided.
