Banks and financial institutions often ask for a personal guarantee when lending to a company or to a person with limited equity in a property. The risk undertaken by a guarantor is high and banks usually require a guarantor to seek independent legal advice prior to signing. That’s one of the ways banks avoid a guarantor later claiming they did not understand the effect of the document.
Whether or not a solicitor’s certificate is required by the bank, any person considering signing a guarantee should obtain independent and comprehensive legal advice.
The expert property lawyers at Parke Lawyers can review mortgage and loan documents and provide you with a clear understanding of the effect of the documents. If necessary, we can even provide a same day service.
Whilst no one expects to default on a loan, the consequences can be financially devastating to a guarantor – including loss of assets and even bankruptcy. Whilst the ability to negotiate with a bank the terms of a guarantee, it is at times possible. It is important to identify what can be done to limit the risk and exposure of the guarantor.
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