FAQs about Independent Legal Advice
Can HS Legal Solicitors give Independent Legal Advice when they are acting on the Purchase of the property?
No, that is not possible. It is a conflict situation.
I am aware I am required to sign a Guarantee Certificate. Can the Solicitor advising witness it on the video call?
We have to look for requirements of your lender
If the Solicitor witnesses the signature of the Director to the Guarantee then how is this done?
The witnessing may be done in person. Some Lenders may accept video link and some will not.
What about the Certificate of Advice?
Practice varies between different lenders.
What are your Identification Requirements?
We will require photographic ID as a Passport, Driving Licence or Identity Card if the Director is from a country that issues them.
Do HS Legal have any other forms that they will want a Director to complete?
They will require the Director to complete a confirmation of Advice form to confirm the advice has been given and accepted.
Can HS Legal give advice on all Lenders Independent Legal Advice Certificates.
We can give advice on an ILA Certificate for almost all Lenders. These include but are not limited to The Mortgage Works, Precise Mortgages, Paragon, Molo and LendInvest.
What is the main purpose of a Director’s Guarantee?
The main purpose is for the Director to guarantee that he/she will fully guarantee all obligations of the Limited Company and in all circumstances. The main obligation is to pay the loan taken out if the Limited Company does not pay but this Guarantee means the Director is liable for all obligations.
If more than one Director signs a Guarantee how is liability divided between them.
They are liable under the concept of joint and several liabilities. This means that both are liable for the whole debt. So if one were to default, wholly or in part, and the Company did not pay then the other Director would have to pay all sums due. They are also jointly liable between them for the entire debt owed.
Can you explain what is in the Personal Guarantee that Directors are required to give?
The format of a Personal Guarantee will differ between different Lenders. However, there are matters they will have in common. The most important thing is that they will contain a commitment by the Director to be responsible for all debts and other liabilities of the Limited Company. That commitment will be stated to be joint and several. In other words joint with other Directors if any. And then several meaning that even though there may be other Directors, the Director giving the Director is totally liable if other Directors do not pay.
What is the extent of the Directors liability for the debt?
It will be stated to be the original debt owed, plus interest owed, plus all costs, and less any sums actually paid. That is with some lenders but some lenders demand unlimited liability including for all obligations.
How are possible defences that the Director or Guarantor might have dealt with?
A feature of all Personal Guarantees is that they will set out a list of possible defences. Then having set out the list there will be a statement that those defences are removed. By signing the Guarantee the Director agrees that he/she cannot rely on the defences set out.
Why do Lenders require Directors of Limited Companies to have Independent Legal Advice when giving Personal Guarantees?
The purpose for the Lenders is that, if the Director disputes the Guarantee, the Lender will produce the Certificate of Advice by Solicitors and state that the Director is bound by the advice. The Director has been declared to be fully aware of what he/she has guaranteed, that is the Company debt to the Lender and any other commitments.
Is the debt owed by the Directors, should the Company default, secured or unsecured on property.
The Company Debt is secured of course on the property in question. However the Directors individual debt, should the Limited Company default, is unsecured on any property.
If a Guarantee is given by a Director how long will it last for?
Some Personal Guarantees do allow for early release. In practice though and generally a Director must expect to be bound for the duration of the Mortgage and will only be released when the Mortgage is paid in full, whether on the sale of the property, or on remortgage of the property.
If a Director is in financial difficulties will he/she be accepted as a Guarantor?
Fairly self evidently that is unlikely and that could of course reflect on the Company itself. The Personal Guarantee may well contain a statement by the Director that he/she has no financial difficulties.
The Personal Guarantee contains reference to the fact that the Director is liable for the Companies liability for Lenders Costs in respect of the Mortgage should the Company default. Can you provide more details.
These will be contained in the Lenders Mortgage documents sent to the Company. These will though include the cost of enforcing any debt and repossession and could be quite substantial.
Do you advise on Sole Proprietor, Joint Mortgage situations?
Yes we do
What is the advice that you will give in these situations.
The advice that Lenders will ask HS Legal to give will be to advise individuals taking on a joint mortgage of the risks involved against the fact that person will have no benefit at all. The risks are all those involved with being a Mortgagor. So obviously the possibility of being responsible for the debt and other liability under the Mortgage. And then the risk of Court Action being taken if payments are not made.