Independent Legal Advice/Personal Guarantee
What are Personal Guarantees and Independent Legal Advice (ILA) and why are they required
Financial Lenders often require Directors and Shareholders to personally guarantee the liabilities of their company under a loan or mortgage arrangement. It is common for the Lender to request Directors and Shareholders to enter into a personal guarantee as an additional layer of security against company borrowings.
When a guarantor or person providing security for a mortgage obtains Independent Legal Advice (ILA), a Lender receives confirmation that the guarantor has freely entered into the guarantee or loan agreement, understanding the financial implications, consequences and risks associated with it.
Where a personal guarantee has been entered in to, a Lender can demand full repayment from the guarantor in the event of default by the company.
What are the risks of Personal Guarantees?
Ultimately, the ramifications of signing any personal guarantee means that a guarantor will be faced with repaying the debt or complying with the obligations they have undertaken to guarantee, to the third party.
If a guarantor is unable to meet such obligations then they risk being the subject of enforcement action for any debt arising under the guarantee (often with costs and interest accruing on a daily basis), and if these obligations cannot be met from the guarantor’s assets, they could be made subject to bankruptcy proceedings.
How Chris Stevenson Solicitors can help you
Chris Stevenson Solicitors have experience in dealing with guarantees required by various financial Lenders and their requirements. We will seek to understand the particular requirements of your matter before ensuring that the personal guarantee and solicitor’s certificate (if required) are executed accurately.
If you would like more information in relation to Independent Legal Advice (ILA) and personal guarantees, please do not hesitate to contact our friendly family team on 01302 341243 or conveyancing@chris-stevenson.co.uk.