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Company Mortgages, Personal Guarantees & Independent Legal Advice (“ILA”)

What is a Personal Guarantee on Company Mortgages / Bridging Loans and what is Independent Legal Advice (“ILA”). These are a lender requirement when a Limited Company mortgages or charges property. This applies on a purchase or a remortgage and whether Charge, Debenture or both


The borrower is the company which has limited liability and is a legal entity in its own right. The directors, or persons who control the company, are asked to give the lender a personal guarantee tying in their own assets and not just those of the company.


Because limited companies have limited liability where a lender repossesses it is difficult to recover the outstanding debt. To combat this lenders now insist on a Personal Guarantee from the directors for their security. The directors will have their own assets and the lender can claim against these under the Guarantee. This is standard practice.


For added protection the director must take Independent Legal Advice from a solicitor unrelated to the transaction. The solicitor cannot be the one acting for the lender or the borrower. This process makes the directors’ Personal Guarantee very difficult to overturn. You should not proceed if you are not prepared to risk your assets.


The Independent Legal Advice must be given by a property solicitor. Not all Conveyancers are solicitors. There are different routes to qualification and some Conveyancers will be regulated by a different body. You will need a solicitor for this. Not all solicitors and firms are willing to deal with Independent Legal Advice. You need to check.


The Conveyancer who is acting for you in your property purchase or remortgage is acting for you and must look after your best interests. As a result they cannot give the independent legal advice (ILA) for the lender. An impartial solicitor is needed. Your solicitor may be able to recommend a firm for the Independent Legal Advice.


However, some lenders will allow another solicitor within the same firm to give the independent legal advice. But do not assume that is okay. Check with the lender.


The lender will have their own solicitors looking out for the lender’s best interests.


Independent legal advice generally needs to be face-to-face and not all lenders will accept it over video call or zoom. Each director’s original identification documentation and proof of address will also need to be seen, copied and verified (certified) for AML and compliance purposes.


Due to the risk to the law firm giving the independent legal advice, the requirements of the firm’s professional indemnity insurer, and the complexity of the advice, someone senior will usually deal with this. The fee payable will reflect the same. These are not cheap but they are necessary and needed each time there is a company mortgage. If you had one six months ago you cannot use it again for a different property or lender.


If you need Independent Legal Advice please get in touch. I am based in central Cardiff, Newport, Pontypool, Cwmbran, and the vale of Glamorgan.



02922 648003 | 07944 377029




Why Did I Start This Blog?


I hope the Blog will be educational and help the public to understand the conveyancing process.


It is your Go to Guide if you are buying or selling or are a homeowner. It will also be handy for property professionals, Estate Agents and investors. The Blog is a useful tool for anyone involved in property.


My blog articles cover what your conveyancer is doing, and why, behind the scenes.


Conveyancers are heavily regulated and the government has made Conveyancers and Land Registry the frontline for anti-money laundering, identity theft and property fraud. Complying with these regulatory requirements is something we refer to as compliance and due diligence.


Many clients don’t realise that our purpose is to protect them and their mortgage lender and not to slow the process down.


We are trying to ensure that there are no title defects and nothing will reduce property value when you sell or remortgage.  Lenders insist on Conveyancers being involved so that they can be sure the property is adequate security for their loan. There must be no legal defects.  This is why we do what we do. For you.


I sincerely hope the Blog goes some way towards demystifying the conveyancing process and helping you.





Independent Legal Advice



MY SERVICES INCLUDE:


Acting for anyone Buying, Selling or Remortgaging In England or  Wales



I am a:


• Solicitor of 23+ years

• SRA & CQS Regulated

• Help to Buy Accredited

• Recommended - Trustpilot & Yell.com


Instruct me for your:


• Transfer of names on deeds & mortgage

• Equity Release  & Lifetime Mortgages

• Bridging Finance

• Auction Property

• Leasehold matter

• Freehold matter

• Trust Deeds & Declaration of Trusts

• ID1 Forms (HMLR)

• Statutory Declarations

• Independent Legal Advice

• Shared Ownership or Shared Equity



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