If you are buying property in company or trust structures then you are likely to be required to obtain a solicitor’s certificate at some stage.
In this article I wanted to quickly review what a solicitor’s certificate is – but also to offer some suggestions as to how to get yours completed as efficiently as possible.
First – A Quick Overview
Banks and other mortgage lenders will usually require that a solicitor’s certificate is provided where a company or trust buys a property and the directors or beneficiaries provide a personal guarantee. There are also other situations where solicitors’ certificates may be required.
In essence, the solicitor’s certificate says that the guarantor attended the solicitor’s office and had the loan documents explained to them. Unfortunately, the format for the certificate is regulated and doesn’t allow for virtual or other forms of electronic meetings. The concern seems to be that someone might stand out of view of the camera and pressure the guarantor.
Most clients see this as an inconvenience and don’t attach a great deal of value to this service.
The difficulty from the solicitor’s point of view is that several hours work are required to provide the certificate. The documents need to be reviewed, a face to face interview needs to be conducted and then the certificate and other paperwork needs to be signed.
Also, the solicitor, in certifying that the guarantor seems to understand the documents the guarantor is signing is then at risk if the transaction goes wrong and the guarantor complains that they didn’t understand what they signed. As a result, our professional indemnity insurers are quite prescriptive about the protocols that need to be followed.
However, there are ways to speed the process up and make it more efficient (whilst complying with the required formalities)…..
1. Commercial Terms and Conditions
The key terms and conditions of your loan will be set out in the Letter of Offer that you will usually receive before the loan documents are prepared.
The best time to negotiate commercial terms – such as interest rates, loan terms, options to extend and pre-paid interest – is before you sign and return the letter of offer.
Once the letter of offer is signed and the loan documents are prepared you may find that your lender applies the ‘Golden Rule’. That is the person who has the gold makes the rules! In any event trying to change commercial terms after documents are prepared will slow things down.
2. Copies in Advance
Make sure that your solicitor has a full copy of the loan documents – not just the guarantee or certificate – in advance of your appointment. This way the documents can be reviewed before you arrive and obvious problems may be able to be addressed in advance.
3. Identification
You will need to attend the meeting in person and bring adequate original identification with you. The easiest solution is a current passport and drivers licence.
However, if you don’t have these available there are other possibilities. Please discuss this with your solicitor in advance.
4. Conflicts
Where there are multiple guarantors an assessment needs to be made whether there is a conflict of interest between guarantors. For example, if one guarantor is a director of the company borrowing the money and the other guarantor is not a director but is providing all the security it may be that each of you need separate advice.
If this is a concern in your situation it should be raised as early as possible to miminise delays.
5. Conditions Precedent
Most loan documents will specify a number of requirements or conditions precedent that need to be satisfied before the loan funds will be advanced. Some of these can be simply addressed by your solicitor or conveyancer. Others may require that you or your finance broker attend to them.
Common examples include insurance for the property, current rates notices or financial statements.
You should discuss these requirements with your finance broker or lender as early as possible to ensure that the solicitors certificate and settlement is not delayed.
Lewis O’Brien & Associates
Lewis O’Brien and Associates regularly provides solicitor’s certificates for clients.
We are conscious that often there is limited time before settlement and the certificate needs to be obtained efficiently.
To contact us, ask for a quote and / or arrange a solicitor’s certificate – please click here.
If you don’t presently need a solicitor’s certificate but know someone that does please share this article with them.
Lewis O’Brien
Your Preferred Property Lawyer