Oakwood Property Solicitors have prepared some great insights about Independent Legal Advice.
What is Independent Legal Advice (ILA) and why is it necessary?
Independent Legal Advice - also known as an ILA - is a signed document confirming that you have received legal advice in relation to a particular matter. In the case of Property law, it is usually sought upon the request of a lender before you are asked to sign a transaction document.
This advice must be received from an independent, alternate solicitor or Chartered Legal Executive who has not been involved in the original proceedings.
Examples of when an ILA is required:
- Personal Guarantees – where a person guarantees that they will repay a loan made to someone else
- Directors Guarantee – where a director guarantees on behalf of the business for a business loan or mortgage
- Settlement Agreements – in employment matters
- Transfers of Equity
- Occupiers Consent Forms
- Mortgages – joint borrow sole proprietor mortgages
Such advice is very important, as it proves to the lender that you have been made fully aware of the nature of the loan/transaction and the risks it involves. The requirement to seek third-party legal advice also helps to ensure that you have not been unduly influenced to carry out your matter, as well as understanding what it is you are being asked to sign.
Often the request to seek advice is sprung on a lender with short notice to seek it out, so it is beneficial to have a provider in mind.
A guarantor may be involved in an agreement, which means that they are the ones providing the financial resources. In this case, the guarantor (or guarantors) will be required to undergo their own independent legal advice also, to ensure that they fully understand the agreement and the risks, and are deemed to be doing so without pressure from family or others.
Safeguarding the lender
The benefits of an ILA also provide protection to the lender of the money, as it is a protection to them from scrutiny. In ushering a borrower towards external advice, it has satisfied its duty of care to its own client.
Requirements of the ILA provider
The solicitor providing the advice must ensure that they are providing it in the correct manner:
- The meeting must either be face-to-face, or conducted via webcam video services such as Skype or Zoom.
- No other party should be present to ensure that no undue influence is exerted.
- The details of the paperwork must be explained to the client to make sure that they fully understand it and have the opportunity to change their mind.
- All consequences of signing up to the agreement are explained, including any potential risks.
Our advice would be to be aware of the possibility of needing to seek independent legal advice if you are taking out a high-value mortgage and/or one with a guarantor. Never be afraid to ask questions during your buying journey as it is your right to know what you are signing up for, and most importantly – enjoy the experience of searching for your new home!
Oakwood Property Solicitors
458 Roundhay Road,
Leeds, LS8 2HU
0113 218 5727