What is a solicitor’s certificate and why does the bank want one?

So I have been asked to be guarantor on a loan and the bank has asked for a solicitor’s certificate. What is it?

So your son or daughter has asked you to be guarantor for the loan they want to buy a new house. Or perhaps you are a company director going guarantor for a company loan. And the bank has insisted that you get a solicitor’s certificate.

If your bank has asked you to get a solicitor’s certificate, this means that a solicitor needs to review the loan documents, the guarantee and any other associated documents and explain them to you before you sign.

Because loan documents vary in size and detail, you can expect that it will take up to a couple of hours for the solicitors to review those documents and possibly longer to explain them to you fully. You say, “I know what being a guarantor means. If they don’t pay, I have to pay, right? Why does it take so long?” Well, it’s not actually that straight forward.

Loan and guarantee documents are often complex with hidden small print that can catch you or the borrower (whose actions you are guaranteeing) out. This is why a solicitor’s certificate is so important. Here are just a couple of the common ones that come up:

As guarantor you have no right to be informed by the bank if their arrangements with the borrower change. So the loan you thought you were guaranteeing might not be the one you ultimately end up guaranteeing and you may not even know.
The bank doesn’t need to chase the borrower before they can chase you. If you are going guarantor for someone who doesn’t have a lot of money, if they default the bank may come straight to you for the money and you have no right to make them try to get the borrower to pay first.

So a guarantee is not something you want to enter into lightly, hence why the bank requires that you prove you have received legal advice first. The solicitor’s certificate is protection for you so you know what you are signing up for. But it is also protection for the bank as they don’t want any chance you will come back later and complain you didn’t know what you were getting into. It might not be an expense you expected when offering to be guarantor but it is worth every cent to be able to make an informed decision.