Independent Legal Advice? What is it? Why do I need it?

Independent Legal Advice is a requirement during a conveyancing transaction where a party to the transaction needs to be separately advised as per the lenders instructions. This may be because the party is in a position where their involvement carries a risk which outweighs the benefit. The advice is supplied by a solicitor who is independent to the transaction and the meeting is face to face; with the advancement of technology this is now possible via Zoom or Skype.

Transactions which commonly require independent legal advice are as below:

• Director Mortgage Guarantee

• Joint Mortgage with Sole Purchaser

• Transfer of Equity

• Occupier Waivers

• Secondary Mortgages/Charges

Independent Legal Advice is usually obtained towards the end of the transaction and can usually be done fairly quickly. Timescales usually vary from firm to firm but we aim to have this done with a next day service via a video call.

Once this has been supplied, the solicitor will issue a Certificate of Independent Legal Advice to the solicitor who is acting in the transaction or directly to your lender if necessary.

Why is Independent Legal Advice needed?

independent advice is needed within the same transaction, as each party may have potentially conflicting interests which need to be fully explained to each party so that they are aware of any implications they may be liable to once the transaction has completed. This needs to be provided independently of the firm of solicitors acting in the transaction so that the lender is satisfied each party’s advice is not favourable to one party

What advice is required?

• A Joint Mortgage with a Sole Purchaser -  Where both parties are on the mortgage but not on the legal title, independent legal advice need be sought to advise of the risk of being liable for the mortgage. This tends to be common where a parent is assisting their child buy their home. Unmarried couples may favour this as a means of avoiding any additional Stamp Duty Land Tax should one partner already own another property.

• Directors Guarantee - Directors of a company are required to obtain Legal Advice when obtaining a mortgage as the guarantee will make the director liable if the company defaults on their payments.

• Occupiers Waiver - Any occupiers over the age of 18 will be required to sign a waiver to waive their rights to reside in the property in the unfortunate event it need be repossessed by the lender.

• Secondary Mortgage - Where a party decides to obtain a mortgage for something which they do not have a direct legal interest in, their lender will insist they obtain independent legal advice so they are aware of any risk they may be liable to.

• Deed of Trust - Where a joint owner drafts a deed of trust detailing the terms of ownership of the property, some lenders may require independent legal advice to ensure that they understand the terms of the deed.

Free Independent Legal Advice?

Most clients will not be aware they are required to obtain Independent Legal Advice and would therefore wish to minimise their costs. Many believe this to be a technicality to satisfy their lender but for the solicitor providing the advice, the risk and consequences of supplying this information is too great to be offered without fee and therefore they are bound under a duty to charge legal fees.

How can this be done remotely?

One of the requirements not just by the solicitors performing the independent legal advice but nearly all solicitors is to ensure that the party obtaining the legal advice is doing so without any undue influence and they have not been misled as to the nature or implications of their involvement.  This can be done by:

• Ensuring they verify the individuals identification and that they are corresponding with the person as per the identification supplied. In a conveyancing transaction, identity requirements tend to be stricter as an anti-fraud restriction.

• Ensuring the person is acting without any undue influence and that they are of sound mind.

Given the rise of technology, many lenders will permit the use of face to face meetings to take place via a video chat platform such as Zoom or Skype.