The Bank's Lawyer and Yours: How Loan Documents Are Signed

In the UK, Australia and New Zealand a business loan is documented by the lender. The bank's credit approval sets the commercial deal: how much, for how long, at what price, against what security. The bank then has a lawyer turn that approval into documents that will hold up in court: the facility agreement or the bank's loan terms, the security over land and business assets, and the guarantees. The borrower has its own lawyer read those documents, explain them, negotiate what can be negotiated and see them signed properly. Two lawyers, two clients, one set of documents.

The shape comes from the common-law tradition the three markets share, in which each side has its own adviser and the documents are argued into shape between them. In much of continental Europe a mortgage is made before a notary, a public officer who acts for neither side. And borrowers who have bought a house, where in some markets one lawyer acts for both the buyer and the lender, are often surprised that a business loan comes with a lawyer they did not choose and cannot instruct.

Most banks keep a panel: a short list of outside law firms appointed after a tender, on agreed rates and the bank's own standard documents. For a larger or more complex loan the bank instructs one of them; larger and syndicated loans often start from an industry template, the Loan Market Association's in the UK and the Asia Pacific Loan Market Association's in Australia, which both sides' lawyers already know. For a small loan on standard forms, the documents may come from the bank's own documentation team or in-house lawyers instead. Either way, the lawyer drafting is the bank's.

Its job is to document the approval exactly and to protect the bank: that the security attaches to what credit assumed it would, ranks where credit assumed it would rank, and that every condition is met before money moves. It owes its duties to the bank. It will not advise you on whether to sign, and it is right not to. A question about what a clause means for you belongs with your own lawyer.

You will usually pay its bill all the same. Most facility letters make the borrower pay the bank's legal costs as well as its own, and many make them payable even if the loan does not go ahead. Paying the fee does not make it your lawyer.

It also works inside limits it did not set. It can agree drafting, but not the price, the limit, the covenant levels or the security: those came from credit, and a request to change one goes back through the relationship manager, sometimes to credit again, and takes time.

Your lawyer acts for the borrower and for no one else in the transaction. The work, roughly in order:

• Reading the offer before you accept it. The commercial terms are set there, and they are hardest to move once you have signed it. The guide to reading a facility letter goes through it clause by clause.
• Reading the documents against the offer. They should say what was agreed, and a definition or a general-terms booklet can quietly widen it. A clause that lets the security cover everything you owe the bank, on any account, now or later, is common and worth understanding before you sign: the all-monies clause.
• Explaining what you are signing: the events of default, the undertakings, the indemnities, what the bank can do and when.
• Negotiating the drafting: definitions, cure periods, materiality, room for finance the business already has.
• Your company's side of the formalities: the board's approval, a director's certificate, a certified copy of the constitution, evidence of who may sign. Where the business is owned or run through a trust, as many are in Australia and New Zealand, the bank's lawyer will ask for the trust deed, check that it lets the trustees borrow and give security, and want every trustee to sign.
• Settlement on your side: repaying and releasing any old lender, the title documents, and the lawyers' undertakings that let money and documents move at the same moment.

Choose a lawyer who does borrower-side banking work at your size. The lawyer who handled your house purchase may not, and a firm on your bank's own panel will usually decline to act against the bank on its own loan.

A guarantee is the one document in the pack whose signer may get nothing from the loan, and the courts in all three markets have long been willing to set aside guarantees signed under pressure or without understanding. Banks answer that with advice that is independent: usually from a lawyer who is not acting for the borrower, given to the guarantor alone, and confirmed to the bank in writing, often on an independent legal advice certificate.

The detail differs by market. Australia's Banking Code has the guarantee carry a prominent notice that the guarantor should seek independent legal and financial advice and can refuse to sign, has the bank give the guarantee documents to the guarantor directly rather than through the borrower, and stops the bank accepting the guarantee until the third day after the guarantor receives the information, unless a lawyer confirms they have been advised. Some of those protections apply differently, or not at all, where the guarantor is a director of the borrower. In England and Wales, since a 2001 House of Lords decision, a bank taking a guarantee from someone whose relationship with the borrower is not commercial, such as a spouse or a parent, is expected to deal with them directly and to get a lawyer's written confirmation that they were advised. In New Zealand, banks commonly ask each guarantor's lawyer to certify that the guarantee was explained.

The certificate protects the bank; the advice protects the guarantor. What the signature commits them to, and what can be negotiated before it is given, is in the guide to personal guarantees.

Loan documents trip on form more often than on substance. Many security documents and guarantees are deeds, and each market's companies legislation sets how a company signs one: broadly, two directors, or a director with a company secretary or a witness. A guarantor's signature on a deed usually needs a witness, and the lawyer who gave the advice often witnesses it. Electronic signing is now widely accepted, though not for every document in every market, and the bank's lawyer will say which form it needs. A document signed in the wrong form is signed again, and the money waits.

Everyone who signs, and the people who own or control the business, will also be identified under anti-money-laundering rules, with copies certified in the form the bank asks for. In many packs it is the slowest item, and the easiest to start early.

Signing is not the end. The facility letter lists conditions precedent, everything that must be in place before you can draw, and the bank's lawyer collects them: the signed documents; the valuation, usually by a panel valuer, with a reliance letter where the valuer was instructed by someone else; evidence of insurance with the bank noted on the policy as loss payee; the board's approval; the release of any earlier lender's security. When the list is complete it tells the bank, and the bank releases the money.

Then the security is registered, and the deadlines belong to the bank's lawyer. Mortgages over land are lodged with the land registry, now mostly electronically. Security over business assets is registered on the PPSR in Australia and New Zealand. A UK company's charges are delivered to Companies House within 21 days, and a charge delivered late is void against a liquidator, an administrator and the company's other creditors. Australia has a timing rule of its own for company security: one registered more than 20 business days after it was given can be lost if the company enters an insolvency process within six months of registration. Deadlines like these are why the bank's lawyer moves quickly once you sign.

On a refinance, the old lender's repayment at its payout figure, the new lender's money and the release of the old security happen together, held in place by the lawyers' promises to each other. A solicitor's undertaking is a lawyer's personal promise, and the profession enforces it. What else a move between banks involves is in the guide to refinancing.

You pay for two lawyers, and every round of mark-ups is billed on both sides. Before you accept the offer, ask the bank who will document the loan and for an estimate of its legal costs; on standard documents some banks will quote a fixed fee or a cap. Ask your own lawyer for an estimate too.

The cheapest loans to document are the ones where the borrower is ready: the company documents and identification sent early, titles and insurance details to hand, payout figures from any existing lender requested, and a view formed in advance on which points matter. Negotiating standard wording for its own sake is expensive and rarely changes the risk. The effort is better spent on the clauses that decide what happens when something goes wrong: the events of default, the cure periods, the definitions behind the covenants.

1. The bank's offer arrives. Send it to your lawyer before you accept it.
2. Ask the bank who will document the loan, and what its legal costs are likely to be.
3. Gather what both lawyers will ask for: the constitution, shareholder and director details, any trust deed, titles, insurance, existing finance and security, and identification for everyone who signs.
4. The bank's lawyer sends the documents. Your lawyer reads them against the offer, marks them up and agrees the drafting.
5. Each guarantor takes advice of their own, and signs.
6. Everyone signs in the form the bank's lawyer specifies, and the conditions precedent are delivered.
7. Settlement: any old lender is repaid and its security released, the new security is registered, and the money is drawn.
8. Keep a signed copy of everything, and diary the conditions subsequent and the reporting dates.

Start with the official registers, which confirm that a lawyer holds a current practising certificate: the New Zealand Law Society's Find a Lawyer; in Australia, the register kept by each state's law society, such as the Law Society of New South Wales' Register of Solicitors; and in England and Wales, the Law Society's Find a Solicitor and the Solicitors Regulation Authority's register.

Independent directories rank firms' banking practices on what clients and other lawyers tell their researchers. Chambers and Partners publishes tables for banking and finance in New Zealand; for corporate finance and property finance in Australia; and in the UK for borrower-side corporate lending in London, with banking and finance tables for each region elsewhere. The firms near the top mostly act on large transactions, often for lenders. For a small business loan, a smaller firm that does borrower-side work every week may be the better fit, and cost less.

The rankings are the directory's own. Banking Judgment Lab has no connection with it or with any firm, and recommends no lawyer. Links checked 6 November 2026; directories move their tables between editions. Nothing on this page is legal advice: law and practice differ by market and change, and the advice worth having is your own lawyer's, on your own documents.