Independent legal advice certificate
What is an independent legal advice certificate for a guarantor?
ONE OF 366 TERMS · FREE · NO SIGNUP
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
An independent legal advice certificate is a signed statement from a lawyer advising a guarantor, or an owner giving a mortgage, that they explained the document, its risks and the debt it secures, and that the client appeared to understand it and to sign freely. Lenders ask for one most often where the guarantor gains little from the loan, such as a spouse or a parent, because courts have set aside guarantees given under undue influence or without understanding. The certificate protects the lender only while it can rely on it: not if the lender withheld the facility details from the lawyer, or knew the advice fell short.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WORKED IN
// NEXT TO IT
- Personal guarantee release
- General security agreement (GSA)
- Subordination
- Intercreditor agreement
- Loan to value ratio (LVR)
- Forced-sale value
- PPSR (Personal Property Securities Register)
- Retention of title
- Purchase money security interest (PMSI)
- Preferential creditors
- Letter of comfort
- Cross-guarantee
- Floating charge
- Structural subordination
- Recovery waterfall
- First mortgage
- Pari passu
- Loan to security ratio (LSR)
- Lending value
- All-monies clause
- Valuation reliance letter
- Solicitor's undertaking
- Loss payee (bank's interest noted)
- Liquidation value (orderly and forced)
- Water entitlements (as security)
- Livestock as security
- Specific security agreement (SSA)
- Debenture (security document)
- Share pledge (share charge)
- Step-in rights
- Third-party mortgage
- Limited guarantee
- Upstream guarantee
- Corporate benefit
- Financial assistance (whitewash)
- Deed of priority
- Perfection (security interest)
- Title insurance
- Payout figure (redemption statement)
- Panel valuer
- Desktop valuation
- Partial release (of security)
- Security trustee (security agent)
- Cash cover (cash-collateralised facility)
- Back-to-back loan
// SUBSCRIBE
The Lab.
One case file and one question, in your inbox every Tuesday morning, New Zealand time. The senior banker's read opens only after you answer.
FREE WITH IT · THREE PDFS
An interview case, an annotated credit paper, and a one-page loan application sheet.
No spam. Unsubscribe anytime. Educational content only.