.png)
Obtaining Independent Legal Advice When Providing Your Signature as a Guarantor on a Mortgage Application
Kormans LLP
December 29, 2022
.png)
In shifting market conditions, it is not uncommon for lenders to make it more challenging for borrowers to qualify for a mortgage. One way for borrowers to overcome such qualification hurdles is to find a creditworthy individual to sign as a guarantor on their mortgage application. This individual steps in and “guarantees” the loan on behalf of the borrowers. Although the guarantor is typically not an owner of the property receiving the mortgage, their signature can allow lenders to feel more comfortable providing funds to close a transaction.
Whether the lender requires it or not, it is important for the person acting as a guarantor to obtain independent legal advice (“ILA”) prior to the execution of all mortgage documentation. This is because, as a guarantor, one is agreeing to be responsible for paying off the mortgage if the borrower defaults on the loan.
Although in the perfect scenario, a guarantor will not need to provide anything other than their signature, it is still vital for a guarantor to fully understand the terms and conditions of the transaction. Such terms may include any potential risks and liabilities that may have been overlooked when agreeing to guarantee the mortgage. A lawyer providing ILA can explain the legal implications of the documents being signed and advise the guarantor on their rights and obligations of the mortgage. This can help protect the guarantors’ interests and ensure that they are entering into the transaction with full knowledge and understanding of the loan agreement.
Obtaining ILA can provide both borrowers and guarantors with peace of mind and help to ensure that the transaction is completed efficiently. When provided with ILA the guarantor can navigate the legal process of their agreement with confidence and make informed decisions about their role in the transaction.
Of additional importance, it is essential for the guarantor to obtain ILA from a lawyer who is not representing the borrowers or the lender of the same transaction. Using a lawyer who represents the guarantor independently ensures that the primary duty is to the guarantor and that advice being provided is not influenced by the interests of any other party.
If you have any legal questions regarding Independent Legal Advice, or you would like to have one of our lawyers provide you with Independent Legal Advice, please do not hesitate to contact us at (905) 270-6660 or e-mail us at: Info@kormans.ca.
_result.webp)
.png)
Discover how Limited Liability Partnerships (LLPs) in Ontario protect professionals like lawyers, accountants, and architects while allowing collaboration, resource-sharing, and individual liability protection.
In this blog post, we will cover in further detail some of the other key items that are important to consider when accepting HST indemnity from the Buyer for the HST self-remittance.
There is an all-too-common misconception by some Buyers and even by some Buyers’ professional, licenced realtors that the time period for the delivery of a Deposit pursuant to a resale Agreement of Purchase and Sale (APS) effectively provides the Buyer with a cooling-off period. The mistaken belief is that the Buyer has until the time and date specified in the APS for the delivery of the Deposit to have Buyer’s remorse for whatever reason and therefore elect to terminate the APS by not delivering the Deposit.
.webp)
