Providing Independent Legal Advice in Challenging Times

Covid-19 may have turned the world on its head, but most lenders still have the appetite to lend and many businesses and business owners have a greater need to borrow.

The current lockdown has affected the way in which lawyers are able to provide Independent Legal Advice ("ILA") to individuals who have been required to grant a personal guarantee ("PG") to lenders.

Prior to the current pandemic, our team of commercial lawyers regularly advised individuals who had agreed to enter into PGs. Under normal circumstances this would have involved us advising the individual in writing and then meeting with them face to face, in order to ensure their full understanding of the PG and, by extension, to satisfy the lender's requirements as regards the provision of ILA.

The current circumstances obviously dictate that face to face meetings are not viable, and so our commercial lawyers have been working with different lenders and guarantors to find ways of still being able to provide ILA on PGs through the use of video conferencing facilities.

Most PGs will be entered into as a deed, meaning that the guarantor’s signature needs to be witnessed by a third party.  Although there has never been a prohibition in law on a guarantor’s spouse, cohabitee or civil partner from acting as a witness, prior to the on-going lock down, it was generally accepted that as a matter of best practice such a person ought not to act as a witness, because the purpose of requiring a party's signature to be witnessed is to provide, if necessary, unbiased evidence of what was signed, by whom, and when.

Under the current circumstances, we are generally finding that lenders are comfortable for a witness to be a spouse, cohabitee or civil partner, provided that the witness is not, themselves, a party to the PG (some PGs are given on a joint and several basis by two or more guarantors), and also that the person entering into the deed executes it in the presence of the witness.  Through the use of video conferencing we are able to satisfy these requirements.

If you have agreed to enter into a PG and require ILA, or if you are a lender that needs to recommend lawyers who can provide ILA quickly and effectively to borrowers, please contact Keith Kennedy, Head of our Corporate and Commercial Team at keith.kennedy@pearsonlegal.co.uk or on 0161 684 6942.

 

 

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers LLP or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.