Before You Sign: What Every Guarantor Needs to Know

August 12, 2025

If you have been asked to provide a personal guarantee for someone else’s loan—whether for a child purchasing a home, a business transaction, or a family trust—then you will often be required to obtain a Solicitor’s Certificate. This certificate confirms that you have received independent legal advice and that you fully understand your obligations, the risks involved, and the consequences of entering into the guarantee.

Most banks and financial institutions will not proceed with the loan until this Solicitor’s Certificate has been issued, to avoid later claims by the guarantor that they did not understand the guarantee or were forced to sign it by undue influence, or unfair pressure.

There are several common scenarios where lenders will require this certificate, including:

• Parents guaranteeing their child’s home loan, particularly where the child has a small deposit or limited serviceability;
• Spouses or de facto partners guaranteeing each other’s personal or business loans;
• Directors of companies providing personal guarantees for corporate debt;
• Individuals involved in trust structures, such as where a family trust is borrowing;
• Third-party guarantees, where a friend or relative offers a guarantee for someone else’s obligations.

Guaranteeing someone else’s loan is a serious legal and financial commitment. If the borrower defaults, you as guarantor may be held liable for the full loan amount, as well as  interest and associated costs. Your assets, including your home or savings, may be at risk.  It is vital that you understand the documents you are signing and that you are making an informed decision free of coercion.

A common misconception is that a lawyer simply “witnesses” a guarantee. In reality, providing a Solicitor’s Certificate involves a detailed legal process. Your lawyer must:

1. review the guarantee documentation including in some cases the loan and mortgage documents;
2. meet with you to explain the guarantee and ensure you understands the terms, conditions, and legal consequences of signing the guarantee;
3. assess whether you appear to be under pressure or do not understand the documents; and
4. issue the solicitor’s certificate only once they are satisfied you understand the nature and effect of the documents.

Solicitor’s Certificates are often needed during time-sensitive transactions. To help move things along efficiently:

• Send the documents to your lawyer as early as possible – these documents can be long and complex, and your lawyer will need time to read and understand them;
• Provide supporting documents – including trust deeds, company constitutions, or related agreements if applicable;
• Clarify who the lawyer is advising – especially if there are multiple guarantors or borrowers, your lawyer may only be able to provide advice and the Solicitor’s Certificate for one party;
• Bring the required identification documents (such as your passport, driver licence, other id such as a Medicare Care) to your meeting.

Guarantees are common in both personal and commercial lending. Whether you’re helping your child into their first home, supporting your partner’s business, or acting as a director of a company, it’s essential that you understand exactly what you’re agreeing to.

Our role is to protect your legal interests and ensure you’re not taking on unintended risks. If you’ve been asked to act as a guarantor and obtain a Solicitor’s Certificate, please contact our Business Services team on 0746716000.