Guarantees — Checklist for advising guarantors

Introductory note:
It is common practice for lenders to require a guarantor seek and receive independent legal advice on the guarantee before execution of the guarantee. One of the lender’s requirements will be for the solicitor who provides the legal advice to sign a certificate (such as one title “certificate of independent legal advice”) confirming the advice given.
Legal practitioners should be aware that the professional representative body for legal practitioners in some jurisdictions provide declarations or certificates for legal practitioners to use when advising guarantors (see Director’s guarantee). For example:
	•	under the NSW Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 (former NSW Rule 58), r 11 prescribes a declaration in Sch 2 for use in NSW when a legal practitioner advises a guarantor; and
	•	the Law Institute of Victoria provides a certificate, “Australian Legal Practitioner’s Certificate 2” for use in certification where an individual is signing a guarantee for the principal borrower.
How to use this checklist
This checklist is not exhaustive. Legal practitioners should take into consideration matters such as the structure of the relevant financing transaction and the provisions in the financing documents, then adapt the checklist to suit.
Legal practitioners should be aware that certain legislation impose specific requirements on guarantee documentation (see The application of banking and other legislation in guarantees). An example of this is the National Consumer Credit Protection Act 2009 (Cth) (see National Consumer Credit Protection Act). The operation of the Banking Code of Practice also impacts on certain guarantees. See The application of the Banking Code of Practice in guarantees.

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