Pay Dirt Series – Why Independent Legal Advice?

You may have noticed a requirement for Independent Legal Advice for the borrower(s) on a mortgage commitment from a MIC.  There are 2 instances where you will see this.

Generally, in a MIC mortgage, the borrower is represented by a separate lawyer from the lender, so they are getting independent advice.

However, sometimes the borrowers need legal advice that is separate from each other.  For example where a spouse is a guarantor for a property that the other spouse uses in their business, or where the matrimonial home is being mortgaged and the funds will be used to benefit only one of the spouses.  Lenders want to know that the validity of their mortgage can’t be challenged on the grounds that one of the borrowers didn’t know (or understand the implications of) the terms of the mortgage.

If you see this in a Commitment, it’s a good idea to let the borrower know what it is, and why it’s in there.