Commercial Loan Disputes: When does solicitor liability arise? Disputes 13th May 2026 Author Jessica Latimer High inflation and rising interest rates are increasing pressure on borrowers. At Moores, we have been seeing an increase in distressed loan enforcement matters including banks and private lenders actively pursuing borrowers and guarantors where commercial loans are distressed or in default. While distressed loans may appear to be an intractable situation, particularly where a mortgagee is in possession, there can be options to stave off the secured lender and/or pursue recovery action against third parties. Of course, for guarantors their personal assets can be at risk. In this article we discuss solicitors’ obligations when providing a certificate of independent legal advice. We have successfully pursued practitioners or joined them to lenders’ enforcement proceedings. What are solicitor’s certificates A solicitor’s certificate confirms that independent legal advice has been given before a loan, mortgage or guarantee is signed. Lenders generally want assurance that borrowers and guarantors have understood their obligations to minimise risks if the loan falls into default. Solicitors’ Rules govern the form of solicitors’ certificates. If the solicitor takes shortcuts in giving advice though, the lawyer who gave the advice might be liable for financial losses. It’s not just a quick signature There is a common misconception that a lawyer just needs to read through the legal fine print and witness a signature to provide a solicitors certificate but courts can expect more. A solicitors’ obligations turn on the scope of the retainer and that can extend to explaining the practical consequences of the legal obligations arising from the arrangements. Where legal and practical consequences of entering into a transaction may be significant, but can’t be assessed without further financial information, the solicitor may be obliged to counsel about risks of proceeding – including risking the loss of substantial assets. While a solicitors certificate follows, the advice given can require not only advising about the law but can extend to advising against a proposed transaction where the full legal ramifications or risks can’t be properly understood by a client. What to do when a loan is in default Borrowers and guarantors should not ignore a default or assume that no options are available to them. Urgent legal advice should be sought including on any potential injunctive relief, depending on the circumstances of the loan/guarantee being signed, as well as any claims for professional negligence. Where we have successfully pursued professional negligence claims against solicitors or joined the practitioner to loan enforcement proceedings, we have seen some of the below shortfalls giving rise to solicitor’s liability: The lawyer didn’t sufficiently explain the real-world risks – The solicitor issuing the certificate or guarantee must explain the real-world implications of signing if things go wrong and failure to warn that a guarantor could lose their house, or didn’t push them to get financial advice where the loan is high risk. A guarantee and mortgage was of no benefit to the guarantor: Typically, this occurs where an older parent or family member provides additional security for a loan – where a solicitor failed to make enquiries about the purpose of the loan, and the benefit to the guarantor. The lawyer acted for both the borrower and the guarantor: Lawyers shouldn’t act for both the person getting the money and the person putting up their house as security. If the advice wasn’t truly independent, the lender will have a much harder time relying on the certificate to enforce the guarantee. Was there a language barrier but no effort to involve an interpreter? If your client doesn’t speak fluent English, the Solicitors Rules require an independent interpreter to be in the room and to sign a specific certificate. Even if the solicitor’s certificate is translated, but the solicitor didn’t actually advise the guarantor of the consequences of signing in their native language, the guarantee can be thrown out. The bottom line Notices of default or enforcement action by a lender is not necessarily the end of the road for distressed borrowers or guarantors being pursued. If your client receives a demand, start to gather documents relating to the guarantee or loan, advise your client not to immediately comply and seek an urgent referral to a specialist lawyer. How we can help Our Disputes Team can provide early advice on distressed loans to enable borrowers or guarantors to decide whether to consider alternative courses of action including pursuing professional negligence claims where poor legal advice has cost your clients. There are not always other options and we give frank and pragmatic advice if further action is simply throwing good money after bad. We assist clients to make informed decisions whatever the circumstances. Contact us Please reach out to our team for a discussion about how we can help your clients manage and defend lenders’ enforcement action. Please contact us for more detailed and tailored help. Subscribe to our email updates and receive our articles directly in your inbox. Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.