This post explains the following:
- Who provides Independent Legal Advice
- When you may require it in a real estate transaction
- What you should expect after consulting a lawyer
Who Provides Independent Legal Advice (ILA)
Independent legal advice is provided by a lawyer (and sometimes a paralegal) who has no connection to the matter, the other parties, or the lawyers representing the parties in the transaction. The objective is to ensure you understand and appreciate the implications of your participation in the transaction. The lawyer must act without any bias or prejudice.
During the meeting with the lawyer, they will review the transaction, including any applicable agreements, and highlight key terms that will affect your rights and responsibilities. Additionally, the lawyer will confirm that you have the legal capacity to be involved in the transaction and are not acting under undue influence, coercion, or deception.
When an ILA is Required in a Real Estate Transaction
Obtaining an ILA is quite common in real estate transactions.
Under the Rules of Professional Conduct, ILA is recommended or required when a lawyer has a possible conflict of interest and requires the client’s consent to proceed, such as in a joint retainer, transactions with clients, and when the lawyer discovers an error or omission in discharging their duties to the client that cannot be easily rectified.
It is mandatory when the lawyer and their client (who is not a regulated lender) are parties to a transaction involving the lawyer borrowing from or lending to the client, or guaranteeing a loan to or from the client. In some instances, the Rules may even require the client to obtain independent legal representation, rather than just an ILA.
In a real estate transaction, a lender may require you to obtain Independent Legal Advice when you are granting security or indebting yourself, but will not directly benefit from the loan, for example:
- When you are a titleholder in the event of a reverse mortgage
- When you are a guarantor of a mortgage loan.
A lender may also require it when there is a possibility of coercion or undue influence, such as when the transaction involves your matrimonial home, and you are a non-title-holding spouse.
What to Expect After Consulting a Lawyer for Independent Legal Advice
The lawyer will issue you a Certificate of Independent Legal Advice after the consultation, confirming the following:
- You have consulted the lawyer for independent legal advice
- The nature of legal advice sought
- The lawyer’s independence, that is, the lawyer is not representing any of the parties in the transaction
- Your capacity to make the decision and your understanding of the nature and consequences of the decision being made
- The voluntariness of your decision.
The lawyer may require your signature on a copy of the certificate for their records.
Frequently Asked Questions about Independent Legal Advice
In Ontario, lawyers are strictly prohibited from representing two clients whose interests might conflict. If you guarantee a loan for someone else (even a spouse or child), you take on significant risk while they benefit. To ensure you aren't being pressured or misled, an unbiased lawyer—one who has no loyalty to the borrower or the bank— is required to explain the risks to you privately.
No. A lawyer providing ILA is legally required to verify that you understand the transaction. They must confirm that you know:
a. The Liability: You could lose your assets (e.g., your house or savings) if the borrower defaults.
b. The Nature of the Document: What exactly you are signing (e.g., a mortgage, a guarantee, a postponement of interest).
c. The Voluntariness: That you are not being forced, threatened, or unduly influenced by anyone to sign.
Under Ontario's Family Law Act, a married spouse has special rights to the "Matrimonial Home," even if their name isn't on the deed. Banks require you to sign (and often get an ILA) to ensure that if they need to foreclose on the property, you cannot claim spousal rights to stop them. You are essentially acknowledging that the bank's right to the money takes precedence over your right to the house.
It is typically a single meeting, lasting between 30 and 60 minutes. However, you must provide the lawyer with the documents in advance so they have time to review them before you arrive.
The person receiving the advice (you) is responsible for the fee. In some cases, such as corporate lending or private mortgages, the borrower may agree to reimburse the guarantor for this cost, but the invoice is issued to the person receiving the advice.
Yes, in most cases. Ontario law allows remote commissioning of documents, provided the lawyer uses specialized video-conferencing technology that meets Law Society standards for verifying your identity and ensuring you are not in the room with the person who may be pressuring you.
CoLex Legal would be pleased to provide advice about specific situations. CoLex Legal can provide and sign a certificate of independent legal advice for you. Call Emeka at 613-558-5363.
This post does not constitute legal advice or opinion. Please reach out if you have any questions.