Securing a Loan
Securing a Loan
Perth Commercial & Corporate Lawyers
Are you looking borrow or lend money privately, whether to friends or family or a business associate, and need legal advice on how to secure a loan? West Perth Legal’s commercial lawyers can assist you with all legal aspects of secured lending and assist you with securing a loan. Our services include:
- Loan Agreements
- Legal advice on securing a loan
- Security Agreements
- Caveat or mortgage registration or removal
- Personal guarantee legal document
- Personal property security agreement and registration or removal
- Legal advice on competing interests with other lenders
West Perth Legal Advantage
Experienced Commercial Lawyers
Professionally Drafted Agreements
Price Certainty (Fixed Fees Where Possible)
Responsive Lawyers
Securing a Loan
A loan with security is where the borrower pledges assets as collateral for the loan. The collateral can be real estate, equipment, stocks, or other valuable assets. Some security permits the lender to seize and sell the collateral to recover the owed amount. Some other methods prevent the transfer of ownership in property without the lender’s consent, and some require a third party to guarantee a loan. These arrangements seek to reduce the lender's risk and can potentially allow the borrower to secure better loan terms.
Secured vs Unsecured Loan
An unsecured loan is where there is no security attached to the loan. In the event of default of an unsecured loan, the lender does not have direct recourse to the borrower’s assets and may have to take court action against the borrower to recover the loan. This is a costly and time-consuming process.
If a loan is secured, the lender may exercise its rights under the loan against assets secured against the loan. For example, if an asset is secured against the loan, the lender may take possession of the asset and sell it to repay the debt. Securing a loan will help increase the chance of a lender recovering its loan.
Legal Services for Securing a Loan
A loan agreement is a legal contract which sets out the terms to which a lender lends to a borrower. Even if you are lending privately to friends or family, it is always a good idea to document your loan via a legal loan agreement. This ensures that the parties are clear on the terms of the loan and help to avoid it being classified as a ‘gift’. Importantly, the parties can address whether a loan is secured or unsecured in a loan agreement.
Whether the loan is for personal or business purposes, our lawyers draft, review and negotiate loan agreements and provide advice that best protects your interest.
A lender may require the borrower to grant interest over personal property such as motor vehicle, equipment, business stock, intellectual property and shares. A security agreement will address the asset used as collateral under a loan, any restrictions on dealing with the asset throughout the duration of the loan, and what happens if the borrower defaults. A security agreement can be a general security agreement or a specific security agreement.
Our commercial lawyers provide legal advice on the suitability of a security agreement and assist with drafting general or specific security agreements.
Under the Personal Property Securities Register, registering the interest lets people know if personal property has security interest over them. For parties with a signed security agreement, it is vital that registration is completed within the statutory timeframe.
West Perth Legal assists the parties with registering security interest in assets under the Personal Property Securities Register as required under statutory timeframes.
A mortgage is a charge against a land. Where a loan is secured using a property, the lender has a mortgage against the property. When the borrower defaults on a loan, the lender may exercise the rights under the loan agreement and mortgage to sell the property to repay the loan. It is possible to have more than one mortgage over a property (second mortgage), which may be appropriate if there is already a mortgage on the property.
West Perth Legal prepares and registers mortgages and second mortgages.
A caveat is a caution or warning to the public that someone (the caveator) has legal interest or claim on a piece of land. It prohibits dealings (such as registering a new owner) on the property unless a notice has been given to the caveator or if the caveator consents. To register a caveat, you need to have a caveatable interest.
West Perth Legal provides legal advice to clients on caveatable interest, prepares caveat registration or removal of caveat.
A lender may require a related party of the borrower (such as mum & dad, shareholder or director of a company, trustee or appointers of a trust) to guarantee a loan. A guarantor promises to repay the loan if the borrower cannot, and often, the lender may receive interest in the guarantor’s asset as security. In the event of default, the lender can first enforce the guarantee against the guarantor to repay the loan.
West Perth Legal prepares personal guarantee documents and provides independent solicitor’s advice to guarantors of a loan.
Frequently Asked Questions
Commercial & Corporate Lawyers
We have helped hundreds of clients with their commercial legal needs. See our Commercial Law and Corporate Law pages for more information.
