Independent Legal Advice for Guarantors on SMSF Loans

Below is a list of lawyers/solicitors who have provided SMSF loan guarantee advice to Grow SMSF customers.

Please note that the information below was correct at the time of publishing this article, however contact details, locations and approximate fees are subject to change.

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Guarantor advice is independent legal counsel provided to SMSF trustees acting as guarantors in a limited recourse borrowing arrangement (LRBA). It ensures trustees understand the personal risks involved, such as potential liability beyond the SMSF's assets if the loan defaults. Solicitors review loan documents, explain guarantee terms, and confirm the guarantor's informed consent.

SMSF lenders require this advice to comply with regulatory standards and mitigate disputes. Under Australian law, including SIS Act requirements, it protects both parties by verifying that guarantors are aware of implications like asset forfeiture or financial loss. This step reduces lender liability and promotes responsible borrowing.

Without guarantor advice, loans may be denied, as it demonstrates due diligence. Trustees benefit from clarity on how the LRBA structure limits recourse to the acquired asset, while personal guarantees expose individual assets.

It includes reviewing loan agreements, explaining personal guarantee risks, and ensuring trustees comprehend potential personal financial exposure in defaults.

To ensure compliance with superannuation laws, protect against claims of undue influence, and confirm guarantors make informed decisions.
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Sometimes, when an SMSF loan is being refinanced, the requirement for new guarantor advice may be waived where the borrower can show they previously received independent legal advice with the original loan was taken out.

Typically, the SMSF or trustees cover the solicitor's fees, which range from $400 to $1,500 depending on complexity.

No, advice must be independent to avoid conflicts; a separate solicitor is required for guarantors.
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Also, usually a the solicitor handling the conveyancing for the SMSF property purchase cannot also sign off on the guarantor advice. Needs to be done via an independent party.

Possibly. Check the specific requirements with your SMSF lender or mortgage-broker.
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Some lenders require wet-ink signed physical copies of the solicitors independent advice certificate to be posted to them.

Lenders may refuse the loan, as it's a key condition for approving SMSF LRBAs.

Not directly. Legal fees relating to independent legal advice for an SMSF loan usually form part of the borrowing costs for the loan and are amortised (written off) over a five year period.

Usually not because the lender requires a solicitors certificate. Some lenders, such as Firstmac for example, have the option of an accountant financial advice* certificate which Grow SMSF can sign off.
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​*It's not actually "financial advice", but advice around the guarantor conditions of the loan.