Guaranteeing Your Guarantee Is Enforceable: ILA And Waiver

Many financing transactions utilize guarantees in support of commercial loans. It is often a requirement that guarantors either seek independent legal advice ("ILA") or agree to waive their right to receive it ("Waiver"). This article explores when the requirements for ILA or Waiver are commonly engaged in the context of financing transactions.

Two main circumstances demand ILA or a Waiver: 1) an individual non-spousal guarantor, and 2) a spousal guarantor.

1. The Individual Guarantor

Whether ILA is required or a Waiver can be obtained for an individual guarantor depends on several factors. First, when an individual is guaranteeing a loan for a corporation in which they have personal involvement, a Waiver may be obtained. We understand "personal involvement" to mean that the individual guarantor is involved in the everyday operations of the corporate borrower by being an active officer, director or shareholder, or maintains a role in managing its affairs (see: The