Independent Legal Advice requested by bank

Yesterday afternoon I was called by a couple in a common-law relationship who required independent legal advice for one of the partners.  They were hoping to get this done quickly.  Since I happened to be available I agreed to meet them later that afternoon at my North York office.

What they required was fairly simple.  The male partner was applying for a line of credit against a property owned by him and the bank required the female partner to sign a document certifying her approval with the encumbrance being placed on the property.  The bank, rightfully, required her to receive legal advice on how agreeing to this encumbrance would affect her legal interests in the property.  This is often referred to as independent legal advice since one of the parties’ would be receiving advice independent of the other.

On the surface, the requirement for her to receive such advice might seem odd – the couple was not married and the male partner wanted to put an encumbrance onto a property wholly owned by him.  What did the female partner have to do with the transaction?  The reason for the requirement is that, in the event of separation, the female partner could make a claim to possessory rights of the home.  While it’s true that equalization rights in a matrimonial home are not the same for common-law spouses, the potential for litigation is certainly there, and the bank was just looking to protect itself in the event of such litigation.

In providing this independent legal advice (which I did with the female partner in the absence of her common-law spouse), I did three things:

  1. I explained to her that I was acting as her counsel and that everything we discussed was protected by solicitor-client privilege.  If for whatever reason she did not wish to sign the agreement then I could not give the reason for her disagreement to any party.
  2. I explained that she may have a legal interest in the property and that, by agreeing to the line of credit, there would now be an encumbrance on this property.  While I did explain some general principles, I did not provide any advice on whether she actually had such an interest.  My job was to explain the potential.
  3. I verified her identity (through two pieces of government-issued photo identification) and executed the agreement by having her sign the document provided by the bank.

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