Opinions of Counsel in Lending Transactions: Scope and Assumptions, Substantive Opinions, Qualifications

Description

In a typical commercial finance transaction, the lender requires the legal opinion of the borrower's counsel. The lender requires this opinion letter as part of its underwriting to support the legal premise underlying the transaction and related documents.

Although particular transactions sometimes require specialized opinions, all opinion letters in loan transactions include opinions that the borrower and other loan parties are entities that have been duly formed and are validly existing and have the requisite power and authority to perform their obligations under the transaction documents. These legal opinions also typically include opinions about the enforceability of the loan documents.

To serve the needs of the borrower and lender while protecting the attorney against potential liability, a well-written opinion letter describes the scope and limitations on the opinions rendered, the factual (and sometimes legal) assumptions underlying opinions, and qualifications to the opinions rendered. The content of an opinion letter depends largely on the legal and factual investigations performed by the opinion giver, guided by the requirements of the parties and customary practice by attorneys in the practice area.

Listen as our authoritative panel of finance attorneys discusses how to prepare and provide opinion letters in commercial finance transactions. The panel will review the risks and potential liabilities for the opinion giver, frequent points of negotiation, and best practices to reduce risk.