May 1, 2019
This article contains practical tips in the form of “do’s” and “don’ts” when rendering an opinion letter given in connection with a real estate transaction.
- Opinion letters subject the firm to liability – don’t sign one unless you are authorized (partner signature would normally be required).
- Opinion letters are subject to negotiation - don’t sign what is submitted to you without making appropriate changes (don’t be pressured by a client to sign a “bad” opinion letter just to get the deal closed).
- Opinion letters are “custom” – do make sure the terms match “the deal.”
- Opinion letters “assume” certain facts – do include all the appropriate “assumptions.”
- Opinion letters need to be “qualified” – do include all the appropriate “qualifications.”
- From a borrower’s counsel’s perspective, a well drafted opinion letter limits the opinions rendered – don’t give opinions without the limitations afforded by including appropriate “assumptions” and “qualifications.”
- Opinion letters rely upon verifications of many facts – do your “homework” (check with all in house attorneys with any information about the client (there is sometimes a disclaimer in an opinion letter as to the law firm only being obligated to check with those attorneys in the firm that would normally be expected to have information about that particular client); check the client’s governing documents; make sure there is an entity “consent” for the transaction with incumbency language; check with the Secretary of State, etc.).
*This article was originally published May 2012.
Margaret Shea Burnham concentrates her practice in the areas of commercial real estate transactions and litigation. She is a Board Certified Specialist in Real Property Law: Business, Commercial, and Industrial Transactions by the North Carolina State Bar and is a member of the American College of Real Estate Lawyers.