Scope and Elements of Opinion Letters


Summary

Lenders typically require that, as a condition to funding, borrower’s counsel deliver a legal opinion to the lenders stating, at a minimum, that the borrower exists as the legal entity it has represented itself to be, that the loan documents to be delivered by the borrower are within the borrower’s powers, have been duly authorized, executed and delivered by the borrower, and that such documents constitute legally valid and binding obligations of the borrower that are enforceable against the borrower. Because legal opinions express the professional judgment of the lawyer representing the borrower, such opinions provide credible, independent confirmation and assurance to the lenders that the matters covered in the opinions are true, and lenders place great reliance on this confirmation by borrower’s counsel. Opinions can also provide lenders with comfort that (1) there are no undisclosed facts or circumstances that are materially inconsistent with the terms of the transaction, since a ...