Preparing Legal Opinions and Other Common Aspects of Opinion Practice

Summary

This practice note discusses the structuring and initial drafting of third-party closing opinion letters in financing transactions. Lenders typically require that, as a condition to funding, borrower's counsel deliver a legal opinion to the lenders. At a minimum, the opinion typically states 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. Lenders place great reliance on this confirmation by borrower's counsel.