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Commercial Lending Opinion Letters: Rights, Obligations and Expectations

 

Understand the proper role of the legal opinion and develop techniques to minimize or eliminate unnecessary and wasteful contention.

Commercial lenders routinely require a borrower's lawyer to deliver a legal opinion at the closing of the loan transaction. The borrower has to pay for this but rarely believes that the exercise provides any benefit to the borrower. If the legal opinion is not negotiated until the end of the transaction, or if the borrower's lawyer and the lender's lawyer cannot agree on some element of the opinion, it often becomes a sticking point at the last minute, exacerbating the borrower's frustration. How should a borrower's lawyer deal with the opinion requirement to ensure that the process is handled efficiently and (relatively) inexpensively? This topic will help lawyers who engage in financing transactions, both on the lenders' and borrowers' side, understand the proper role of the legal opinion and develop techniques to minimize or, hopefully, eliminate unnecessary and wasteful contention over the issues that can arise if the process is not handled intelligently.