Inclusive Real Estate Secured Transaction
Opinion
In Which
are Incorporated the Principal Concepts
of
The ABA
Section of Business Law
Legal Opinion Accord
and
The ABA
Section of Real Property,
Probate and Trust Law
and
The American College
of Real Estate Lawyers
Report on Adaptation
of the Legal Opinion Accord
A REPORT OF THE JOINT
ABA/ACREL COMMITTEE COMPRISING:
The American Bar Association,
Section of Real Property, Probate and Trust Law, Committee
on Legal Opinions in Real Estate Transactions, Subcommittee
on Creation of an Inclusive Opinion: David
L. Miller, Washington, D.C., Co-Chair; Mark R. Spradling,
Houston, Texas, Co-Chair; Benson Joel Barr, Southfield,
Michigan; Gurdon H. Buck, Hartford, Connecticut; Frederic
W. Clark, Philadelphia, Pennsylvania; Dianne S. Coscarelli,
Cleveland, Ohio; William B. Dunn, Detroit, Mi chigan; Kenneth
P. Ezell, Jr., Nashville, Tennessee; Timothy W. Grooms,
Little Rock, Arkansas; Karl B. Holtzschue, New York, New
York; Raymond Iwamoto, Honolulu, Hawaii; Thelma Rivera-Miranda,
Hato Rey, Puerto Rico; Robert A. Thompson, San Francisco,
California; and William L. Thompson, Jacksonville, Florida;
and
AMERICAN COLLEGE OF
REAL ESTATE LAWYERS ATTORNEYS’ OPINIONS COMMITTEE:
Edward J. Levin, Baltimore, Maryland, Chair;
Portia O. Morrison, Chicago, Illinois, Co-Vice Chair; Charles
S. Sokoloff, Smithfield, Rhode Island, Co-Vice Chair; Robert
A. Thompson, San Francisco, California, Co-Vice Chair; Charles
H. Andresen, Duluth, Minnesota; David C. Auten, Philadelphia,
Pennsylvania; Drake M. Batchelder, Ft. Lauderdale, Florida;
Wm. Terry Bray, Austin, Texas; Stephen A. Bromberg, Birmingham,
Michigan; Gurdon H. Buck, Hartford, Connecticut; Mert F.
Buckley, Wichita, Kansas; James A. Cole, Baltimore, Maryland;
William B. Dunn, Detroit, Michigan; A. James Elliott, Atlanta,
Georgia; K. Gregory Erwin, Houston, Texas; Howard M. Feuerstein,
Portland, Oregon; Joseph Finley, Minneapolis, Minnesota;
W. Bebb Francis, III, San Antonio, Texas; Catherine T. Goldberg,
Albuquerque, New Mexico; Martin Gottlieb, Boston, Massachusetts;
Donald J. Gralen, Chicago, Illinois; Samuel F. Hatcher,
Atlanta, Georgia; Robert O. Hetlage, St. Louis, Missouri;
Karl B. Holtzschue, New York, New York; John B. Hood, Rochester,
New York; Morris C. Kellett, Philadelphia, Pennsylvania;
Henry M. Kittleson, Lakeland, Flori da; Daniel L. Klein,
Wilmington, Delaware; Michael Levin, Hartford, Connecticut;
Timothy Martin, Louisville, Kentucky; Thomas A. Mason, Cleveland,
Ohio; William L. McCown, Milwaukee, Wisconsin; K.C. McDaniel,
New York, New York; Russell A. McNair, Jr., Detroit, Michigan;
O’Malley M. Miller, Los Angeles, California; Allan
E. Mulligan, Bloomington, Minnesota; J. Fred Powell, Birmingham,
Alabama; Laurence G. Preble, New York, New York; Myrna Putziger,
Boston, Massachusetts; Susan M. Reid, San Franciso, Califor
nia; Richard L. Reppert, Cleveland, Ohio; Leon J. Reymond,
Jr., New Orleans, Louisiana; Thomas G. Roberts, Los Angeles,
California; James Rosenbloom, Chicago, Illinois; Stanley
M. Samuels, Portland, Oregon; Richard W. Scarritt, Kansas
City, Missouri; Leopold Z. Sher, New Orleans, Louisiana;
David S. Sidor, Columbus, Ohio; Gary A. Taback, Southfield,
Michigan; Courtland Traver, McLean, Virginia; Ira J. Waldman,
Los Angeles, California; James H. Wallenstein, Dallas, Texas;
James G. Wheeler, Jr., St. Johnsbury , Vermont; and Jeffrey
P. Zucker, Las Vegas, Nevada.
Inclusive
Real Estate Secured Transaction Opinion
I. INTRODUCTION
The ABA Legal Opinion
Accord and the report of which it is a part are impressive
in many ways, and have received some acceptance, but they
have yet to become the nationwide standard that their authors
had hoped. Particularly given the availability of state
bar associa tion reports in many jurisdictions, practitioners
have evidenced mixed responses to learning a new body of
legal opinion practices. This is at least in part because
the Accord looks and perhaps is difficult to master and
the Accord omits coverage of many substantive areas common
to legal opinions in real estate transactions.
To address at least
the latter issue, a joint committee of the ABA and the American
College of Real Estate Lawyers published a report adapting
the Accord for loans secured by r eal property. But, if
the Accord is difficult to master, it is even a more challenging
task to achieve a clear and comprehensive knowledge of how
the Accord works as supplemented—and modified—by
the ABA/ACREL Report.
The principal goal
of this report is to facilitate understanding of the ABA
Business Law Report (including the Accord) and the ABA/ACREL
Report (collectively, the "Opinion Reports").
II. FALSE BREVITY
One of the fundamental
approaches of the Accord, which t he ABA/ACREL Report also
follows, is that each legal opinion letter that is to be
governed by the Accord (or the Accord as modified and supplemented
by the ABA/ACREL Report) will incorporate those documents
by reference. This would result in very short opinion letters,
and in the ability to quickly check any variations between
a given opinion letter and the Accord or the ABA/ACREL Report.
While brevity undoubtedly
is a virtue (and is the soul of wit), this brevity is only
skin deep. Behind the shor t-form of Accord opinion lies
a complex set of code-like and specific interpretive rules
that have no history of interpretation by courts. No attorney
will or should give or receive an opinion that incorporates
the Accord or the ABA/ACREL Report without being sufficiently
comfortable that he or she understands those documents and
how they are likely to be interpreted in the future. Few
have achieved this level of comfort.
III. INCLUSIVE OPINION
FORM
Despite these d ifficulties,
we believe that the goals of the Opinion Reports are worth
pursuing and that these publications are worth understanding.
The Joint Committee
believes that it would enhance the understanding of the
Opinion Reports if we could show how an opinion might look
if it included the principal concepts contained in these
two published opinion letter reports, without specifically
referring to them; that is, a kind of one stop shopping.
The form of opinion letter which follows this brief introducti
on attempts to do just that for real estate loans, the most
common kind of real estate transactions giving rise to third-party
legal opinion letters.
This form of opinion
letter is intended primarily to serve an educational purpose,
not to serve as a model. We also recognize that this form
of opinion is not the only way to set forth the positions
stated in the Opinion Reports. This form of opinion letter
perhaps gives rise to the opposite of the risk of false
brevity, the risk of false comprehensive ness; nor does
this form expressly cover each principle stated in the Opinion
Reports. Finally, both the Opinion Reports permit private
ordering between the parties to each transaction, the use
of which would result in changes to the opinions, assumptions
and other qualifications in this form.
The Opinion Reports
both are useful and constitute significant progress toward
achievement of a national consensus for real estate opinion
practice. We intend through this "inclusive" form
of opinion letter to enhance understanding of the meaning
of the Opinion Reports.
INCLUSIVE REAL ESTATE
SECURED TRANSACTION OPINION
[date]
[Name and Address
of Opinion Recipient]
Re: $[__________] Loan
(the "Transaction") from [_____________________]
("Lender") to [________________________]
(the "Client")
Ladies and Gentlemen:
We provide this Opinion
Letter to you at the request of the above referenced Client
pursuant to Section [_____] of the [Agreement] described
below.
I.
BACKGROUND
1.1 Documents Reviewed.
We have acted as [special] counsel to the Client in connection
with the preparation of the following documents relating
to the Transaction:
(a) Promissory
Note dated as of ____________, made by the Client
(the "Note").
(b) [Mortgage/Deed
of Trust/Deed to Secure Debt] dated as of __________,
executed by the Client (the "Mortgage")
with respect to certain property including real
property located at ______________________ (the
"Real Property").
(c) Assignment
of Leases and Rents dated as of ________, executed
by the Client (the "Assignment of Leases").
(d) Security
Agreement dated as of __________, executed by
the Client (the "Security Agreement").
(e) Loan
Agreement dated as of ____________, executed
by the Client and Lender (the "Agreement").
(f) [[Two]
unfiled] Uniform Commercial Code Financing Statements
executed by the Client (the "Financing
Statements").
1.2 Transaction
Documents. The documents described in items (a) through
(e) above are referred to in this Opinion Letter as the
"Transaction Documents." The Transaction
Documents described in items (b) through (d) above are referred
to in this letter as the "Security Documents."
All property described in any of the Security Documents
in respect of which provision is made by the Security Documents
for a lien or security interest is referred to in this Opinion
Letter as the "Collateral." Except as otherwise
indicated herein, capitalized terms used in this Opinion
Letter are defined as set forth in the Agreement or the
Glossary attached to this Opinion Letter.
1.3 Opining Juri
sdiction. The Law (as defined in the attached
Glossary) covered by the opinions expressed in this Opinion
Letter is limited to the Law of the State of [_____] (the
"State")[, and the General Corporation
Law of the State of Delaware ]. Except as set forth in Paragraphs
2.1 and 2.2 below, we express no opinion concerning the
Laws of any other jurisdiction, [the other Laws of Delaware,]
or the effect thereof.
1.4 Scope of Review.
In connection with the opinions hereinafter set forth, we
have limited the scope of our review of the documents related
to the Transaction to [originals/photocopies of] the Transaction
Documents and the Financing Statements. In addition, in
connection with the opinions hereinafter set forth, we have
reviewed such other documents and certificates of public
officials and certificates of representatives of the Client,
and have given consideration to such matters of law and
fact, as we have deemed appropriate, in our professional
judgment, to render such op inions.
1.5 Reliance Without
Investigation. We have relied, without investigation
or analysis, upon information in Public Authority Documents
(as defined in the attached Glossary). Except to the extent
the information constitutes a statement, directly or in
practical effect, of any legal conclusion at issue, we have
relied, without investigation or analysis, upon the information
contained in representations made by the Client in [Sections
____of] the Agreement and on information provi ded [by officials
of the Client] [in certificates of officers of the Client],
which we reasonably believe, in each case, to be an appropriate
source for the information. Except to the extent the information
constitutes a statement, directly or in practical effect,
of any legal conclusion at issue, we have relied, without
investigation or analysis, upon information provided to
us by Lender, as set forth in [________].
1.6 Opinions of
Other Counsel. We note that various issues concerning
[ specify legal issues] are addressed in the opinion of
[_______________] (the "Other Counsel"),
separately provided to Lender. [In rendering the opinions
set forth below, we have relied upon the information contained
in such opinion of the Other Counsel without investigation
or analysis, and we express no opinion with respect to those
matters.]
II.
OPINIONS
Based upon and subject
to the foregoing and to the qualification s set forth below,
we are of the opinion that:
2.1 Status.
The Client is a [corporation], validly existing in good
standing in its jurisdiction of organization.
2.2 Authorization.
All actions or approvals by the Client, and its [shareholders],
necessary to bind the Client under the Transaction Documents
have been taken or obtained.
2.3 Execution.
The Client has duly executed and delivered the Transaction
Documents and the Financing Statements for valid consideration.
2.4 Remedies Opinion.
The Transaction Documents are legal, valid, binding and
enforceable against the Client in accordance with their
terms. [That is, under the law of contracts of the Opining
Jurisdiction, and other laws of the Opining Jurisdiction
that we, in the exercise of customary professional diligence
would reasonably recognize as being directly applicable
to the Client, the Transaction, or both: the Transaction
Documents form a contract; a remedy will be available with
respect to each agreement of the Client in the Transaction
Documents or such agreement will otherwise be given effect;
and any remedy expressly provided for in the Transaction
Documents will be given effect as stated.]
2.5 Form of Security
Documents. The Security Documents are in a form sufficient
to create a lien on or security interest in all right, title
and interest of the Client in the Collateral, except to
the extent the Collateral includes items or types of P
ersonal Property (as defined in the attached Glossary)
in which a security interest cannot be created under Article
9 of the Uniform Commercial Code.
2.6 Usury Opinion.
Assuming that no fees, charges, benefits, or other compensation
will be paid, directly or indirectly to Lender or for Lender’s
benefit, except as specified in the Transaction Documents,
and assuming that no amounts to be paid as specified in
the Transaction Documents constitute a penalty, the Transaction,
as eviden ced by the Transaction Documents, does not violate
the usury laws of the State.
2.7 No Breach or
Default Opinion. Execution and delivery by the Client
of, and performance of its agreements in, the Transaction
Documents do not (i) violate the [articles or certificate
of incorporation or bylaws; partnership agreement or certificate]
of the Client, (ii) [to the best of our Actual Knowledge
(as defined in the attached Glossary)], breach, or result
in a default under, any existing o bligation of the Client
under the Other Agreements specified in Attachment [__]
hereto (the "Specified Other Agreements"),
or (iii) [to the best of our Actual Knowledge] breach or
otherwise violate any existing obligation of the Client
under any Court Order which is identified in Attachment
[__] hereto (the "Specified Court Orders"),
which the Client has certified to us are the only Court
Orders. Our Opinion in this Paragraph does not extend to
any action or conduct of the Client that a Transa ction
Document may permit but does not require, except to the
extent that (i) such action or conduct takes place simultaneously
with, and (ii) we had Actual Knowledge that it constituted
part of, the consummation of the Transaction.
2.8 No Violation
of Law Opinion. Execution and delivery by the Client
of, and performance by the Client of its payment obligations
in, the Transaction Documents neither are prohibited by
applicable provisions of statutory law or regulation of
the State nor subject the Client to a fine, penalty or other
similar sanctions under, any statutory law or regulation
of the State. Our opinion in this Paragraph relates only
to statutory laws and regulations that we, in the exercise
of customary professional diligence, would reasonably recognize
as being directly applicable to the Client, the Transaction,
or both.
III.
QUALIFICATIONS
Notwithstanding any
provision in this Opinion Letter to the contrary, the foregoing
opinions are subject to the following additional qualifications:
3.1 Assumptions.
In rendering the foregoing opinions, we have relied, without
investigation, upon the assumptions set forth below unless
in a given case the particular assumption states, directly
or in practical effect, a legal conclusion expressed in
the opinion:
(a) [A
Client who is a natural person, and] natural
persons who are involved on behalf of the Client,
have sufficient legal capacity to enter into
and perform the Transaction or to carry out
their role in it.
(b) The
Client holds the requisite title and rights
to any property involved in the Transaction.
(c) Each
party to the Transaction (other than the Client)
has satisfied those legal requirements that
are applicable to it to the extent necessary
to make the Transaction Documents enforceable
against it.
(d) Each
party to the Transaction (other than the Client)
has complied with all legal requirements pertaining
to its status as such status relates to its
rights to enforce the Transaction Documents
against the Client.
(e) Each
document submitted to us for review is accurate
and complete, each such document that is an
original is authentic, each such document that
is a copy conforms to an authentic original,
and all signatures on each such document are
genuine.
(f) Each
Public Authority Document is accurate, complete,
and authenti c and all official public records
(including their proper indexing and filing)
are accurate and complete.
(g) There
has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence.
(h) The
conduct of the parties to the Transaction has
complied with any requirement of good faith,
fair dealing and conscionability.
(i) Lender
and any agent acting for Lender in connection
with the Transaction have acted in good faith
and without notice of any defens e against the
enforcement of any rights created by, or adverse
claim to any property or security interest transferred
or created as part of, the Transaction.
(j) There
are no agreements or understandings among the
parties, written or oral, and there is no usage
of trade or course of prior dealing among the
parties that would, in either case, define,
supplement or qualify the terms of the Transaction
Documents.
(k) All
statutes, judicial and administrative decisions,
and rules and regul ations of governmental agencies,
constituting the Law of the Opining Jurisdiction
are generally available (i.e., in terms of access
and distribution following publication or other
release) to lawyers practicing in the Opining
Jurisdiction, and are in a format that makes
legal research reasonably feasible.
(l) The
constitutionality or validity of a relevant
statute, rule, regulation or agency action is
not in issue unless a reported decision in the
Opining Jurisdiction has specifically addressed
b ut not resolved, or has established, its unconstitutionality
or invalidity.
(m) Other
Agreements and Court Orders (as such
terms are defined in the attached Glossary)
would be enforced as written.
(n) The
Client will not in the future take any discretionary
action (including a decision not to act) permitted
under the Transaction Documents that would result
in a violation of law or constitute a breach
or default under any Other Agreement or Court
Order.
(o) The
Client will obtain all permits and governmental
approvals required in the future, and take all
actions similarly required, relevant to subsequent
consummation of the Transaction or performance
of the Transaction Documents.
(p) All
parties to the Transaction will act in accordance
with, and will refrain from taking any action
that is forbidden by, the terms and conditions
of the Transaction Documents.
(q) The
Security Documents have been or will be duly
recorded and/or filed in all plac es necessary
(if and to the extent necessary) to create
the lien as provided therein.
(r) The
description of the Collateral is accurate and
is sufficient under Law (i) to provide notice
to third parties of the liens and security interests
provided by the Security Documents and (ii)
to create an effective contractual obligation
under Law.
We have no Actual Knowledge
that the foregoing assumptions are false. We have no Actual
Knowl edge of facts that, under the circumstances, would
make our reliance on the foregoing assumptions unreasonable.
3.2 Exclusions.
None of the foregoing opinions include any implied opinion
unless such implied opinion is both (i) essential to the
legal conclusion reached by the express opinions set forth
above and (ii) based upon prevailing norms and expectations
among experienced lawyers in the State, reasonable in the
circumstances. Moreover, unless explicitly addressed in
this Opinion Letter, the foregoing opinions do not address
any of the following legal issues, and we specifically express
no opinion with respect thereto:
(a) Federal
securities laws and regulations administered
by the Securities and Exchange Commission (other
than the Public Utility Holding Company Act
of 1935), state "Blue Sky" laws and
regulations, and laws and regulations relating
to commodity (and other) futures and indices
and other similar instruments;
(b) Federal Reserve Board margin regulations;
(c) pension
and employee benefit laws and regulations (e.g.,
ERISA);
(d) Federal
and state antitrust and unfair competition laws
and regulations;
(e) Federal
and state laws and regulations concerning filing
and notice requirements (e.g., Hart-Scott-Rodino
and Exon-Florio), other than requirements applicable
to charter-related documents such as a certificate
of merger;
(f) compliance
with fiduciary du ty requirements;
(g) Local
Law;
(h)
(i)
the characterization of the Transaction
as one involving the creation of a lien
on Real Property or a security interest
in Personal Property except to the extent
that the enforceability of remedies against
the Client set forth in the Transaction
Documents is dependent on the characterization
of the Transaction expressed by the parties
to it;
(ii)
title to Collateral or the accuracy of its
description;
(iii
) the sufficiency of the description of
the Collateral to provide notice to third
parties of the lien or security interest
provided for in the Security Documents;
and
(iv)
the creation, attachment, perfection, or
priority of a lien on Real Property Collateral
or a security interest in Personal Property
Collateral, or enforcement of a security
interest in Personal Property Collateral
separately from enforcement of the lien
on Real Property Collateral as contemplated
by §9-501([4] or [d]) of the Uniform Commercial
Code.
(i) fraudulent
transfer and fraudulent conveyance laws;
(j) Federal
and state environmental laws and regulations;
(k) Federal
and state land use and subdivision laws and
regulations;
(l) Federal
and state tax laws and regulations;
(m) Federal
patent, copyright and trademark, state trademark,
and other Federal and state intellectual property
laws and regulations;
(n) Federal
and state racketeering law s and regulations
(e.g., RICO);
(o) Federal
and state health and safety laws and regulations
(e.g., OSHA);
(p) Federal
and state labor laws and regulations;
(q) Federal
and state laws, regulations and policies concerning
(i) national and local emergency, (ii) possible
judicial deference to acts of sovereign states,
and (iii) criminal and civil forfeiture laws;
and
(r) other
Federal and state statutes of general application
to the extent they provide for criminal prosecution
(e.g., mail fraud and wire fraud statutes).
3.3 Bankruptcy and
Insolvency Exception. The opinion set forth in Paragraph
[2.4] of this Opinion Letter is subject to the following
qualifications: The effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting
the rights and remedies of creditors generally. This exception
includes:
(a) the
Federal Bankruptcy Code and thus comprehends,
among others, matters of turn-over, automatic
stay, avoiding powers, fraudulent transfer,
preference, discharge, conversion of a non-recourse
obligation into a recourse claim, limitations
on ipso facto and anti-assignment clauses
and the coverage of pre-petition security agreements
applicable to property acquired after a petition
is filed;
(b) all
other Federal and state bankruptcy, insolvency,
reorganization, rece ivership, moratorium, arrangement
and assignment for the benefit of creditors
laws that affect the rights and remedies of
creditors generally (not just creditors of specific
types of debtors);
(c) all
other Federal bankruptcy, insolvency, reorganization,
receivership, moratorium, arrangement, and assignment
for the benefit of creditors laws that have
reference to or affect generally only creditors
of specific types of debtors and state laws
of like character affecting generally only creditors
of financial institutions and insurance companies;
(d) state
fraudulent transfer and conveyance laws; and
(e) judicially
developed doctrines relevant to any of the foregoing
laws, such as substantive consolidation of entities.
3.4 Equitable Principles
Limitation. The opinion set forth in Paragraph [2.4]
of this Opinion Letter is subject to the following qualifications:
The effect of general principles of equity, whether applied
by a court of law or equity. This limitation includes principles:
(a) governing
the availability of specific performance, injunctive
relief or other equitable remedies which generally
place the award of such remedies, subject to
certain guidelines, in the discretion of the
court to which application for such relief is
made;
(b) affording
equitable defenses (e.g., waiver, laches
and estoppel) against a party seeking enforcement;
(c) requiring
good faith and fair dealing in the performance
and enforcement of a contract by the party seeking
its enforcement;
(d) requiring
reasonableness in the performance and enforcement
of an agreement by the party seeking enforcement
of the contract;
(e) requiring
consideration of the materiality of (i) the
Client’s breach and (ii) the consequences
of the breach to the party seeking enforcement;
(f) requiring
consideration of the impracticability or impos
sibility of performance at the time of attempted
enforcement; and
(g) affording
defenses based upon the unconscionability of
the enforcing party’s conduct after the
parties have entered into the contract.
3.5 Other Common
Qualifications. The opinion set forth in Paragraph [2.4]
of this Opinion Letter is subject to the following qualifications:
To the extent the Law of the State applies any of the following
rules to one or more of the [identify state law provisions]
[provisions of the Transaction Documents] covered by an
opinion to which this Paragraph [3.5] applies, that opinion
is subject to the effect of generally applicable rules of
Law that:
(a) limit
or affect the enforcement of provisions of a
contract that purport to require waiver of the
obligations of good faith, fair dealing, diligence,
and reasonableness;
(b) provide
that forum selection clauses in contra cts are
not necessarily binding on the court(s) in the
forum selected;
(c) limit
the availability of a remedy under certain circumstances
where another remedy has been elected;
(d) limit
the right of a creditor to use force or cause
a breach of the peace in enforcing rights;
(e) relate
to the sale or disposition of collateral or
the requirements of a commercially reasonable
sale, including, without limitation, statutory
cure provisions and rights of reinstatement
[and limita tions on deficiency judgments];
(f) limit
the enforceability of provisions releasing,
exculpating or exempting a party from, or requiring
indemnification of a party for, liability for
its own action or inaction, to the extent the
action or inaction involves gross negligence,
recklessness, willful misconduct or unlawful
conduct;
(g) may,
where less than all of a contract may be unenforceable,
limit the enforceability of the balance of the
contract to circumstances in which the unenforc
eable portion is not an essential part of the
agreed exchange;
(h) govern
and afford judicial discretion regarding the
determination of damages and entitlement to
attorneys’ fees and other costs;
(i) may,
in the absence of a waiver or consent, discharge
a guarantor to the extent that (i) action by
a creditor impairs the value of collateral securing
guaranteed debt to the detriment of the guarantor,
or (ii) guaranteed debt is materially modified;
(j) may
permit a party who ha s materially failed to
render or offer performance required by the
contract to cure that failure unless (i) permitting
a cure would unreasonably hinder the aggrieved
party from making substitute arrangements for
performance, or (ii) it was important in the
circumstances to the aggrieved party that performance
occur by the date stated in the contract;
(k) limit
or affect the enforceability of a waiver of
a right of redemption;
(l) impose
limitations on attorneys’ or trustees’
fees;
(m) limit
or affect the enforceability of any provision
that purports to prevent any party from becoming
a mortgagee in possession, notwithstanding any
enforcement actions taken under the Security
Documents; and
(n) limit
or affect the enforceability of provisions for
late charges, prepayment charges or yield maintenance
charges, acceleration of future amounts due
(other than principal) without appropriate discount
to present value, liquidated damages and "penalties."
3.6 Generic Qualification.
The opinion set forth in Paragraph [2.4] of this Opinion
Letter is subject to the qualification that certain [remedies,
waivers, and other] provisions of the Transaction Documents
may not be enforceable; nevertheless, [subject to the
other qualifications set forth in this Opinion Letter,]
such unenforceability will not render the Transaction
Documents invalid as a whole or preclude (i) the judicial
enforcement of the obligation of the Client to repay the
principal, together with interest thereon (to the extent
not deemed a penalty) as provided in the Note, (ii) the
acceleration of the obligation of the Client to repay
such principal, together with such interest, upon a [material]
default by the Client in the payment of such principal
or interest [or upon a [material] default in any other
material provision of the Transaction Documents],
and (iii) the foreclosure in accordance with applicable
Law of the lien on and security int erest in the Collateral
created by the Security Documents upon maturity or upon
acceleration pursuant to clause (ii) above.
3.7 Choice of
Law. The opinion set forth in Paragraph [2.4] of this
Opinion Letter is given as if the Law of the Opining Jurisdiction
governs each Transaction Document, without regard to whether
the Transaction Document so provides, and without regard
to any choice of law rules except as provided below in
this Paragraph. While the preceding sentence excludes
any o pinion on the effectiveness of any governing law
provision in the Transaction Documents, if a Transaction
Document contains a governing law provision choosing the
Law of the Opining Jurisdiction to govern the contract,
the opinion set forth in Paragraph [2.4] of this Opinion
Letter includes an opinion (subject to the other qualifications
in this Part III) that such governing law provision choosing
the Law of the Opining Jurisdiction will be given effect
under the choice of law rules of the Opining Jurisdict
ion; however, the opinion set forth in Paragraph [2.4]
of this Opinion Letter does not include an opinion as
to what Law governs (i) if the Transaction Document contains
a governing law provision choosing the Law of an Other
Jurisdiction (as defined in the attached Glossary)
or does not contain a governing law provision, or (ii)
to the extent the opinion as to what Law governs requires
a determination that the Law of the Opining Jurisdiction
is not contrary to a fundamental policy of the Law of
an Ot her Jurisdiction.
IV.
ADDITIONAL CONFIRMATIONS
4.1 Legal Proceedings.
We hereby confirm to Lender, pursuant to the request set
forth in Section [___] of the Agreement, but without investigation,
analysis, or review of court or other public records or
our files, other than our litigation docket and information
provided to us by the Client, that there are no actions
or proceedings against the Client, pending or overtly
threatened in writing, before any court, governmental
agency or arbitrator which (i) seek to affect the enforceability
of the Agreement, or (ii) except as disclosed in [the
Agreement or an exhibit, annex or schedule thereto] [an
officer’s certificate], come within [the objective
standard established in the Agreement for disclosure of
such matters] [other objective threshold].
V.
USE OF THIS OPINION
5.1 The opinions
ex pressed in this Opinion Letter are solely for Lender’s
use in connection with the Transaction for the purposes
contemplated by the Transaction Documents. Without our
prior written consent, this Opinion Letter may not be
used or relied upon by Lender for any other purpose whatsoever,
except for the use of this Opinion Letter (i) in connection
with review of the Transaction by a regulatory agency
having supervisory authority over Lender for the purpose
of confirming the existence of this Opinion Letter, (ii)
in connection with the assertion of a defense as to which
this Opinion Letter is relevant and necessary, or (iii)
in response to a court order.
Very truly yours,
GLOSSARY
As used in the Opinion
Letter to which this Glossary is attached, except as otherwise
defined in such Opinion Letter, the following terms (whether
used in the singular or the plural) shall have the meanings
indicated:
Actual Knowledge:
with respect to the Opinion Giver, the conscious awareness
of facts or other information by the Primary Lawyer or
Primary Lawyer Group.
Client: the
party or parties to the Transaction (including predecessor
entities where relevant) for which the Opinion Giver provides
legal representation.
Collateral:
collectively or individually, all Real Property described
in the Security Documents and all Personal Property described
in the Security Documents, in respect of which provision
is made by the Securi ty Documents for a lien or security
interest, unless a different meaning is given in the Transaction
Documents.
Constituent Documents:
the articles or certificate of incorporation, by-laws,
partnership documentation or similar organization documents
of the Client.
Court Orders:
court and administrative orders, writs, judgments and
decrees that name the Client and are specifically directed
to it or its property.
Law: the statutes,
the judicial and administrative d ecisions, and the rules
and regulations of the governmental agencies of the Opining
Jurisdiction, including its Local Law (but subject to
any limitations on coverage of Local Law set forth in
the Opinion Letter to which this Glossary is attached).
Local Law:
the statutes and ordinances, the administrative decisions,
and the rules and regulations of counties, towns, municipalities
and special political subdivisions (whether created or
enabled through legislative action at the Federal, state
or regional level -- e.g., water agencies, joint
power districts, the Maine Turnpike Authority, The Southern
California Rapid Transit District, the Port Authority
of New York and New Jersey), and judicial decisions to
the extent that they deal with any of the foregoing.
Opining Jurisdiction:
a jurisdiction whose applicable Law is addressed by the
Opinion Giver in the Opinion; if there is more than one
such jurisdiction (e.g., the United States and
a particular state), th e term refers collectively to
all.
Opinion: a
legal opinion that [includes a declaration that it is
governed by the Accord and] is rendered by the Opinion
Giver to one or more persons involved in the Transaction
other than the Client.
Opinion Giver:
the lawyer or legal organization rendering the Opinion.
Opinion Letter:
the document setting forth the Opinion that is delivered
to and accepted by the Opinion Recipient.
Opinion Recipient:
the address ee or addressees of the Opinion Letter.
Other Agreements:
contracts, other than the Transaction Documents, to which
the Client is a party or by which it or its property is
bound.
Other Counsel:
a lawyer or legal organization (other than the Opinion
Giver) providing a legal opinion pertaining to particular
matters concerning the Client, the Transaction Documents
or the Transaction (i) directly to the Opinion Recipient,
or (ii) to the Opinion Giver in support of the Opi nion.
Other Jurisdiction:
the jurisdiction whose law a Transaction Document provides
will govern that contract, if not the Opining Jurisdiction.
Personal Property:
property or rights and interests in property treated under
Law as personalty or otherwise not as Real Property.
Primary Lawyer:
(a) the
lawyer in the Opinion Giver’s organization
who signs the Opinion Letter;
(b) any
lawyer in the Opinion Giver’s organization
who has active involvement in negotiating
the Transaction, preparing the Transaction
Documents or preparing the Opinion Letter;
and
(c) solely
as to information relevant to a particular
opinion issue or confirmation regarding a
particular factual matter (e.g., pending
or threatened legal proceedings), any lawyer
in the Opinion Giver’s organization who
is primarily responsible for providing the
response concerning that particular opinion
issue or confirmation.
Primary Lawyer
Group: all of the Primary Lawyers when there are more
than one.
Public Authority
Documents: certificates issued by the Secretary of
State or any other government official, office or agency
concerning a person’s property or status, such as
certificates of corporate or partnership good standing,
certificates concerning tax status, certificates concerning
Uniform Commercial Code filings or certificates concerning
title registra tion or ownership.
Real Property:
property or rights and interests in property treated under
Law as real property, including fixtures.
[Security Documents:
mortgages, deeds of trust, security agreements, assignments
of leases, rents or both (regardless of whether stated
as absolute or as a security assignment), or similar instruments
which provide for the creation of a lien on or security
interest in Collateral to secure the obligations of the
Client under the Transaction Docum ents.]
[Transaction:
the business exchange (e.g., loan, sale of securities,
merger or acquisition) by the Client and the other parties.]
[Transaction Documents:
the contract documents setting forth the principal terms
of the Transaction addressed by the Opinion, including
the Security Documents, and other contracts ancillary
thereto that are explicitly addressed by the Opinion.
Unless otherwise included by express statement in an Opinion
Letter, contracts of persons othe r than the Client (such
as guaranties and letters of credit) are not included
in the term Transaction Documents.]
Adapted by permission
from Third-Party Legal Opinion Report prepared
by the Committee on Legal Opinions, Section of Business
Law, © 1991 American Bar Association. Copies of the Report
may be purchased from Order Fulfillment, ABA, 750 North
La ke Shore Drive, Chicago, IL 60611. $10 each for up
to 10 copies; $7.50 for 11 to 24 copies; $5 for 25 plus
copies, $3.95 for postage and handling for each order.
