The comments referred to below may be viewed by clicking on the “Listserve” item on the Committee’s webpage.
Kyle Recker, San Francisco, CA, asked for diligence questionnaires, research memos, and other guidance for giving an opinion that neither the borrower nor any guarantor is an “investment company” or a company “controlled” by an “investment company,” as those terms are defined in the Investment Company Act of 1940.
Charles Menges, Richmond, Virginia, cautioned against giving a ’40 Act opinion if one is not familiar with the law and does not customarily give the opinion. He noted that such an opinion is not customary in real estate financing transactions (but is typical in connection with syndicated credit facilities for large corporate borrowers) and suggested pushing back on the opinion request if it was made in connection with a real estate loan. Marshall Grodner, Baton Rouge, Louisiana, agreed and pointed out a trap for the unwary, particularly in the securitization context. Under the ’40 Act, the term “securities” includes “notes.” If the property of the seller/servicer is primarily “notes” (secured or unsecured) rather than receivables, the ’40 Act probably covers the transaction and an exemption from registration would need to be found. Mitchell Meisner, Detroit, Michigan, agreed. All of these responders noted the importance of appropriate assumptions, factual certifications, or both.
Mitchell Meisner, Detroit, Michigan, sought input regarding practices and policies concerning giving zoning opinions to title companies. This topic was initially raised in February 2018 and was an active topic into March 2018. A number of Committee members replied. This issue of Opinions Matters includes a discussion of the topic in Notes on Zoning and Permitting Opinions in Real Estate Financing Transactions.
Members of the Committee on Legal Opinions in Real Estate Transactions are encouraged to raise legal opinion issues on the Listserve and to participate in the exchanges. Members also are encouraged to bring new developments (such as recent case law or newly identified issues) to the attention of Committee members through the Listserve.
