After many years of deliberation and several fits and starts, it appears that the Statement of Opinion Practices (the “Statement”) project is coming to a conclusion. The Statement is a joint effort by the Legal Opinions Committee of the Business Law Section (“BLS”) of the American Bar Association and the Working Group on Legal Opinions Foundation (“WGLO”). In early June, a Joint Committee of WGLO and BLS Legal Opinions Committee members approved for submission to WGLO and the BLS Legal Opinions Committee a final revised draft of the Statement, and that Joint Committee unanimously approved the draft. That Joint Committee includes several real property practitioners who are active in and past chairs of the RPTE Legal Opinions in Real Estate Transactions Committee. The Statement is posted at the BLS website. The sponsors hope that various organizations like our Committee will agree to approve the Statement. It is anticipated that the distribution draft will be adopted by the Business Law Section’s Opinions Committee at its fall meeting in September and by the WGLO board in October (if not earlier).
Also posted on the BLS website are the Core Opinion Principles and an Explanatory Note with a table of sources from the existing Legal Opinion Principles and Guidelines for the provisions of the Statement. These items are planned to be published with the Statement.
A bit of background. When the Third-Party Legal Opinion Report including the Legal Opinion Accord was distributed in 1991 by the ABA Business Law Section, Certain Guidelines for the Negotiation and Preparation of Third-Party Legal Opinions were included. These Guidelines were not part of an Accord opinion that would have been adopted by reference in an opinion letter. While the Accord project was not universally received and did not gain traction as the basis for rendering third-party opinion letters, the Guidelines that were part of the Legal Opinion Report were favorably received as setting forth certain practices with respect to third-party opinion letters. Subsequently, the ABA Business Law Section’s Legal Opinions Committee promulgated Legal Opinion Principles in 1998 and updated the Guidelines with the Guidelines for the Preparation of Closing Opinions in 2002. The real estate bar generally has been supportive of these efforts, and in 2003 it adopted the Real Estate Opinion Letter Guidelines. This was a joint effort of our Committee and the Attorneys’ Opinions Committee of the American College of Real Estate Lawyers.
The new Statement updates the prior ABA Business Law Principles in its entirety, but it only updates selective provisions of the Guidelines. The other provisions of the Guidelines that are unaffected in the Statement are not repealed, and the Statement provides that no inference should be drawn from their omissions from the Statement.
Once the final Statement is adopted, it will be a good time for real estate practitioners to revisit the Real Estate Opinion Letter Guidelines to see if they need to be updated in light of not only the new Statement but also other developments affecting the customary practice of real estate legal opinions, including the Real Estate Finance Opinion Report of 2012 and the Local Counsel Report of 2016.
In addition to the Statement, the Joint Committee is proposing a summary of Core Opinion Principles that can be adopted by reference in an opinion letter or attached to an opinion letter. These Core Opinion Principles are more concise articulations of some of the points included in the Statement.
This Committee previously approved in principle the work of the Joint Committee and has been supportive of the Statement, subject to review and approval of the final version.
