Drafting or reviewing legal opinions in loan transactions
Drafting or reviewing legal opinions in loan transactions

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Drafting or reviewing legal opinions in loan transactions
  • Types of legal opinion in loan transactions
  • Parties
  • Drafting an English law legal opinion
  • Local law legal opinions
  • Specialist finance legal opinion content

Legal opinions are one of the key documentary conditions precedent in loan transactions. The legal opinion is a letter which sets out opinions as to matters of law. It does not cover factual matters.

It is common practice to use legal opinions in the vast majority of finance transactions. This information enables the addressee of the legal opinion to assess the legal risks involved in a transaction and decide how best to move forward.

For more information, see What is a legal opinion? and When do you use a legal opinion?

Types of legal opinion in loan transactions

In the vast majority of loan transactions, an English law legal opinion will be required. In transactions which involve a cross-border element a local law legal opinion from each relevant jurisdiction will also be required.

Parties

A legal opinion in a bilateral transaction will be provided:

  1. from the English law firm or the local law firm acting for the lender

  2. to the lender

A legal opinion in a syndicated transaction will be provided:

  1. from the English law firm or the local law firm acting for the syndicate of lenders

  2. to the facility agent for itself and the facility agent as agent for all the finance parties—note that the wording of the legal opinion will often restrict which lenders can rely on it (typically limited