Real Property Section
Illustrative Real Estate Loan Opinion Letter
[Letterhead of Lawyer or Law Firm]
[DATE]
[Lender's name and address]
Re: $___________ Loan from Lender to [Limited Partnership Borrower]
Secured by the land and improvements erected and to be erected thereon, located in
______________ City/County, Maryland (the "Security") and Guaranteed by [Individual
Guarantor]
______________:
We have acted as counsel to ABC Limited Partnership (the
"Borrower") and John Doe (the "Guarantor") in connection with the
captioned transaction (the "Loan"). This letter is furnished to satisfy [the
condition set forth in Section _______ of __________/your request dated_____________]. All
capitalized terms used in this letter that are not otherwise defined herein shall have the
meanings assigned to them in the Loan Documents (as hereinafter defined).
In our capacity as counsel to the Borrower and the Guarantor and for
purposes of this opinion, we have examined the following documents:
(i) the [describe commitment/loan agreement] dated _________ between
the Borrower and __________ (the "Lender"), the Deed of Trust and Security
Agreement dated ______ from the Borrower to _______________ and __________, as trustees,
(the "Deed of Trust"), the Promissory Note dated __________, in the principal
amount of $__________ from the Borrower to the order of the Lender, the Assignment of
Rents dated __________ from the Borrower to the Lender (the "Assignment"), the
Uniform Commercial Code Financing Statements signed by the Borrower (the "Financing
Statements"), and the Guaranty Agreement dated __________ from the Guarantor for the
benefit of the Lender (collectively the "Loan Documents");
(ii) long form Status Certificate of the Borrower from the Maryland
State Department of Assessments and Taxation (the "SDAT") dated ________________
to the effect that the Borrower is existing under and by virtue of the laws of the State
of Maryland and is in good standing to transact business;
(iii) certified copy of the Limited Partnership Certificate of the
Borrower [and all amendments thereto];
(iv) the Limited Partnership Agreement of the Borrower [and all
amendments thereto];
(v) a certificate of the Borrower [that it has elected to be governed
by the Maryland Revised Uniform Limited Partnership Act, that it has appointed a resident
agent,] that there have been no amendments to the Limited Partnership Agreement other than
those reflected on the Status Certificate and that all necessary consents or required
votes of the partners of the Borrower have been obtained;
(vi) certificates of each of the Borrower and the Guarantor to the
effect that the representations made by or on behalf of the Borrower or the Guarantor (as
the case may be) in the Loan Documents are accurate and complete;
(vii) certificates of each of the Borrower and the Guarantor
identifying any governmental programs to which the Borrower or the Guarantor is subject
and identifying whether the Borrower or the Guarantor is engaged in or operates in a
regulated industry;
(viii) certificates of each of the Borrower and the Guarantor
identifying all indentures, mortgages, deeds of trust, security agreements, leases,
contracts, and other agreements and instruments to which the Borrower and the Guarantor
(as the case may be) is a party and the violation, breach, or default of which could have
a material adverse effect on the Borrower's or the Guarantor's business or financial
condition (the "Identified Borrower Contracts" and the "Identified
Guarantor Contracts");
(ix) representations of each of the Borrower and the Guarantor set
forth in the Loan Documents that the Loan is a Commercial Loan (as defined in §l2-l0l(c)
of the Commercial Law Article of the Annotated Code of Maryland) or that all Loan proceeds
are being used for a Commercial Loan purpose;
(x) certificates of each of the Borrower and the Guarantor identifying
all judicial and governmental judgments, orders, injunctions, decrees, and arbitration
awards outstanding against the Borrower or the Guarantor (as the case may be) and all
judicial and governmental actions, suits, and proceedings, and all arbitrations and
mediations, pending or threatened against the Borrower or the Guarantor (as the case may
be), or any of their properties;
(xi) the commitment for an ALTA lender's policy of title insurance
issued to you by __________________________ (the "Title Company") in the amount
of $__________ dated ___________________ ;
[(xii) list other documents and certificates relied upon; and]
(xiii) such other documents and matters as we have deemed necessary and
appropriate to render the opinions set forth in this letter, subject to the limitations,
assumptions, and qualifications noted below.
In basing the opinions and other matters set forth herein on "our
knowledge", the words "our knowledge" signify that, in the course of our
representation of the Borrower and the Guarantor in matters with respect to which we have
been engaged by the Borrower and the Guarantor as counsel, no information has come to our
attention that would give us actual knowledge or actual notice that any such opinions or
other matters are not accurate or that any of the foregoing documents, certificates,
reports, and information on which we have relied are not accurate and complete. Except as
otherwise stated herein, we have undertaken no independent investigation or verification
of such matters. The words "our knowledge" and similar language used herein are
intended to be limited to the knowledge of the lawyers within our firm who have recently
worked on matters on behalf of the Borrower or the Guarantor.
In reaching the opinions set forth below, we have assumed, and to our
knowledge there are no facts inconsistent with, the following:
(a) each of the parties thereto (other than the Borrower and the
Guarantor) has duly and validly executed and delivered each instrument, document, and
agreement executed in connection with the Loan to which such other party is a signatory
and that such party's obligations set forth therein are its legal, valid, and binding
obligations, enforceable in accordance with their respective terms;
(b) each person executing any such instrument, document, or agreement
on behalf of any such party (other than the Borrower and the Guarantor) is duly authorized
to do so;
(c) each natural person executing any such instrument, document, or
agreement is legally competent to do so;
(d) there are no oral or written modifications of or amendments to the
Loan Documents, and there has been no waiver of any of the provisions of the Loan
Documents, by actions or conduct of the parties or otherwise;
(e) the personal property which is part of the Security is located in
____________ City/County, Maryland;
(f) as to due recordation of the Deed of Trust and the priority of the
Deed of Trust, you are relying upon the Title Company's commitment referred to in
Paragraph (xi) above, and as to the due filing of the Financing Statements, you are
relying upon the Title Company;
(g) the Borrower owns the Security of record and in fact; and
(h) all documents submitted to us as originals are authentic, all
documents submitted to us as certified or photostatic copies conform to the original
documents, all signatures on all documents submitted to us for examination are genuine,
and all public records reviewed are accurate and complete.
Based on our review of the foregoing and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of this letter:
1. The Borrower is a limited partnership validly existing in good
standing under the laws of the State of Maryland.
2. The Borrower has the limited partnership power [to own its current
properties and conduct its business as now conducted,] to borrow the proceeds of the Loan
and to execute and perform its obligations under the Loan Documents.
3. All necessary partnership action has been taken to authorize the
execution, delivery, and performance of the Loan Documents by the Borrower.
4. The Loan Documents have been duly executed and delivered by the
Borrower and the Guarantor (as the case may be) and constitute the valid and legally
binding obligations of the Borrower and the Guarantor (as the case may be), enforceable
against the Borrower and the Guarantor (as the case may be) in accordance with their
terms, subject to the following:
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws affecting the rights of creditors generally; and
(ii) the exercise of judicial discretion in accordance with general
principles of equity.
5. The execution and delivery of, and the performance of the
obligations under, the Loan Documents (i) will not conflict with the Borrower's
partnership agreement, (ii) based solely upon our review of the Identified Borrower
Contracts, the Identified Guarantor Contracts, and our knowledge, will not violate or
result in the material breach of the provisions of, or constitute a material default
under, any of the Identified Borrower Contracts or any of the Identified Guarantor
Contracts, and (iii) based solely upon the certificates referred to in Paragraphs (vii)
and (x) above, the commitment of the Title Company referred to in Paragraph (xi) above,
and our knowledge, will not conflict with or result in the breach of any court decree or
order of any governmental body binding on the Borrower or the Guarantor.
6. Based solely upon the certificates referred to in Paragraph (x)
above, and the commitment of the Title Company referred to in Paragraph (xi) above, and
our knowledge, there is no litigation, arbitration, or mediation pending before any court,
arbitrator, mediator, or administrative body, or threatened, against the Borrower or the
Guarantor, or any of their properties [, except as described in __________].
7. Based solely upon the certificates referred to in Paragraphs (vii)
and (x) above, and our knowledge, no consent, approval, authorization, or other action by,
or filing with, any governmental authority is required for the execution and delivery by
the Borrower or the Guarantor of the Loan Documents, or if required, the requisite
consent, approval, or authorization has been obtained, the requisite filing has been
accomplished, or the requisite action has been taken.
8. The Deed of Trust is in appropriate form for due recordation among
the Land Records of _______________ City/County, Maryland and for creation of the
encumbrance and security interest it purports to create on the real and personal property
constituting the Security.
9. The Financing Statements are in appropriate form for due filing
among the financing statement records of the SDAT and the Circuit Court for __________
City/County, Maryland pursuant to the Maryland Uniform Commercial Code.
10. We have received a letter from the zoning office of __________
City/County, Maryland (the "Zoning Letter"), a copy of which is attached hereto
and stating that the subject property is shown on the zoning maps of __________
City/County as being located in a __________ zone. [We have examined the zoning maps of
__________ City/County, Maryland, revised and current through __________, 19__ (the
"Zoning Maps"), and find that the subject property as shown on the survey dated
__________, 19__ and prepared by __________, a certified surveyor (the
"Surveyor"), and also identified thereon as __________ City/County parcel number
______, is shown on such maps as being located in a ______ zone.] According to Section
_____ of the zoning ordinance of _______________ City/County, "business and
professional offices" are a permitted use in such zone. The Borrower has represented
to us that [it intends to construct] [the subject property is presently improved by] an
office building for sole use as business and professional offices upon the subject
property. Accordingly, in reliance solely upon the Zoning Letter [based upon our review of
the Zoning Maps] and the zoning ordinance of __________ City/County, Maryland, we are of
the opinion that [the construction of an office building upon the subject property
constitutes] [the improvements which presently exist upon the subject property constitute]
a permitted use of such property, subject to compliance with the other requirements of the
zoning ordinance and the subject property's [proposed] [continued] exclusive use for
business and professional offices. No further subdivision is necessary for the conveyance
of the subject property because the property [is a properly subdivided parcel] [is not
subject to subdivision requirements since ___________]. [Based upon and in sole reliance
upon the certification of the Surveyor,] the subject property is carried on the tax rolls
as a separate lot or lots.
11. Based solely upon the representations referred to in Paragraph (ix)
above and our knowledge, the Loan does not violate Maryland usury laws.
In addition to the qualifications set forth above, the opinions set
forth herein are also subject to the following qualifications:
(i) We have not made or undertaken to make any investigation of the
state of title to the real property or to the personal property constituting the Security
or of the filing or recordation of the Deed of Trust [the Assignment,] or the Financing
Statements, and we express no opinion with respect to the title to such real property or
personal property.
(ii) We express no opinion on the perfection or priority of any lien or
security interest.
(iii) We express no opinion as to the laws of any jurisdiction other
than the laws of the State of Maryland and the laws of the United States of America. The
opinions expressed herein concern only the effect of the laws (excluding the principles of
conflict of laws) of the State of Maryland and the United States of America as currently
in effect. We assume no obligation to supplement this opinion if any applicable laws
change after the date hereof or if we become aware of any facts that might change the
opinions expressed herein after the date hereof.
The opinions expressed in this letter are solely for the use of the
Lender [and its counsel], and these opinions may not be relied on by any other persons
without our prior written approval. The opinions expressed in this letter are limited to
the matters set forth in this letter, and no other opinions should be inferred beyond the
matters expressly stated.
This letter is to be interpreted in accordance with the Report of the
Special Joint Committee on Lawyers' Opinions in Commercial Transactions of the Maryland
State Bar Association, Inc. and The Bar Association of Baltimore City dated January 18,
1989.
Very truly yours,
[Signature of Lawyer/Law Firm
representing Borrower]
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