CHAPTER 15.06. No Violation

• Jurisdiction: United States

15.06. No Violation

Other opinions given in the world of corporate finance could be requested by opinion recipients in real estate financing transactions, although most of these are practically valueless given both the other opinions already included in the typical opinion letter and the nature of borrowers in real estate financing transactions. One example is the "no violation" opinion to the effect that execution, delivery, and performance of the transaction documents by the borrower do not violate other agreements of the borrower, the constituent documents of the borrower, or applicable laws. An example of the no violation opinion is:

The execution and delivery by the Borrower of, and performance of its payment obligations in, the transaction documents, do not: (i) breach any existing obligation of the Borrower under any of the agreements and documents [specified in Attachment [___] hereto] [known to us] or (ii) violate the Borrower Organizational Documents. The execution and delivery by the Borrower of, and performance by the Borrower of its payment obligations in, the transaction documents, neither are prohibited by applicable provisions of law comprising statutes or regulations duly enacted or promulgated by the State ("Statutes or Regulations") nor subject the Borrower to a fine, penalty, or other similar sanctions, under any Statutes or Regulations.

In the past, such opinions were designed for large corporate financings and were rarely requested in real estate financing transactions. As with other opinions that seem inappropriate or inapplicable for most real estate financing transactions, these opinions now are requested routinely in real estate financing transactions, notwithstanding that they originated in transactions involving public companies and frequently seem like odd requests in the real estate financing transaction context.

[1] No Violation of Other Agreements

If given, a no violation opinion as to other agreements of the borrower should be limited to written agreements and amendments or modifications that are reflected in written documents, as the opinion giver is unable to review oral contracts and unwritten amendments.¹²⁷ Various authorities give some guidance on what aspects of the specified other agreements are material to this particular opinion. For example, the Accord provides that a no violation opinion "does not extend to any action or conduct of the borrower that a Transaction Document may permit but does not require, except...