Opinion of seller's counsel: Overview, definition, and example
What is an opinion of seller's counsel?
An opinion of seller’s counsel is a formal written statement provided by the legal counsel (attorney) of a seller in a transaction, typically involving the sale of a business or property. The opinion outlines the legal aspects of the sale, providing assurance to the buyer or other interested parties that the seller’s title to the property or assets is valid and that the sale complies with applicable laws.
In a business sale, the seller’s counsel may confirm that the seller has the legal authority to sell the assets, that the assets are free of any legal disputes, and that the seller’s representations in the agreement are accurate. This opinion is often required by the buyer or their counsel to help reduce risk and ensure that the transaction is legally sound.
Why is an opinion of seller's counsel important?
An opinion of seller's counsel is important because it provides legal assurance to the buyer regarding the seller’s ability to complete the sale and the legitimacy of the transaction. It helps protect the buyer from legal risks by confirming that the seller has the right to transfer ownership of the assets or property and that there are no unresolved legal issues that could affect the sale.
For buyers, obtaining this opinion is a way to verify that the seller has met all legal requirements and that the transaction is proceeding without hidden liabilities or legal complications. For sellers, providing this opinion can help facilitate the sale process by assuring the buyer that everything is in order.
Understanding opinion of seller's counsel through an example
Imagine you are a buyer purchasing a commercial property from a seller. Before completing the sale, you request an opinion from the seller’s legal counsel. In the opinion, the seller’s counsel confirms that the seller legally owns the property, there are no outstanding legal claims or disputes related to the property, and the seller has the legal right to sell it. With this reassurance, you feel confident moving forward with the transaction.
In another example, a company is selling its assets to a new owner. As part of the sale, the buyer requests an opinion of seller's counsel to ensure that the assets are free of any liens or encumbrances. The seller’s attorney provides an opinion stating that the assets are clear of any legal claims, and the transaction can proceed without issue.
Example of an opinion of seller's counsel clause
Here’s how an opinion of seller's counsel clause might appear in a sale agreement:
“Seller’s counsel shall provide an opinion to the Buyer confirming that, to the best of Seller’s counsel’s knowledge, (i) the Seller has the full legal right and authority to transfer ownership of the assets described in this Agreement, (ii) the assets are free and clear of any encumbrances, and (iii) the Seller’s representations and warranties in this Agreement are valid and enforceable.”
Conclusion
The opinion of seller’s counsel is a critical document in many transactions, providing legal assurance to the buyer that the sale is legitimate and free from unexpected legal complications. By ensuring that the seller has the legal right to transfer ownership and that there are no outstanding legal issues, this opinion helps minimize risk and facilitates smoother transactions.
Whether you're buying or selling assets or property, understanding the importance of the opinion of seller’s counsel can help you navigate the sale process with confidence and ensure that all legal requirements are met.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.