A Background and Summary prepared by Edward J. Levin, Piper & Marbury L.L.P.
Chair, American College of Real Estate Lawyers Attorneys’ Opinions Committee
January 13, 1999

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Attached [linked on the Dirt Contributed Files page under "Forms from the ABA"] is a copy of the Inclusive Real Estate Secured Transaction Opinion project report (the "Inclusive Opinion Report"). This Report, which includes an illustrative opinion, was prepared by the American Bar Association’s Section of Real Property, Probate and Trust Law, Committee on Legal Opinions in Real Estate Transactions, Subcommittee on Creation of an Inclusive Opinion (the "ABA Committee") and by the American College of Real Estate Lawyers ("ACREL") Attorneys’ Opinions Committee (collectively, the "Committees"). ACREL’s Attorneys’ Opinions Committee approved the Inclusive Opinion Report at its meeting in Washington, D.C. in October, 1998, and the Executive Committee of the Board of the College approved the Inclusive Opinion Report in January, 1999. The ABA Committee approved the Inclusive Opinion Report in August, 1998 at its meeting in Toronto, Canada, and the Executive Committee of the ABA Section of Real Property, Probate and Trust Law approved it in December, 1998.

The Committees believe that the Inclusive Opinion Report serves a most important role. It provides to the practicing real estate bar a usable, self-contained model opinion. Within the four corners of the opinion are all of the definitions necessary to understand the opinion as well as all of the assumptions, qualifications, and limitations of the opinion. One can read the illustrative opinion in the Inclusive Opinion Report and understand it without having to refer to an outside source. Additionally, that opinion is annotated; elaborations and explications of particular points are either set forth in the opinion itself or are set forth in footnotes. Alternatives to the remedies or enforceability opinion are also included in the text and the footnotes.

The source of the Inclusive Opinion Report is the Legal Opinion Accord adopted by the Business Law Section of the ABA in 1991 as part of its Third-Party Legal Opinion Report (the "Accord"). The Inclusive Opinion Report remains faithful to the format and substance of the Accord as modified by the Real Property Adaptation, discussed below. While there are a number of substantive points in the Accord about which the members of the Committees have differing views, the drafters of the Inclusive Opinion Report decided to retain the content of the Accord at this time. Left for another day is a project that would amend certain presumptions and formulations contained in the Accord.

The Inclusive Opinion Report adopts the opposite drafting theory from the one employed by the Accord. The Accord opinion is a model of brevity. It achieves its brevity by incorporating the text of the Accord into the opinion by reference. For those thoroughly familiar with the Accord, the short Accord opinion is easy to use. However, as the introduction to the Inclusive Opinion Report diplomatically states, the Accord is "difficult to master." Most people are not familiar enough with the Accord to enable them to give or receive an Accord opinion unless they spend an inordinate amount of time learning, or relearning, the Accord each time an opinion is given.

The Accord itself was concerned with an unsecured transaction and is obviously lacking in the context of a real estate secured transaction. To address this concern, in 1994 the Committees prepared an adaptation of the Accord (the "Real Property Adaptation") that is designed to enable real property lawyers to give Accord-based opinions. The Inclusive Opinion Report explicitly incorporates the Real Property Adaptation into its illustrative opinion.

Even more important than its utility as a form for lawyers rendering opinions, the Inclusive Opinion Report is primarily designed to serve an educational purpose. Because it identifies and discusses many opinion-related matters within the body of the illustrative opinion, the Inclusive Opinion Report provides a learning device for those interested in third party legal opinions.

Based on anecdotal evidence, the Committees believe that the Accord has not been widely accepted by real estate lawyers across the country. This belief was borne out by a survey that ACREL’s Attorneys’ Opinions Committee conducted in 1996. Five years after the 1991 publication of the Accord and two years after the Real Property Adaptation was produced in 1994, only a minority of the 110 members of ACREL who responded to the survey said that they or their firms either used or accepted Accord-based opinions. Many of the respondents stated that they were not familiar with the Accord or that they found it too complicated. A similar survey conducted now would probably produce very similar findings. The members of the Committees believe that practicing lawyers will find the form of opinion letter contained in the Inclusive Opinion Report to be much more user-friendly than the illustrative opinion letter that accompanies the Accord, and they expect that it will be more widely employed.