When a North Carolina local government unit applies to the Local Government Commission (the “LGC”) for its approval of an installment financing, the unit has to supply an opinion of the unit’s attorney as part of the application package.
The LGC’s Form
The LGC’s application includes a suggested form of that opinion, but there are some problems with that form. For one, the form assumes that the financing is just about ready to close. At the time the attorney is asked to write the opinion, however, the financing may be in a much earlier stage. Sometimes, the lender may not be known, and in other cases the lender has been identified but document preparation is continuing. The form opinion also states that the documents are enforceable in a way that may be both premature and uncomfortable for many local government attorneys.
Our Alternate Form
We at Sanford Holshouser have prepared an alternative form of the preliminary opinion that is designed to address the issues we’ve noted. We have also made some other changes that we see as improvements, while still covering the points that the LGC wants to see covered. Our alternate form is available here. Two other notes:
- If you are working with an outside bond counsel, the LGC will happily take this opinion from the bond counsel, as opposed to your regular local attorney. In our experience most bond counsel will usually provide this opinion, if asked, without an extra charge. We’d suggest that because the opinion asks for a conclusion as to the enforceability of documents, the bond counsel is in fact the better choice to provide this opinion if the bond counsel is already participating in the transaction.
- If the timing is such that the application is ready to go in (or has to go in) but not all the conditions to delivering the opinion have been satisfied, the LGC will accept the opinion in an unsigned draft form. The relevant attorney can then provide an updated, signed copy once the conditions are satisfied.
Please contact us if you have any questions, any suggestions for improving this form or if there’s anything else with which we might be of help. Please also see our disclaimer, especially the part in there about the use of forms you find for free on the internet. The successful use of this form is still dependent on the attorney’s evaluation of the facts and circumstances of your particular financing, but we hope this will be a useful starting point.