Government entities and lenders require an attorney title opinion letter (or “opinion of title”) for various purposes related to Florida real estate. These title opinion letters must be prepared by a Florida-licensed attorney. Some of the purposes that attorney opinion letters are used for include:
- A Unity of Title
- Covenant in Lieu of Unity of Title
- Water and Sewer Department Agreements
- Building, Zoning & Permitting Purposes
- Loan Closings & Assurances for the Lender
- FHA & USDA Loans
- Veteran’s Affairs (VA) Loans for Condominiums
- HUD Loans for Multifamily Transactions
- A Title Opinion Letter in Lieu of a Title Insurance Policy
How Do Attorneys Prepare Opinion of Title Letters And What Do They Contain?
Also known as an “attorney title opinion” or “statement of opinion,” an opinion of title letter begins with a thorough and meticulous search and review of the title of a property. Based on this comprehensive review, the attorney prepares a title opinion letter verifying, to the best of their professional judgment, the following critical title issues:
- The property’s current legal owner.
- Affirmation of the property’s legal description.
- Whether there are any liens, mortgages, judgments, or special exceptions encumbering the property.
- Whether anything on title hinders the purpose that attorney opinion letter is being used for.
Certain government entities may also require additional information to be certified in the letter, such as whether the title search reveals the need for the consent of a third party. Sometimes, if there is a mortgage lender, the lender will have to sign a “joinder” form stating that they are in agreement with, and do not object to, the matter that is being sought to be accomplished (i.e., a Unity of Title, permit request, etc.).
Lenders usually require an attorney opinion letter for a different purpose. An opinion letter for a lender helps facilitate their due diligence process. It may be required based on the size or type of loan being given. The opinion letter is drafted by the borrower’s attorney and involves a thorough review of the corporate documents of the borrowing entity as well as the loan documents.
What Are Opinions of Title (Title Opinion Letters) Used For?
Opinion of title letters serve several important purposes for parties with an interest in a real estate parcel or transaction.
Unities of Title
Attorney opinion letters play a critical role in obtaining a Unity of Title, a required prerequisite for property owners seeking to combine two or more distinct lots or parcels of land into a single property. The objective of the Unity of Title may be for development, lending, or other purposes. A Unity of Title agreement is a commitment an owner makes to the local jurisdiction that they will not convey, mortgage, or lease the individual parcels separately and will hold them together as one parcel.
Different Florida cities and counties have their own distinct requirements for obtaining a Unity of Title such as the submission of specific Unity of Title forms as well as deeds, joinder forms, lien searches, and other documents and information. Oftentimes, a Unity of Title will also require that the adjacent parcels be owned by the same company or individual.
One thing that virtually every local government office will ask for is an opinion of title prepared by an attorney certifying that the title record is correct and complete, the property’s legal description is accurate, and that nothing hinders local authorities from recording or enforcing the Unity of Title (or any other legal instrument for which it is required). Importantly, the opinion of title letter will note any encumbrances, liens, special exceptions, or other exceptions pertaining to the property, making it highly advisable for property owners to obtain.
In lieu of a Unity of Title, several local governments in Florida, including Miami-Dade County, have established a process whereby the owner may submit a “Covenant in Lieu of Unity of Title.” This is a document in which the property owner makes several binding commitments about their development of the land and subsequent sale of individual parcels. A Covenant in Lieu of a Unity of Title will often not require that the adjacent parcels subject to the covenant have a common ownership.
Attorney Opinion Letters for Loan Closings
Before approving a mortgage loan for a prospective borrower, some lenders require an attorney opinion letter. An attorney opinion letter for a mortgage loan provides the lender with certain assurances, including that their rights in the property secured by the mortgage are free from encumbrances or defects that would diminish the property’s value or interfere with the lender’s ability to foreclose in the event of default. Additionally, a loan opinion letter often provides assurances that the loan documents are binding under Florida law, that the borrower company was validly formed, and that the company has the authority to enter into the transaction.
Opinion of Titles for Counties and Municipalities
Broward County, Miami-Dade County, and other counties in Florida require a reliable title opinion letter prepared by a licensed Florida attorney for several purposes outlined below. Some government offices have a specific template that they want the attorney to follow after the title search is completed. Others allow for any opinion of title letter signed by a licensed Florida attorney as long it addresses all the key findings of a comprehensive title search and meets their other requirements.
Since an opinion of title letter verifies many crucial title issues, local governments require them for a variety of purposes, including:
- Unities of Title
- Water and Sewer Agreements
- Declaration of Restrictions
- Declarations of Use
- Development Agreements
- Zoning Actions
- Building & Permitting Purposes
- Proposed Subdivision Plats
Title Opinion Letters for Federal Government Agencies
Federal government agencies, including the Department of Veteran’s Affairs (VA), the Federal Housing Administration (FHA), and the U.S. Department of Housing and Urban Development (HUD) may require an attorney opinion letter before the closing or refinance of a Florida property can take place.
The VA often requires attorney opinion letters prior to approving a loan for a property that is part of a condominium association (if the condominium has not obtained prior VA approval). This type of opinion letter requires a comprehensive review of VA guidelines and the condominium’s governing documents (including the declaration of condominium, by-laws, rules & regulations, etc).
HUD and FHA utilize attorney opinion letters for multifamily project loans. These opinion letters require a thorough review and analysis of the borrower’s corporate documents. The USDA uses attorney opinion letters for loan closings to confirm clear and marketable title, and to provide information concerning any encumbrances, reservations, exceptions, and defects which would have priority over the proposed USDA mortgage.
Title Opinion Letters in Lieu of a Title Insurance Policy
In 2022, Fannie Mae and Freddie Mac announced that lenders are authorized to use an attorney title opinion letter in lieu of a title insurance policy under certain limited circumstances. For an attorney opinion letter to be approved by Fannie Mae or Freddie Mac for a Florida property, it must come from a Florida-licensed attorney who has malpractice insurance. Additionally, the title opinion letter must be addressed to the lender and all successors-in-interest, be commonly accepted in jurisdiction in which it is being used, provide gap coverage for the duration between closing and the recording of the mortgage, and list all other liens and confirm that they are subordinate.
Farshchian Law – A Premier Florida Real Estate and Title Services Law Firm
Given the vital role of attorney title opinion letters and the multitude of purposes that they serve, it is critical that the attorney conducting the title search and preparing the letter has experience and expertise in this area of law. At Farshchian Law, we prepare title opinion letters for parties and transactions throughout Florida and have been trusted for years throughout the Florida real estate community for our reliable attorney opinion letters. Please contact us at (305) 901-5628 or (239) 935-8599, or email us at Info@JFRealEstateLaw.com to learn more about how we can help you.