Authorizing the Use of Attorney Opinion Letters in Lieu of Title Insurance in Real Estate Transactions
AOLs are an important emerging trend in real estate finance transactions. However, despite being more affordable than title insurance, they should be used with caution when replacing title insurance. The costs savings associated with this practice might not justify the additional risk associated with it.
August 26, 2024 at 09:52 AM
6 minute read
In the context of a real estate finance transaction, an attorney opinion letter (an AOL) is typically a legal opinion prepared by a licensed attorney that opines as to the authority of the borrower and the enforceability of the security instrument and the other loan documents. Customarily, an AOL does not opine as to the status of title, and the parties will rely on title insurance to confirm the priority of the lien of the mortgage. Unlike an AOL, title insurance is obtained to protect the owner and lender, as applicable, against any loss or damage resulting from defects in title. Nevertheless, some cities and counties in Florida require an AOL for matters that pertain to unity of title, permitting and zoning.
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