The Forthcoming California Lawyers Association BLS Opinions Committee Sample UCC Opinion: Something for All Transactional Lawyers (UCC, Real Estate, Securities, or otherwise) Who Give, Review, or Receive Legal Opinions on California Law

Richard N. Frasch

Rick is currently the chair of the ABA Business Law Section Legal Opinions Committee and the vice chair for Social Media of the CLA BLS Opinions Committee. Rick has significant legal and business experience in contracts, financings, institutional lending, international business transactions (with an emphasis on China), venture capital, and mergers and acquisitions. Among other positions, he has been a partner in a venture capital fund and has served as the general counsel of a large insurance holding company. Rick has also served as the Chair of the Executive Committee of the Business Law Section of the California State Bar (1991-1992).

The forthcoming "Sample California Third-Party Legal Opinion Letter for Personal Property Secured Financing Transactions" (the "UCC Sample Opinion") will be the newest sample opinion from the California Lawyers Association Business Law Section Opinions Committee (the "Committee").¹ Since the Committee first published the original Sample California Third-Party Legal Opinion for Business Transactions (May 2010), the Committee has approved for publication three other sample opinions: a Sample California Third-Party Legal Opinion for Venture Capital Financing Transactions (the "Venture Sample Opinion")²; a Sample California Third-Party Legal Opinion for Business Transactions (Revised August 2014) (the "Transactional Sample Opinion")³; and the sample opinion contained in the Report on Legal Opinions Concerning California Partnerships and Limited Liability Companies (December 2016) (the "Partnership/LLC Sample Opinion").⁴ This article will provide a preview of the forthcoming UCC Sample Opinion for both UCC lawyers and general transactional lawyers who give, review, or receive legal opinions in securities, corporate, and commercial transactions on California law.

As the name implies, the UCC Sample Opinion is nominally directed to lawyers who specialize in secured transactions, and, as a co-editor/reporter of both "ancient" and recent Committee reports,⁵ I can confidently report that the UCC Sample Opinion is a thoroughly researched, well-written, and "must have" resource for lawyers who often give, review, or deliver UCC opinions as well as a useful beginning point for the lawyer who does not regularly practice in the secured transactions area but is required to give, review, or receive a UCC opinion. First, the UCC Sample Opinion is arguably the longest and most thoroughly researched sample opinion produced by the Committee. For example, it contains a total of twenty-two forms of sample opinions, several of which have two or three alternatives, compared to the Venture Sample Opinion and the Transactional Sample Opinion, each of which contains no more than nine forms of sample opinions. The UCC Sample Opinion contains ninety-seven footnotes compared to the prior sample opinions: ninety-one for the Venture Sample Opinion, forty-two for the Transactional Sample Opinion, and thirty for the Partnership/LLC Sample Opinion. Second, the UCC Sample Opinion was drafted to be a companion to the Committee’s 2005 UCC Opinion Report⁶ and should be read together with it. Third, the UCC Sample Opinion does a thorough analysis of the various types of creation, perfection, and priority opinions that are often requested and many times given in California. As with the first UCC Committee report on opinions issued in 1989,⁷ the UCC Sample Opinion disfavors requests for, and counsels in most instances against providing, broad priority opinions.⁸ Finally, the UCC Sample Opinion discusses several recent international developments in secured transaction practice that may affect the validity of the security interests or the enforceability of the loan documents under California and federal law. For example, the new Hague Convention rules governing perfection of security interests in securities entitlements are referenced and discussed.⁹ Also, the new EU (European Union) bail-in rules that affect international loans (and the remedies of creditors of banks that make such loans) are referenced and discussed.¹⁰ In both discussions, the UCC Sample Opinion suggests qualifications that should be considered for inclusion in an opinion letter in the event that opinions are given covering such legal developments.