Non-Consolidation Opinion

A non-consolidation opinion is drafted in writing and operates similarly to an estoppel certificate that is issued by the borrower’s attorney in a loan agreement. Specifically, borrowers might have the opportunity during the loan application stage to negotiate a reduction or elimination of an opinion letter, which will reduce legal fees. It is important for the borrower to understand what an opinion letter is and how it is reviewed, as he or she can use it to their advantage to reduce the legal fees associated with entering into a loan.

Types of Opinion Letters

There are four unique types of opinion letters, including:

  1. Due organization
  2. Enforceability
  3. Bankruptcy remote
  4. Non-consolidation

Due Organization

Due organization opinion letters will identify the good standing of the borrower, which is generally a company. The letter will provide information regarding the status of the entity, net profits, and the overall well-being of the company. This type of opinion letter will also identify whether or not entering into the loan agreement would violate any other agreements or laws. This type of opinion letter is the easiest and least expensive to draft. The fees range from approximately $2,000 to $5,000.


Enforceability opinion letters include information that is stated in a due organization letter along with the validity and nature of the loan agreement. Enforceability opinions can be a bit more complicated to draft, which could result in additional time and expense to have one drafted. Depending on how complex the letter is–- which is affected based on the size of the loan, limitations, and negotiations between the parties-- the fee for having this opinion letter drafted could range from $3,000 to $8,000.

Bankruptcy Remote

Bankruptcy remote opinion letters are required in larger loans where certain bankruptcy provisions are required in the company formation documents. For example, if bankruptcy remote provisions are required to be included in a corporation’s articles of incorporation and bylaws, then this opinion letter will be required in the company’s loan contracts. This type of opinion letter will identify the enforceability and effectiveness of what happens to the loan should the company become bankrupt. The attorney drafting this letter must be licensed in the state where the business is registered. The fee for this letter is approximately $5,000.


A non-consolidation opinion letter is similar to that of a bankruptcy remote letter, as it is only required in very large conduit loans that exceed $24 million. It’s an opinion that provides that if any equity owner holding more than 49 percent of the ownership becomes insolvent, the assets and liabilities of the entity wouldn’t be consolidated with those of the equity owners. This type of opinion letter is the most complicated and time-consuming, particularly if the entity oversees multiple subsidiaries at multiple levels of ownership. Fees can range between $5,000 and $35,000 depending on the amount of the loan and number of entities involved.

Due to the fact that some opinion letters can be complex, time-consuming, and costly, it is important for the borrower to attempt to reduce or eliminate opinion letters altogether. Speak to a qualified attorney as soon as you can if you believe that the opinion letter will be required. Find out what options you have to expedite the loan application stage and save more money.

How an Opinion Letter Works

Depending on the circumstances of the loan, the opinion letter is a required and key component of the loan closing process. Without it, financial institutions or other businesses will not lend the money. Often, such loans are seen in single-purpose entities (SPEs). These types of entities are engaged in no other business aside from owning the property related to the loan. The SPE will have no other debt or purpose aside from operating as a holding company. Regardless, the opinion letter might still be required for the SPE, especially in the above-mentioned circumstances. If it is required, then the attorney must draft the applicable opinion letter attesting to the SPE’s ability and capacity to repay the loan, while also evidencing that the SPE has no other obligations or outstanding debt that would otherwise make it incapable of repaying the loan.

If you need help learning more about a non-consolidation opinion or other type of opinion letter, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.