A legal opinion from the bond adviser is also called a reasoned opinion. This means that the board is tied to restrictions. In general, legal advice is never qualified if it is subject to limitations, general assumptions and requirements. For the municipal securities market, legal opinions are traditionally considered unqualified. In the municipal securities market, legal advice is traditionally free. Surety lawyers may provide an “unqualified” opinion on the validity and tax exemption of surety bonds if they are “firmly satisfied” that, under the law in force at the time of the notice, the highest court of the relevant jurisdiction, reasonably and properly informed of the issues, would reach the legal conclusions set out in the notice. Ex-legal is a municipal obligation that is issued without the legal opinion of a law firm specializing in bonds being printed. A qualified legal opinion is a legal opinion that contains conditions or reservations in this regard. A legal opinion is prepared by a bond advisor of a municipal issuer.

In order to provide and document these legal opinions, Bond Counsel provides services, including analysis of the legality of the project and security structure and preparation of documents, including bond contracts, resolutions, regulations, tax certificates, voting language, public announcement and other documents required for the transaction. In addition, bond advisors often deal with disclosure-related matters, such as drafting or reviewing documents such as the official statement, continuous disclosure agreements (CDAs), intent to sell or sell, and preparing or reviewing negative assurances on the official statement — sometimes referred to as SEC Rule 10b-5 notices. The bond advisor may also assist in the due diligence process leading to the issuance of the bonds, including a review of past compliance with continuous disclosure agreements, and may review the issuer`s full annual financial report, website and other information to ensure consistency and relevance of the information provided to the market. For this reason, small business in municipal bonds will not seek legal advice, and these are called ex-legal. Of course, it makes sense to save costs, because the whole process is already expensive. As mentioned earlier, these are legal bonds issued without legal advice. As an investor, you should approach ex-legal obligations with caution as they do not have legal confirmation. The majority of municipal bonds have legal advice from a lawyer or law firm that specializes in bonds. In the case of negotiated sales, private placements or direct purchases, the underwriter (or placement agent or buyer) may engage their own legal counsel. These legal advisors assist the policyholder in fulfilling its legal obligations in connection with a bond transaction.

This may include the preparation or review of documents such as the bond purchase agreement, official statements, disclosure documents, blue sky memoranda, underwriters` agreement, negative insurance and other miscellaneous documents. The underwriter`s counsel will consider various aspects of the surety transaction to assist the underwriter in fulfilling its due diligence obligation and negotiating the purchase agreement on behalf of the underwriter. The policyholder`s advisory fee is often paid from the cost component of the policyholder`s gross difference. Issuers should be aware of these significant costs and agree early in the sale process on the fees to be charged by the underwriter`s legal counsel. When municipal bonds are sold to public issuers, they are often offered a legal option related to the tax status of the issues and the issuer`s authority to issue the bonds. An unqualified legal opinion indicates that the lawyer is not concerned that this is a legally binding obligation of the municipality and that interest payments received from investors will be exempt from federal tax. If a bond is issued with a legal opinion with a qualified legal opinion, it means that the tax status or other matters related to the title will be questioned. It is often costly to obtain legal advice on municipal matters. As a result, some small municipal bond issues will not seek legal advice and will therefore be labeled as ex-legal. Make sure you know the terminology related to municipal obligations before you take your exam.

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