An unqualified opinion is an opinion given by a bond counsel to the issuer of municipal bonds. There are no reservations usually that relate to the issue directly. A bond counsel can be said to be the attorney that represents the corporate interests upon a bond offering.
An unqualified opinion of the bond counsel is the best opinion that an issuer can obtain on the municipal securities issues. In case you want to become an issuer of municipal securities, then consider seeking the legal advice of a bond counsel. In case you are given an unqualified opinion by the counsel, then you are good to go.
Insights on Unqualified Legal Opinion
At that time, when the municipal bonds are traded to the public issuers, they will usually seek legal options on the tax status on the bonds and also the issuer’s permit to give out the bonds. An unqualified opinion, therefore, means that the bond counsel does not have any reservations and asserts that the whole issue is a legally binding agreement of the county or municipality.
They also ascertain that the interests received by the investors will not be taxed in any way – that is, the federation tax. If a bond is given with a qualified opinion by the bond counsel, it means that the bond has issues with the tax status, among other things. It merely implies everything is not okay with the issuance of the municipality bond. Most are the times it becomes expensive to acquire legal opinions for the municipal bonds.
Because of that reason, the small matters in municipal bonds will not seek legal opinions, and these will be referred to as ex-legal. Of course, it will be logical to save up the expense since the entire process is already expensive.
Qualified Legal Opinion
A legal opinion from the bond counsel is also known as a reasoned opinion. That means that the advice is subject to qualifications. Generally, legal advice is never said to be qualified if it is subject to limitations, common assumptions, and requirements. For the municipal securities market, legal opinions are said to be traditionally unqualified.
As stated earlier, these are legal bonds that were issued without any legal opinion given on them. As an investor, you should address the ex-legal bonds with caution as they do not have the legal endorsement. The majority of the municipal bonds do have a legal opinion from an attorney or a bond law company.
These law firms are involved in the picture so that they can give a legal opinion on the validity of the bonds and other issues such as the tax treatment and interests to charge. The investors and issuers need such a decision for decision making. The opinion for the bonds confirms that the bond has been authorized and executed the right way and that it is valid and legally binding to the issuer.
The attorney bond has not ascertained the ex-legal bond if it followed the required requirements and law. That technically means that ex-legal bonds are exposed to higher legal risks than the other types of bonds.