Many transactions, especially those involving real estate, qualify as a “multi-jurisdictional transaction.” Imagine the real estate investor, a California LLC headquartered in Los Angeles, that forms a wholly-owned Delaware LLC subsidiary to purchase an investment property located in Hilton Head Island, South Carolina. In order to finance the purchase, the subsidiary/borrower obtains a loan from a lender headquartered in Charlotte, North Carolina. The lender will opt for North Carolina law to govern the loan documents, except that the laws of the State of South Carolina will govern the mortgage, the laws of the State of Delaware will govern the perfection and priority of the lender’s security interest in personal property, and the laws of Delaware and California will control all matters related to the requisite corporate power and due authorization (among other things) by the subsidiary/borrower and the investor/guarantor of the execution, delivery and performance of the applicable loan documents.
While the scope of each engagement, including local counsel engagement, will be different from deal to deal, most parties expect that local counsel will be willing and able to handle the following matters:
- If engaged by the investor, South Carolina counsel would (i) review the South Carolina mortgage and related real property instruments, (ii) confirm proper execution of those instruments, including witness and notary requirements, and (iii) be available to discuss questions or concerns with respect to particular South Carolina legal matters and to advise generally as to South Carolina closing matters.
- If engaged by the lender, South Carolina counsel would (i) prepare and/or review the South Carolina loan documents, including conformance with applicable provisions of the South Carolina Code as to mortgage instruments and fixture filings and local requirements of the Beaufort County, Register of Deeds office and (ii) be available to discuss questions or concerns with respect to particular South Carolina legal matters and to advise generally as to South Carolina closing matters and mortgage foreclosure remedies; and
- If engaged by the title company, South Carolina counsel would (i) supervise any title exam/search and prepare a title commitment and/or opinion and title policy documents, (ii) conduct or supervise the closing and authorize the disbursement of the loan proceeds by the title company and (iii) supervise the recording of the real property instruments.
In addition, local counsel to the borrower and guarantor will often be expected to issue a legal opinion as to certain South Carolina-specific matters, including (a) being in a form sufficient for recording, (b) creating a lien over the real property and creating/perfecting a security interest in fixtures, (c) enforceability of the South Carolina documents, and (d) no conflict with South Carolina laws. Other opinions may be given with regard to the choice of North Carolina law, South Carolina usury laws, and fees and taxes required to be paid in connection with the recording of the real property instruments.
Further, due to the fact that the states of California, Delaware and North Carolina are also involved, the borrower and guarantor will likely also be required to obtain counsel licensed in those states to provide additional legal opinions related to existence, corporate power, due authorization, execution and delivery, enforceability of the loan documents under North Carolina law, and other standard loan opinions.
The lawyers at WF, in addition to being licensed in multiple jurisdictions and capable of providing transactional legal advice across several states, also act as local counsel for companies and financial institutions in multi-jurisdictional transactions, including as to real estate matters, general corporate matters and enforceability of loan documentation.