Lenders have typically relied on heavily-qualified legal opinions of outside counsel regarding the attachment, perfection and priority of a security interest. A UCC insurance policy provides a significant advantage over a legal opinion, offering greater protection to the lender and limited liability to outside counsel.
The policy offers much broader and unqualified protection by its policy terms. It also limits any legal exposure to the law firm being asked to tender the opinion by removing the firm from having to opine on matters of attachment, perfection and priority under the UCC.
Here is a summary of the key advantages that a UCC insurance policy provides over a typical legal opinion:
About the Author
Gary M. Zimmerman is Senior Vice President and Chief Underwriting Counsel for UCCPlus, a division of Fidelity National Title Group.