In property transactions involving overseas entities, legal opinions are a key safeguard. They help ensure that the transaction is valid, enforceable and compliant with the laws of the relevant foreign jurisdiction.

What is a Legal Opinion?

A legal opinion is a formal document provided by a solicitor qualified in the jurisdiction of a foreign entity. It sets out their professional assessment of whether the entity has the legal capacity and authority to enter into a transaction, and whether the documents have been validly executed under the laws of that jurisdiction. Such an opinion will also confirm that the overseas entity is solvent in their relevant jurisdiction.

Why is it Needed in Property Transactions?

Legal opinions are commonly required when:

• The seller is an overseas entity
• The buyer is an overseas entity
• A lender requires assurance that the transaction is legally sound

The opinion provides comfort to the party(ies) relying on the opinion by confirming:

• The overseas entity has correctly executed the transaction documents
• The overseas entity has the power and capacity to transact
• The overseas entity is solvent and not subject to insolvency proceedings

It may be addressed to the seller, buyer, their lender, or a list of parties who can rely on its validity.

Do Registered Overseas Entities have to provide a Legal Opinion?

Under the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA), overseas entities owning UK land must register with Companies House to obtain an OE ID. This registration does not confirm that the transaction complies with the laws of the foreign jurisdiction or that the entity is solvent. A legal opinion is still required to provide assurance that the transaction is valid under those laws.

Do Land Registry Certificates Replace Legal Opinions?

No. While Land Registry certificates, such as Form 7 or those under Schedule 4A of the Land Registration Act 2002, confirm certain aspects of the transaction (such as the seller having the power to dispose of the property), they do not verify:

• That the documents are validly executed under foreign law
• That the seller is solvent

A Form 7 certificate may not be required where the overseas entity has a valid OEID, but a legal opinion would still be needed.

Why Legal Opinions Matter

Legal opinions also offer an additional layer of protection. If a transaction is later deemed invalid, the buyer may have grounds to bring a professional negligence claim against the solicitor who provided the opinion. This makes them a vital safeguard in cross-border property transactions.

Need Advice?

If you’re involved in a property transaction with an overseas entity and need guidance on legal opinions, our Real Estate Finance team is here to help. Contact us today for expert support and tailored advice.