How to Draft Better Additional Provisions – Part IV

8/2/17: How to Draft Better Additional Provisions – Part IV: The A, B, C’s of writing additional provisions with examples.

Welcome. This is the fourth installment in our series of webcasts on how to draft better additional provisions in the Colorado Real Estate Commission Approved Contract. Our first one talked about the notion to first seek to avoid drafting an additional provision at all. The second said oh, if you have to draft something think about merely supplementing the existing pre-printed language. The third one said make a decision about whether you are drafting something that is a contingency or whether it is an affirmative obligation. If it is a contingency, if the contingency is not satisfied generally the deal dies. Or is it an affirmative obligation, so if one side can’t perform, the non-performing side is in default under the contract. Once you have made that decision, then what do you do? Generally, it sounds corny; but you address the A, B, and C’s of writing the additional provision.

The A, B, C’s of writing Additional Provisions

The A is: What Activity? What Action? and What needs to be Accomplished? Notice all three of those words: Activity, Action and Accomplished all begin with an A, that’s the “A” part of it. Then you address the “B:”  “By when must this happen? And then the “C” is the difference between a Contingency and an Affirmative obligation. The “C” is: What are the Consequences? What are the consequences if the “A” does not happen by the “B?” So, with a contingency if the action does not happen, the contract generally dies, the contract terminates, in Colorado Real Estate Approved language. If the action is that if the thing does not happen by the “B” by the date by which it’s supposed to happen, then the non-defaulting party, the party that is supposed to perform is in default under the contract.

 

Additional Provisions Example

Jon this is too complicated, give me an example. Okay, I will give you an example. Going back to our last installment, let’s say the notion is that the seller needs to hire a structural engineer to certify that the roof is sound. The “A” is hire a licensed structural engineer, to do what, to certify that the property is structurally sound, let’s leave it at that, that is the “A.” By When? That is easy, you pick a date. What happens if it is not satisfied? If it is not satisfied by a certain date and it is intended to be an affirmative obligation then you go on to say if this is not satisfied, the Seller will make whatever repairs or whatever improvements are necessary to make the property structurally sound. If it’s intended as a contingency, then you say, if the engineer finds that the property is not structurally sound then the contract terminates or either buyer or seller may terminate it not later than such and such a date. That is the difference between an affirmative obligation and a contingency.

Now I don’t want you to walk away from this four part series to think that you are a pro now. When I was in junior high school I took a martial arts class and after my first class I thought I was ready to take on the powerhouse fighter of the era, Muhammad Ali. Don’t be cocky like me. All these things are designed to reduce the likelihood of error; they do not guarantee that the clause will be perfect. These are just tips to how to draft better additional provisions; it’s not how to draft “perfect” additional provisions. But armed with the four notions of this four-part series, hopefully we will all be a little better at it. In the meantime, remember, we live in a complicated world, be careful out there.

Parts I – III:
7/12/17: How to Draft Better Additional Provisions – Part III. Recognizing the difference between an affirmative obligation and a contingency. [See article for examples: Drafting Better Contingencies.

6/14/17: How to Draft Better Additional Provisions – Part II. If you cannot accomplish your goal with existing pre-printed language, attempt to supplement the existing language in the pre-printed contract. We illustrate this point with examples.

5/24/17: How to Draft Better Additional Provisions – Part I. Seek to avoid drafting additional provisions at all by using pre-printed language to achieve the same result. We illustrate this point with examples.

Disclaimer — Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship. Laws vary from one state to another. For legal advice on a specific matter, consult an attorney.