Yesterday, while waiting for my flight from Orange County’s John Wayne Airport back to Seattle I purchased the current issue of Fortune Magazine. In addition to the feature story, “What It Takes To Be Great,” the magazine interviewed Boeing CEO James McNerney and Costco Founder Jim Sinegal.

I found the feature story extremely fascinating and well written. Although it covered no new ground, the author Geoffrey Colvin presented further compelling evidence that the secret to great success, no matter what the field of endeavor, is determined more by painful and demanding practice than natural talent. After examining consistently outstanding sport figures, musicians, artists and business people, study and study concludes that consistent application of a proper mental approach, focused practice, and obtaining quality feedback on performance is what determines the difference between good results and excellence. The article contains a “tip sheet” for perfect practice. I highly recommend this issue of Fortune that will be on the shelf until November 6th. The interviews with Mr. McNerney and Mr. Sinegal alone are worth the purchase price.

This afternoon I will meet with a dozen or so other volunteer attorneys who are members of the King County Bar Association’s Business Assistance Panel as we plan for the annual Business Advisory Day. We provide pro bono legal advice to small business owners in Seattle’s economically distressed communities in cooperation with the University of Washington’s Business and Economic Development Program (BEDP). According to the King County Bar Association website, “participating members of the King County Bar Association have been a key component of the BEDP’s ability to link 380 Business School students and more than 100 business advisors with 110 inner city companies since 1995. Based on feedback from business owners, the work of the students and advisors has led to the creation of more than 200 new jobs, the retention of 190 other jobs, and the addition of more than $6.5 million in new revenue for inner city small businesses.”

Perhaps from that group of business owners will emerge an individual that strives for greatness, understands perfect practice and the path so difficult to tread to become the next James McNerney or Jim Sinegal.

The feature article in this past Sunday’s Real Estate section of The Seattle Times, “Staking Their Claim,” dealt with the issue of condominium sales in project that are either pre-built or under construction. I was contacted by Kelly Tompkins, who wrote the article, on August 24, 2006, for my opinion on whether or not I would expect the number of reservations that fall out of contract over the next couple years to increase and the options that are available to buyers who cancel reservation and presale agreements. Overall the article was well written and the opinions expressed made sense to me. I do appreciate Kelly’s call for my opinion and plug in the article.

For the record, I went out on a limb and predicated that reservation and presale cancellation numbers may increase due to the rise in the number of units on the market which could trigger competition from developers to attract buyers, increases in interest rates, the possibility of a mild recession and general real estate market volatility. This view is contrary to today’s market exuberance and was excluded from the article. It is widely known that condos in the Puget Sound market have appreciated faster this past year than detached single family residences and that demand is generally strong for well located units with desirable amenities. It seems, however, that the market is responding to the possibility of overbuild, interest rate and construction cost increases as the number of condo projects in Seattle and Bellevue that have been cancelled or shelved recently is increasing as was reported in a Puget Sound Business Journal article published on Friday, October 20, 2006.

A reservation is a commitment to purchase if the developer reaches a certain promised threshold in the development process. A presale “agreement” is an addendum (Northwest Multiple Listing Service Forms 26) to the real estate purchase and sale agreement (REPSA). In addition to Form 26, The New Construction/Conversion Addendum to Condominium Real Estate Purchase and Sale Agreement (Form 29) also deals with pre-completion issues and affects the legal rights of condo purchasers. The Presale Addendum covers issues such as buyer’s review and approval of covenants, conditions and restrictions, plans and specifications, architectural review committee approvals, decoration selections, upgrades and changes, inspections, closing date commitments, the condition of the premises at closing, and punch-list items. Form 29 governs the relationship of the condominium buyer and seller during the construction process. When a prospective buyer signs a REPSA, that agreement will contain the earnest money deposit clause and may be accompanied by one or all of the presale and construction/conversion addenda. All of these agreements, and contracts in general, contain the implied covenant of good faith and fair dealing.

If a developer cancels a project then any deposit would clearly be refundable. If a developer fails to deliver a public offering statement, an unlikely scenario, the buyer disapproves the offering statement or other discretionary items in the presale addendum, the project or unit materially and substantially deviates from the plans and specifications furnished to the buyer, there is an material misrepresentation that is not remedied to the buyers satisfaction or the completion date is substantially missed and the buyer notifies the real estate agent and sellers representative in the manner provided by the agreements, then the buyer may be in a position to rescind the agreement and receive a deposit refund. However, the REPSA and Forms 26 and 29 give a developer much lead way to adopt to changing site conditions and this is where the covenant of good faith and fair dealing comes into play. Minor changes in conditions are not enough to give automatic rise to a cancellation right.

In cases where the buyer simply gets “cold feet” and wants to terminate the agreement without a valid reason, the buyer will be faced with losing his or her deposit and may be liable for additional damages agreed to by the buyer and developer in the REPSA in addition to deposit forfeiture. For example, a developer may seek additional damages for custom work to personalize the unit unless those damages are precluded in the REPSA because the parties agreed to limit damages to deposit forfeiture. In a rising market arguably damages may be mitigated by market conditions, in a stagnant market things could be different.

It should be remembered that developers may depend on reservation commitments as a partial criteria for construction loan approval and binding purchase agreements with presale addenda for construction draws. Buyers need to carefully review the developer’s plans and other deliverables, the REPSA and presale addenda with their real estate agent and attorney and should make certain that they are as committed as the real estate developer to a project which may not be completed for a number of years before signing anything.

The October 21, 2006 New Homes Saturday section of the Seattle Post-Intelligencer, featured two new condominium projects: “The Carlton of Mercer Island,” a “charming 60 condominium community [that] features one and two bedroom homes,” developed by Mercer Island Condos, LLC, and “Sunset at the Locks,” a twin pair of condominiums featuring 20 units for those “who want to stake their claim on a slice of this re-gentrified [Ballard] neighborhood,” developed by Sunset Development, LLC. Although Section F, New Homes Saturday, is technically advertising, it is noteworthy because both Mercer Island Condos, LLC and Sunset Development, LLC are limited liability companies whose limited liability company agreements resulted from a collaboration of efforts by Lee Brettin of the Brettin Law Office and Tammy Gibson, Esq., condominium specialist and counsel for Mr. Robert Hardy, the developer.

Also, in the Wednesday, October 18th, edition of the Seattle Post-Intelligencer, Section C, appeared news of a new restaurant, “QUBE,” under the headline “High hopes for French-Asian fusion start-ups.” QUBE, a restaurant owned by Fu Shen Chang and his wife Kerry Huang, will feature Asian-French cuisine in its new Second Avenue location. Lee Brettin of the Brettin Law Office is responsible for the formation of the parent company Iron Plate, LLC, and in collaboration with Eugenie Rivers, Esq., of Rivers Business Law, Inc., the formation and venture funding of QUBE, LLC /dba/ “QUBE.” Lee Brettin handled lease negotiations for the new restaurant as well.

By entering into professional collaborations these attorneys were able to offer their entrepreneur-clients services to enable them to execute on their business plans. Here is wishing everyone involved the success they have worked hard for and truly deserve.