Draft Lpa Scenario 14

Skill: Draft Successor Fund LPA — Plan-Asset Exemption, Real Estate Valuation, and Multi-Source Conflicts

1. Subject-matter triage

• Treat the LPA as the primary deliverable and the drafting issues memo as secondary.
• Build the draft from the precedent first, then reconcile the term sheet, ERISA memo, fee schedule, facility terms, and GP structuring memo against it.
• If a source document is silent, preserve the precedent unless the silence creates a legal or commercial gap that must be filled.
• If source documents conflict, do not average them; choose a controlling term, draft to that term, and record the departure in the issues memo.
• If the task implicates multiple plan investors, multiple valuation dates, or multiple fee/facility mechanics, separate those paths explicitly rather than collapsing them into a single generic rule.

2. Failure modes the skill is correcting

• Drafting plan-asset exemption language as boilerplate without making sure the operative investment, governance, and rights-exercise provisions actually support the exemption.
• Failing to distinguish operating-company qualification testing from reporting and distribution valuation mechanics.
• Reproducing inconsistent business terms from different source documents without reconciliation.
• Omitting a substantive issues memo or reducing it to a cover note.
• Failing to identify the source of each conflict and the rationale for the adopted resolution.
• Allowing facility mechanics, fee offsets, or affiliate compensation to drift out of sync with waterfall and capital account provisions.
• Treating structural information about the GP entity as optional, even when the structuring memo controls authority, formation, or identification language.

3. Legal frameworks / domain conventions that apply

• Plan-asset exemption provisions must track the applicable operating-company framework and be drafted so the fund’s qualification depends on the fund’s rights and actual exercise of management over qualifying real estate assets.
• Qualification testing should be framed on the cost basis standard used by the exemption, not on fair market value.
• Fair market value remains relevant for appraisals, capital accounts, reporting, and distribution mechanics.
• Valuation provisions should specify appraisal frequency, independence, and appointment mechanics, and should align with financial statement and capital account language.
• Fee offsets and affiliate compensation provisions must be harmonized so that affiliate-level fees are disclosed and correctly netted or credited where required by the economic deal.
• Subscription facility mechanics must be coordinated with contribution, return, and waterfall timing so borrowed amounts do not distort accrual concepts.
• GP entity formation, authority, and signatory language should conform to the structuring memo if it addresses those topics.
• Draft legal propositions with the applicable authority or governing convention named in the source set or reflected in standard practice; do not state exemptions, tests, or allocation rules as naked conclusions.

4. Analytical scaffolds

• Start by mapping each source document to the agreement provisions it informs: formation, investment powers, plan-asset language, valuation, fees, facility, waterfall, transfer mechanics, and miscellaneous structural terms.
• Read each document for both express terms and implied dependencies; note where a term in one document assumes a clause in another.
• Reconcile conflicts by priority of legal necessity, then commercial specificity, then consistency with the precedent, and only then by drafting preference.
• For each disputed term, record the competing versions, select the operative version, and preserve the rejected alternatives in the issues memo.
• Draft the plan-asset provisions so that fund-level qualification, portfolio-level rights, and ongoing exercise of control are aligned across the whole agreement.
• Draft valuation language so that cost-basis qualification language does not bleed into fair-value reporting language.
• Check that fee language, offset language, and any portfolio-company compensation disclosure all speak the same economic language.
• Check that facility language aligns with contribution timing, preferred return accrual, and waterfall order.
• If the source set gives a specific term for one document but a different term elsewhere, make the discrepancy visible in the issues memo even if the draft follows the controlling term.
• Use the issues memo to separate resolved conflicts from open issues; unresolved items should be presented as true drafting questions, not hidden assumptions.

5. Vertical / structural / temporal relationships

• Fund-level exemption language depends on asset-level investment rights and recurring exercise of those rights; do not draft the exemption in isolation from acquisition and portfolio-management provisions.
• GP identity and authority language should flow from the structuring memo into the defined terms, execution authority, and delegation provisions.
• Valuation mechanics may differ by purpose: qualification testing, capital account maintenance, distribution calculations, and financial reporting may each require distinct drafting treatment.
• Facility borrowing can change timing for capital calls and distributions; ensure the waterfall and preferred return provisions address that sequencing.
• Any affiliate compensation or offset concept should be tied to the same period, entity, and payment stream across the fee schedule and the LPA.
• Where a source document uses a term for one point in time and another document uses a different point in time, preserve the temporal distinction rather than forcing uniform wording.

6. Output structure conventions

• Produce two Word documents: the LPA draft and the drafting issues memo.
• Draft the LPA as a complete operative agreement with defined terms, core economics, governance, transfer, valuation, and miscellaneous provisions integrated into a conventional LPA structure.
• Use clear bracketed placeholders only where the source set leaves a genuine open item.
• The issues memo should be a substantive advisory memo, not a checklist.
• Organize the issues memo by topic, and for each item state: the source documents implicated, the competing terms or ambiguity, the adopted drafting resolution or remaining open point, and the practical consequence of the choice.
• Where a proposition depends on a legal rule or regulatory framework, identify the rule or framework by name in the memo.
• End the memo with a concise set of recommended next steps tied to the drafting open points and the responsible role or decision-maker.
• Before finishing, confirm that the LPA file exists and contains operative drafting, and that the issues memo file exists and contains actual issue analysis rather than a cover paragraph.