THE BLACK SIDE OF GREEN BUILDING

For some companies "going green" means changing light bulbs and installing a new thermostat. For others - those that are serious - it means taking the first steps on a journey to sustainability based upon a strategic commitment. The decision is not whether to go green, rather to go it alone or retain the assistance of a green building specialist.

More and more the decision is to use an environmental spcialist - that is the wise choice. In the overall development of a sustainability program, the price of utilizing a specialist who expedites, advises, and provides the critical expertise required to formulate and implement an environmental initiative is prudent.


BACKGROUND

In the U.S. alone, commercial buildings consume 39% of energy, 72% of electricity, and account for 35% of greenhouse emissions. Given this impact, the recently enacted American Recovery and Reinvestment Act of 2009 contains tens of billions of dollars in funding for green building incentives available to businesses. On the flipside, federal agencies and state and municipal governments are beginning to enact green building standards and mandates for any new commercial construction or renovation.

Like the Arboreel Group, environmental specialists - schooled in the art of green building operation and maintenance - provide the guiding hand that: streamlines the process, delineates best resource use (money and staff), trains, and perhaps more importantly, advises on a variety of (what I term) unforeseeable factors. In this article I discuss but one of these factors - the potential legal risks surrounding green building and how a qualified environmental specialist can provide a blueprint for avoiding legal entanglement.

THE RISKS

As green building and operations expand from the exception to the rule, certain legal risks are inevitable. Lawsuits related to negligence and fraud, violation of consumer protection laws, and failure to meet certification standards resulting in loss of tax credits are but a few examples. And those parties involved - owners, tenants, designers, architects, engineers and contractors - should be advised of these liabilities and the strategies to minimize or eliminate them. This is where competent environmental specialists comes in.

For example, owners risk that their projects will fail to achieve the required or desired green building standards or certification and thus fail to qualify for tax credits. Design professionals (architects, engineers and interior consultants) may face a higher standard of care and heightened liability stemming from design defects, liability due to the failure of systems or components to perform adequately over the building's life cycle, or trigger insurance exclusions where certain green outcomes were expected.

Contractors risk liability stemming from a failure to deliver contracted green builidng requirements, or from non-performing green products where sustainability outcomes were guaranteed. Tenants risk that the building fails to meet expectations for tax credits and abatements received based upon reduced energy use, etc.

Breach of contract claims might include breach of the implied warrants of construction materials, workmanship and purpose, or failure to deliver and/or meet energy efficiency standards. Parties may also be subject to fraud claims resulting from false or misleading statements regarding the performance of the building.

MITIGATING THE RISKS

Having a qualified environmental specialist greatly aids mitigating potential liabilities, especially when these issues are managed with thoughtful attention to detail. Here I identify four ways to minimize these legal risks:

1. The project management process must clarify the project goals up-front.
Use an integral design process, and assure the free-flow of project
information.

2. Each and every contract should be drafted to ensure the contractual
language clearly reflects the expectations for certifications, tax credits,
and future sustainability. This would include timeline and documentation
requirements, provide for non-performance damages and detail expectations of
tenant's benefits and obligations.

3. Design professionals and owners must pay special attention to their
insurance policies and seek coverage for green-specific warranties or
services.

4. Owners, tenants, and buyers need be mindful that any disclosures and
marketing materials defining expectations and risks for a green
construction project are aligned with reality.

Legal firms do not and cannot pretend to know all the issues regarding green building materials, green certification standards and requirements, and are neither trained nor equipped to effectively liaise with all of the team members and the numerous project nuances as does an environmental specialist.

AN OUNCE OF PREVENTION GOES A LONG WAY

The benefits of going green are undeniable and non-arguable, but you must ensure the legal risks and pitfalls in the process are mitigated through retaining qualified professionals to asssist in the journey toward sustainability.

Green building is defined as an effort to apply principles of environmental sustainablity to every aspect of the construction and renovation of buildings. This presents three main bases for legal liability: breach of contract, fraud and negligence.

Mitigating your exposure in going green rests heavily upon assigning the right in-house staff to manage the project and having the right environmental specialist on your team to provide the required sustainability expertise that is imperative.

This article presents only one of the unforeseen risks of going green - to think that any business can ignore the greening issue and maintain a status quo posture is delusional. Going green is a long-term cultural commitment for any company, but a journey that will have to be taken. Currently for new builds there is no green option, for existing buildings it is quasi-optional. However, in the near future all existing structures will be mandated to effect a greener footprint - this is the future.

By: Jim Lavorato
President, Entertainment Equipment Corporation and Principal, Arboreel Group