Unmet Expectations• Cost:The project cost more than expected• Scope:The project’s scope was more expansive than anticipated• Schedule: Completion took longer than planned• Quality: The workmanship quality was inferior to expectations.
What is Green Building?also known as green construction orsustainable building, is the practice of creatingstructures and using processes that areenvironmentally responsible and resource-efficient throughout a buildings life-cycle: fromsiting todesign, construction, operation, maintenance,renovation, and deconstruction. This practiceexpands and complements the classicalbuilding design concerns ofeconomy, utility, durability, and comfort. http://en.wikipedia.org/wiki/Green_buildin g
LEEDigation Is it Different Than Ordinary Litigation?
Law Ark Building Blog“ The bad news is that attorneys, especially those already practicing in construction law, will soon realize that aside from green design and construction’s sometimes specialized and occasionally ill-defined vernacular, there’s no real novelty in the types of claims that might arise. No new frontiers of jurisprudence need be explored– a leaky green roof is still a leaky roof–whether it also requires regular mowing and landscape maintenance changes little from a legal perspective. http://www.lawarkbuilding.com/?p=104
Best Practices Construction Blog“ Cole may be right that there is no novelty to the traditional types of claims (contract, tort, statutory, etc.) that may arise in green construction disputes. However, the novelty in the green building industry is the new set of standards that will inevitably become part of the legal dispute. In other words, while “a leaky green roof is still a leaky roof” … there will be new risks to be allocated, different types of damages lost, additional players involved, varied proof required and, yes, perhaps a novel cause of action alleged because that leaky green roof system failed. http://bit.ly/diszmS
Still... Unmet Expectations • Energy Performance: Is the building’s energy systems performing as expected (or promised)? • Rating: Did the building achieve the planned LEED rating or other certification? • Long-Term Sustainability: What is the project’s impact on the environment, and is this as expected?
Shaw Development v. Southern Builders• Problem: Contract required building to meet Silver Certification. It didn’t.• Whose Fault?: Developer sued builder, but there was no clear allocation in contract of who was responsible for certification• Damages: $700k+ in lost tax credits• Result: Unknown - Settled.
Washington DC v. Washington Nationals• Problem: Expectations for “Green” LED Scoreboard wasn’t met. Owner claimed project wasn’t substantially complete and withheld funds.• Damages: Not too clear in settlement materials released, but $3.5 Million was withheld based in large part on the scoreboard dispute.• Result: Unknown - Settled.
Show Me The Money! • Tax Credits: Missing a certificate level can effect tax credit eligibility • Energy Efficiency: If property is not as energy efficient as promised, damages can include increased energy costs
Unique Damage Situations • Missing Certification: If a property expects to have Gold certification, but only gets Silver, and this doesn’t have any tax credit implications...what are the damages? • Goodwill:How will courts calculate loss of good will if green construction misses expectations.
Unique Liability Situations • LEED Responsibility Allocation: Responsibility for LEED points is distributed between architect, owner and contractor. If energy efficiency is not as expected, how do you assign liability? • Energy Efficiency: Energy efficiency of a building relies on factors: (i) climate; (ii) property placement; (iii) property use; (iv) etc. How do you clearly blame a party for inefficiencies.
Preparing for the Risk• Control Expectations• Limit Exposure By Contract• Be Careful, and Keep It Simple
Control Expectations “...Expect the unexpected. Always sounds like good advice. Except, of course, if you are expecting the unexpected, then well then it really isnt really unexpected anymore. Is it? And that leaves you vulnerable to the truly unexpected. Because, youre not expecting it.
Control Expectations • Clear terms identifying scope of work • Clear terms in Subcontracts • Very specific specifications, making them as independent from specific certifications as possible • Get team together ahead of time (BIM, Charette)
Shaw Developmentv. Southern BuildersContract required “Silver LEED Certification,”but lacked clear specifications.Two lessons:- Builder’s obligation to achieve certificationand build to specs must be aligned;- Certification is not a guarantee, andarchitects / builders should be weary ofpromising a certification.
Limit Risk in Contract • Avoid warranties of long term energy performance • Set performance expectations at time building complete, not some time in future • Clearly allocate responsibilities between owner, builder and architect • Get LEED AP to consult
Things That Affect A Building’s Energy PerformanceA building’s energy performance can be avery complex matter, affected by things out ofthe builder / architect’s control:- Climate- Use and Users of Building- Third Party Interference
Allocate ResponsibilityThe LEED Program allocates responsibilityfor points between the Owner, Builder andArchitect.It is an error to not allocate responsibility forgreen building design and construction whencontracting.
Non-Contractual Actions• Check and Double Check Subcontractors’ and Consultants’ Credentials• Be Careful with Advertising. Keep it Simple and Don’t Greenwash.• Require Communication in Contract• Consider Green Building Insurance
What is Green Washing? Greenwashing (green whitewash) is the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources. It is a deceptive use of green PR or green marketing. The term green sheen has similarly been used to describe organizations that attempt to show that they are adopting practices beneficial to the environment http://en.wikipedia.org/wiki/Greenwash
Novel Insurance Products• Green Washing Insurance• Green Certification Insurance• Heightened Risk caused by certain green building practices like Vegetative Roofing, Alternative Energy Generational Systems, etc.
LEEDigation The Impact of LEED on the Practice of Law Christopher Hill The Law Office of Christopher G Hill, P.C. Virginia christopherhill-law.com constructionlawva.com LEED AP
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