Patrick R. Drueke is a shareholder at Rhoades McKee. He helps individuals and businesses solve real estate disputes, real estate transactions, land development challenges, condemnation claims and construction matters. He is a Leadership in Energy and Environmental Design® Accredited Professional (LEED AP), and is also certified by Green Advantage® - Commercial/Residential. The LEED rating system is the nationally recognized benchmark for the design, construction and operation of high-performance green buildings. As a LEED AP, he can navigate clients through the evolving legal and regulatory requirements relating to green building, as well as assist clients through the LEED certification process from startup to final verification of a project’s green measures.
Identify the underlying risks and liability potential in green construction.
Identify contractual provisions to mitigate legal risk.
Is There New Legal Exposure for Green Building?
“While the process of incorporating environmental considerations into the home building process is not new, today’s green building activity is expanding quickly, and as with any emerging field the potential exists that mistakes will be made and the unexpected will occur.” NAHB, Before You Build Green: A Primer on Liability Pitfalls .
“Take proactive steps to reduce the risk that your green building project could become a major headache for you and your customer, ending in litigation.” NAHB, Before You Build Green: A Primer on Liability Pitfalls .
“As with other aspects of your business, the key is to accept risk knowingly.” David Jaffe, NAHB Vice President for Construction & Liability Research, March 2007.
The United States Green Building Council contends that there is no new legal risk in its paper: “The Legal Risk in Building Green: New Wine in Old Bottles?”
The paper suggests that liability risk associated with green building is nothing different than traditional construction (i.e. “the novel liability associated with building green are . . . new wine in old bottles”).
The paper suggests that the framework of legal liability is not new: local building codes and land use regulations must still be followed.
The paper suggests that there have been very few insurance claims against green design professionals.
“Green building is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building's life-cycle from siting to design, construction, operation, maintenance, renovation and deconstruction.”
Manage expectations and avoid misunderstandings by clearly defining what “green” means in your contract.
State that the structure will be built according to the National Green Building Standard.
The as-built structure must then comply with the specified standard.
A recent case in Maryland ( Southern Builders v. Shaw Development ) emphasizes the importance of understanding the applicable legislative scheme (mandate or incentive) and clearly describing the responsibilities of: the owner, design professional, contractor, etc.
In Southern Builders the parties utilized a standard form contract, and incorporated a project manual, which stated that the project was “designed to comply with a Silver Certification Level according to the USGBC’s LEED Rating System.”
Maryland offered state tax credits for LEED projects.
Projects could obtain the credit only after receiving a certificate of occupancy after construction was complete, and a submittal that the building meets the criteria necessary to receive the tax credit (i.e. LEED Silver) – all within a specified time period .
Tax credit equal to 50% of the total cost for the construction of a green building or the rehabilitation of a building into a green building and the expenses incurred to obtain LEED certification or $50,000.00, whichever is less.
HB 4193 (Introduced February 5, 2009):
A credit equal to $5,000 for the purchase of an eligible green residential structure; or a credit of 30% of the costs incurred for an eligible renovation or addition or $2,000, whichever is less.
HB 4927 (Introduced May 12, 2009):
Provides a tax credit equal to $50,000, or 50% of the cost of LEED certification (including third-party commissioning, consulting and verification costs) whichever is less for the construction or renovation of a qualified green building.