Much of the discussion with respect to the liability issues surrounding sustainable building has focused on the commercial sector, so I was interested to see my friend Brian Anderson, a real estate partner in the Madison, Wisconsin office of Whyte Hirschboeck Dudek S.C, quoted in a brief article suggesting risk management best practices for home builders in a recent article posted by Professional Builder. The article suggests that LEED for Homes and NAHB’s National Green Building Program may soon open the doors for insurance claims and litigation arising out of green projects that do not perform as promised. In the article, Mr. Anderson actually describes a matter his office handled where a builder did not obtain the anticipated level of certification for a residential project. “We were struggling to determine the value of the certification when the claim settled,” he told PB.
At least in the commercial context, a jumping off point for plaintiffs who assert these types of claims could be the studies- many of which are promulgated by the USGBC and its constituents- that tout the higher leasing and purchasing figures for LEED-certified buildings. I have started to see the beginning of this inquiry in my own practice and recently pointed a client to the CoStar study in order to assist it in attempting to translate a lost LEED rating into a quantifiable dollar figure (litigation has not resulted – yet – in this particular matter).
It is obviously a bit different in the residential context and I do not believe there is a study comparable to CoStar’s out there just yet. However, I do agree with Mr. Anderson’s conclusions in the PB piece that the most critical threshold issue for green construction in either sector is contract language that clearly defines the parameters of a project’s anticipated green features. While litigation is always a possibility no matter the type of project, matching the parties’ expectations through tight contract language that clearly defines the term “green,” among other definitions, can help reduce the risk that sustainable design will increase the potential for a lawsuit or claim on a green building project.