Green roofs have been a part of building for over a thousand years. The current green building movement has, however, had the greatest impact on the growth of the green roofing industry. A green roof is commonly defined as a roof that consists of vegetation and soil, or a growing medium, planted over a waterproofing membrane. There are two basic types of green roofs: (i) an extensive roof, which has a few inches of soil cover; and (ii) an intensive roof that has two feet or more of soil for a variety of grass, trees, bushes and shrubs. Green roofs are used in a multitude of buildings, including industrial facilities, commercial offices, retail properties and residences. The benefits of a green roof include reduced storm-water runoff, absorption of air pollution, reduced heat island effect, protection of underlying roof material from sunlight, reduced noise, and insulation from extreme temperatures. A green roof can thus be a critical design element for a green building. As more properties across the country are attempting to obtain LEED certification, it is worth noting that a green roof can help a property obtain over a dozen LEED credits, including credits for reduced site disturbance, landscape design that reduces urban heat islands, storm water management, water efficient landscaping, innovative wastewater technologies and innovation in design. The increase in green roofs and the green building movement is also resulting in an increase in liability resulting from errors in the design, installation or maintenance of green roofs. As a result, owners, design professionals and contractors should carefully consider ways to mitigate the potential risks involved with building a green roof.

In order to mitigate liability, the stakeholders in a project that features a green roof should clearly detail their expectations and performance requirements in their contracts. This will require preparing contracts that might not easily fit within standard forms of architect and construction contracts. A clear example of green roof liability was detailed by Frank Musica at the AIA Convention 2007. In that instance, the green roof contractor and structural engineer failed to communicate the specifics of the green roof. The result was water leakage and significant structural damage. This scenario could have been avoided by simple communication. One can easily imagine potential disputes arising from any of these following situations: (i) failure to deliver the energy efficiency levels claimed by the installation of a green roof; (ii) failure to deliver a green roof that results in the claimed number of LEED credits that should be awarded by the USGBC; (iii) mold or other environmental hazards as a result of poor maintenance of a green roof; or (iv) a roof collapse resulting from a green roof that was not properly constructed, installed or maintained. Parties should look to limit unnecessary liability by drafting contracts that clearly detail how the applicable parties will be responsible for each of the above-mentioned items. Although liability for said items is not able to be eliminated, it is important to all stakeholders that it is appropriately detailed in contract form, instead of by a judge or jury.

Green building owners and general contractors should engage experienced green roofing professionals when building a green roof. The green roofing industry has begun to assist in this regard by designating such professionals in a manner similar to that of the USGBC’s LEED Green Associate or Accredited Professional designations. Green Roofs for Healthy Cities has established the Green Roof Professional (“GRP”), which designation was created to distinguish certain individuals that have achieved a specific knowledge level with regard to green roof design, project management, installation and maintenance.  The goal of the designation level is to allow green roofing professionals to differentiate themselves, establish an increased level of professionalism in the green roofing industry and help protect the public health, safety and welfare by the building of better green roofs. I would strongly encourage clients to seek GRPs when working on a green roof in an attempt to mitigate unforeseen liability. It is worth noting, however, that one likely unintended consequence of this accreditation program for GRPs is that they could very well be held too a higher standard of care should any problems occur following the installation, repair or maintenance of a green roof.

Green roofs provide a benefit to the environment, energy efficiency related savings to property owners and tenants and potential credits for owners seeking LEED or other third-party green building certification for their property. The legal risks and potential liabilities of green roofs should, however, be carefully examined, both by companies considering installing a green roof and by green roof professionals themselves before getting involved with any green roofing project.

Geoff White is a Senior Associate in the Commercial Transactions and Real Estate Group at Frost Brown Todd.  He is a LEED Green Associate (LEED GA) and a Fellow of the Institute of Green Professionals (FIGP).  A sizeable portion of his practice is spent advising clients on the legal issues of green building and sustainable development.  He recently co-authored the chapter “Understanding and Mitigating the Legal Risks of Green Building,” in the Aspatore Books Inside The Minds – Negotiating and Structuring Construction Contracts.  Mr. White is licensed to practice law in Kentucky and Ohio.  Contact him at gwhite@fbtlaw.com or (502) 568-0202.

Much like the rest of the green building industry, green leases contain a collection of legal risks that landlords and tenants have not previously had to consider. This article considers a small sample of such problems, specifically in relation to certification requirements, cost issues, insurance provisions and green product issues.

Many companies and government agencies require their space to satisfy an applicable LEED for Commercial Interiors certification level. These entities look for a lease to specify that the space will meet such standards. Landlords are not generally in the position to guarantee such certification level. The project architect, general contractor, subcontractor and USGBC all have a much greater impact on whether the space meets the required certification level. The landlord will thus need to make sure it is working with contractors and architects that understand the issues and are able to work towards achieving the necessary certification levels. It will need to protect itself in its applicable project contracts. The landlord and tenant must work together in attempting to craft a lease that adequately protects each of their respective interests and avoids liability outside of either of their control. Crafting lease incentives such as free rent periods or rental abatements are the best way to incentivize a property owner to deliver a green lease space without undue penalty for items outside of its control.

In addition, green building is generally more costly and timely than the standard building process. Landlords and tenants must realize this when determining the tenant improvement allowances detailed in the lease. Although green space is obviously important for a company, having a finished space is a far more important issue.

The improvements must also be are properly insured. A party entering into a green lease must carefully consider the increase in both (a) the replacement cost and (b) the rebuilding period following a casualty event, due to specific green building issues. As detailed above, the cost of green building products are generally more expensive than standard materials. There will also be additional costs incurred if the space needs to re-obtain its LEED certification level following a casualty event. It is important that each of those points is considered when determining replacement value and how that is detailed within the lease. If the casualty event is not the fault of the tenant, the lease should also consider who will be responsible for the costs of the LEED re-certification. The rebuilding of the space will also take longer due to both (i) the installation of many energy efficient systems and (ii) the LEED re-certification process following the casualty event. Such issues must be considered in the sections of the lease detailing the rebuild obligations of the parties following a casualty event.

The use of certain green products can also create unforeseen issues for both the landlord and the tenant. Some specific examples were detailed in Frank Musica’s “Don’t Let Green Design Cause Red Ink” presentation at the 2007 AIA National Convention in San Antonio.

The first example to consider is one in which a design firm specified cork flooring in kitchen areas. Unfortunately, this product had not been properly tested for use in high traffic kitchen areas. As a result, the cork flooring eventually saw growth of mold created by the high traffic and water spillage of the kitchen area. Another example was a tenant that provided the government with military systems designs and terrorism identification systems. The tenant invested in green design and extensive daylighting systems, including skylights and large window systems. Upon inspection of the new space by the government, it was determined that the tenant was putting confidential information at risk. The tenant faced a threatened revocation of its contractor’s security rating and cancelation of existing contracts. These outcomes show why tenants must work with their landlords in the installation of green building products and systems within their spaces in order to avoid potential liabilities that may have been unforeseeable for the landlord, contractor or architect.

In conclusion, green leasing, much like the green building movement itself, is here to stay. There are a multitude of new legal issues and risks that both a landlord and a tenant must consider if they elect to lease green space. These potential risks are further reasons to work with the most skilled professionals in the green building and leasing industry, whether that is an architect, contractor or attorney in site selection, plan preparation, lease negotiation and the final build-out of the space in connection with a green lease.

Geoff White is a Senior Associate in the Commercial Transactions and Real Estate Group at Frost Brown Todd. He is a contributing author to Green Real Estate Law Journal. He also oversees the Green Building Series on the Frost Brown Todd’s Construction Law News website. Mr. White is licensed to practice law in Kentucky and Ohio and is a member of the Kentucky Chapter of the U.S. Green Building Council. Learn more about Geoff at http://www.frostbrowntodd.com/geoffwhite

The claim that made the biggest splash with my audience yesterday was where Musica reported how an architect failed to perform sufficient due diligence in crafting green building specifications for a particular project and specified what turned out to be a patented solar shading system. After the project was complete, the patent holder approached the owner and demanded a licensing fee for its use of the system. The owner pointed a finger at the architect and sought indemnification under the terms of the parties’ agreement. In my slide detailing this particular claim, I set forth the standard form intellectual property infringement indemnification provision that I use in my owner – architect agreements:

The Architect shall indemnify and hold the Owner and the Additional Insureds, as set forth in Exhibit X, harmless from any and all claims for infringement by reason of the use of any design or elements of the design of the Architect which the Architect knew, or with the exercise of due care, should have known, to be protected by one or more copyrights or patents.”

The key points to take out of this discussion are the following. First, design profesionals must use heightened scrutiny on green building projects in selecting products, materials, and building systems. Their inquiry should not only be limited to whether such items are covered by a patent, but also whether they are (1) readily available from the manufacturer and (2) provide the level of performance that the architect’s client is expecting. Second, and perhaps most critically, each contract provision in a green construction contract must be vetted with that same degree of rigor. Form contract language, as we saw in the Shaw Development case, can be a recipe for disaster. Here, although the architect may not have enjoyed sufficient bargaining power to delete this particular indemnification out of its agreement with the owner, its counsel ought to have identified such a provision and stressed the importance of reviewing any intellectual property protections as the architect selected various building systems and components.

Finally, I will be giving this same presentation, tomorrow, January 30, at the William & Mary Law School’s Environmental Law & Policy Review Symposium, It’s Not Easy Being Green. You can access additional details about the Symposium through the link below. The entire Symposium will be videotaped – details on how you might be able to access it will be forthcoming. I have also provided a link back to our post at gbNYC discussing Mr. Musica’s presentation and a link to his PowerPoint slides.

• Need For Green Counsel Increasingly Salient (gbNYC, link to Musica presentation)
• W&M ELPR Symposium - It’s Not Easy Being Green