Contract - April 2010 - (Page 34)

practice Sustainable development has evolved into a win-win for all parties concerned. Not only does it work to fight global warming, preserve ground water, the ozone, air quality, animal habitats, and vegetation, but also it no longer makes sense not to go green, even if just for the economic reasons. The prudent developer today is building and renovating/retrofitting sustainably because it directly affects the bottom line. But there are additional reasons to go green. The government now is mandating it (in some shape or form), and even those property owners reluctant to “convert” to sustainable building practices soon will be forced to adopt them. As a result, architects, engineers, and interior designers now need to focus on what legislation is being promulgated and what new liabilities will affect their given practices. Green building has morphed into an everevolving system. Getting a building certified used to be the ultimate goal. A property owner (and its construction, design, and other team members) devoted much energy and resources to obtaining the “green seal of approval”—whether that was certification by USGBC’s LEED program, Green Building Initiative Green Globes, Energy Star, or any of the various certifications out there—and then they thought they were done paying attention to sustainability until the recertification period began. Now there is a continual requirement to keep a building green and prove it with metering, monitoring, and recommissioning. Thus the professionals involved in sustainable building have become continual service providers. initial project or ongoing recommissioning, could be costly to all parties involved. Dra ing agreements to reflect a sharing of responsibility and risk relating to a property’s sustainability should be the new platform from which most agreements are written. The old days when architects, engineers, contractors, and other service providers relied on tried and true contracts (AIA or others) that have been used for years can no longer neglect to have their agreements reflect the possibility that they (the service providers) will be held to a higher standard of care and the liabilities relating thereto. So where does this leave those professionals who provide services to property owners and tenants that are indented to result in sustainable certified premises? The first player that needs to come on board is the insurance carrier. Though many insurers already have embraced sustainable construction with green endorsements for property damage, more coverage development is needed in professional liability. The developer or tenant seeking certification by one or more of the certifying bodies out there (such as LEED) counts on the design professional and the contractor to deliver the certification level sought. When that certification level is not realized, who is responsible for the resulting damages (both direct and consequential)? The design professional’s insurance company will need to cover this type of risk and, as of today, none of the carriers have underwritten policies to do so because they are unwilling to take on the risk that comes with the design professional promising the delive of a certified property. Sustainable building practices come with the related burden of myriad legal issues for architects, interior designers, and their clients to consider To be fair to the carriers, direct damages in not delivering a certified building are one With this benefit of more work for the A&D thing. This could be loss of tax credits, failcommunity, there is the related burden of By Richard J. Sobelsohn, Esq., LEED AP, ure to obtain a certificate of occupancy dealing with myriad legal issues to consider Moses & Singer by a certain date, or other delive issues. in the development and continuing main(Delay in delive of premises to a commertenance of sustainable buildings. Some of cial tenant has been an issue for landlords for these relate to construction/renovation, some to leased premises, and others to owner/manager/service pro- many years, and provisions for such delays are not new.) Consequential vider aspects of property development and operation. While real estate damages are a different animal. These can arise when, although the developers may, prior to acquisition, be concerned only with traditional premises is delivered in a timely manner, it may not be at the certificaaspects of the acquisition, new construction, or renovation of an exist- tion level required pursuant to the terms of a lease. Who is responsible ing property, they now also must focus on the possibility of meeting if the tenant in its lease has a termination right for such an occurrence green building standards already enacted, or those which will be en- and other related damages occur? What party will be on the hook if forced in the future (either for LEED, Green Globes, or similar certifica- the building (though when delivered to the developer met the required standards) does not maintain the level of sustainability that the proptions, or to meet local, state, or federal requirements). erty owner is counting on? Failure to address these “green” opportunities at the outset of a project in the due diligence phase, and especially in the contracts with all Visit this article at for a professionals related to the sustainable property, whether it be for the continuation of this legal discussion. 34 contract april 2010

Table of Contents for the Digital Edition of Contract - April 2010

Contract - April 2010
Editor's Note
Resources: The Green Scene
Focus: Land of Opportunity
Green: Post-Occupancy Green
Practice: Legal Green
Lean & Green
Environmental Extraordinaire
Above the Legal Limit
Informing the Masses
Luxury in the Raw
Designers Rate: Green Products
Process: Science in the Age of the Invisible
Ad Index

Contract - April 2010