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The green building industry is arguably more popular than ever. The number of certified green buildings grows every day across all sectors of the building industry. Unfortunately, the contracts for sustainable projects are sometimes behind the times. Standard construction contracts are often not tailored to address the numerous issues and nuances that may come up on sustainable projects. This potentially puts all contracting parties at greater risk of uncertainty if disputes arise on the job site. Preparation on the front end of a green building is usually the best way to alleviate problems later on, and it starts with the contract. This is true whether the project is one for new construction or for renovations or retro-fitting.

First, the contract should be as clear and specific as possible about what the green goal is. Simply using terms like “green building,” “sustainable building” or “high-performing building” are not enough, because it is unclear what the precise goal is. For example, the goal may be to reduce electricity costs, and the owner may have a specific energy saving cost or usage goal in mind. That should be identified in the contract. In addition, an owner may require a third-party green rating certification. That could mean LEED certification, but LEED alone has multiple levels. Or, it could mean Green Globes, the WELL Building Standard, or a handful of other third-party rating agencies. If so, then specificity is needed. If the goal is not achieved, there will be no confusion as to what the goal was. Related to this issue is which party will bear the costs for certification fees, inspections and tests that may be necessary to the green certification. Again, this is best addressed in the contract.

Second, the contract should reflect who is responsible for achieving the project’s green goals. That might be a design professional like the architect or an engineer. Or it may be general contractor, sub-contractors, suppliers, a sustainability coordinator or a combination of construction professionals. Each segment of the construction project should be aware of what responsibilities it is undertaking in the green building process. The person or entity that is responsible also may want to get paid more for taking on the added risk.

Making Guarantees

All contracting parties should be aware of what guarantees they are making or receiving in terms of sustainable performance or certification. For instance, if a contract requires LEED Gold certification, but the final product does not achieve that, the contract should be clear about what the repercussions are. Similarly, the contract can address what happens when a component such as a solar energy system or a HVAC unit does not achieve the level of performance a contractor or otherwise represented.

An alternative to a guaranty is a performance bonus or bonuses based on the certification or performance levels achieved. In other words, a contract will describe a base fee for services on the project and then allow for additional compensation depending on the level of certification the building gets or based on the level of performance of the building after occupancy. This is helpful because it can be difficult to guaranty these levels on certain projects. Green building warranties may also be provided, but carry greater obligation or risk to the warranty provider.

The parties can also tie final completion benchmarks to the achievement of the sustainable goal, depending on the type of project. Money may be held back on a project pending the receipt of the green rating. However, when a rating will be bestowed by the rating agency is not always certain, and cannot be entirely controlled by the contracting parties.

A contract can also address the types of damages that may be obtained if the project fails to achieve the agreed-upon sustainability goals. For example, if the purpose of building green was to achieve certain tax credits, and those credits

are not achieved, they may become the measure of damages. Damages may be more difficult to ascertain in other performance metrics. Contracting parties may also want to consider capping those damages, or setting forth a method to measure them.

When it comes to green building contracts, there is no one size that fits all. Goals, methods, specifications and components can greatly vary. However, all parties involved in a sustainable building project have added incentive to consider and address the unique issues that may appear. Reliance on the standard building contract may not suffice. If the issues are not properly addressed upfront, the chances for dispute and litigation will significantly increase. As the old saying goes, an ounce of prevention is worth a pound of cure.

Mark J. Stempler is a Florida shareholder with the law firm Becker & Poliakoff. He is board certified in construction law, is certified as a LEED Green Associate and focuses his practice in the areas of construction litigation, government law, and civil litigation. He may be reached at mstempler@bplegal.com.

There was a recent article in Tampa Bay Online by Yvette Hammett, linked here, dealing with new dorms going up at the University of South Florida. Other than my normal interest in the goings on at my alma mater was the construction methodology for the project. Tampa-based CBG Building Co., plans to use a system developed by Denver-based Prescient Co., Inc., where segments of the building are designed and pre-constructed off site and then shipped to the site for installation.  The dormitory project consists of a 6 story parking garage and a 6 story dormitory with 500 apartment style units.

A quote from the article notes that this type of construction may be expandable to different types of projects:

What makes this building system so different is this: “We don’t construct our building,” said Prescient CEO Satyen Patel. “We assemble it.” The process involves three companies — one for software development, one that heads up the manufacturing technology and one that installs the products on site, Patel said.

“We deliver a post, a panel and a truss. Those are the three finished goods that come out of our manufacturing system and get assembled on site. We can go taller than timber and substantially less expensive than concrete.”

Patel said the Florida market will be big for his company for several reasons: the projects work well for senior living facilities, Prescient serves the higher density market and its system works well for in fill construction because it doesn’t require a large staging area like traditional construction does, Patel said.

The original intent in going to this system was to meet an August 2016 completion date. It will be interesting to see the progress on this project and if that schedule is met.

item7_rendition_slideshowVertical_2014-top-green-buildings-08-sustainability-treehouse-glen-jean-west-virginiaSolar roof panels and low-flow toilets are so last season.  Now there’s more graywater recycling, net-zero or net-positive energy systems, ground source heat pump systems, and variable-refrigerant flow heating and cooling systems.  These features are featured in the American Institute of Architects’ (AIA) Committee on the Environment’s annual Top Ten Awards.

The awards celebrate projects that are innovative and integrate built and natural systems and enhance both the design quality and environmental performance of the built environment.  This year’s winners range from renovated historic buildings to educational facilities and even includes a very cool “sustainability treehouse” in West Virginia (here’s the photo).

Check out the awardees at http://www.aiatopten.org/.

Many contracts used in green building projects are not always ideal for green building projects.  Often, contractors, design professionals, or owners will use their old standard construction contracts.  But those forms might not take into account some of the nuances or issues that can arise on a sustainable project.

For example, green building contracts should strive to be more specific about what the green goal is.  Terms like “green building”, “sustainable building” or “high-performing building” lack the specificity of what the goal is.  Further, it is not enough for the owner to say it wants LEED platinum rating, or LEED certified, or Green Globe?  There is a difference.  Or, maybe the goal is to save money on electricity, or to reduce the amount of water consumed.  Those should be specifically identified, so if the goal is not achieved, there will not be confusion as to what the goal was.  Confusion often leads to a dispute, which often leads to litigation.

The contract should also reflect who is responsible for achieving the project’s green goals.  It can be the architect, an engineer, or contractors and sub-contractors or suppliers.  Each segment of the construction project should be aware of what responsibilities it is undertaking in the green building process.  And, they may want to get paid more for taking on the added risk.

 The aforementioned should also be aware of what guarantees they are making in terms of sustainable performance or certification.  If an architect undertakes the responsibility of achieving a certain level of certification, and that goal is not met, the contract should be clear about what the repercussions are.  Or, the contract can address what happens when a component such as an HVAC system does not achieve the level of performance a contractor represented.  If the contract is silent, the design professional, contractor, or whomever may find themselves facing a lawsuit for breach of contract.

 In some cases, an alternative to a guaranty is to allow for performance bonuses based on the certification or performance levels achieved.  In other words, a contract will describe a base fee for services on the project, and then allow for additional compensation depending on level of certification the building gets, or based on the level of performance of the building after occupancy.  This is helpful because it can be difficult to guaranty these levels on certain projects.

 There are some form contracts out there that are tailored for green construction projects.  But just about every project is unique and generally there is no one size that fits all.  So, before you sign that green building contract, whether you are an owner or part of the construction team, and whether its for new construction or even a renovation or retrofit, make sure you are contractually protected, and that everyone is on the same page as to the green goals.

Set of bio, eco, organic sticker elementsThis post originally appeared in “The Green Building Law Blog

Being green is not always straightforward.  There are many products on the market, related and non-related to building, that make claims about their environmental benefits and impacts.  There are many service providers that make similar claims.  But not all products and services live up to their billing.  Companies marketing themselves or their products as environmentally friendly will have
to better qualify those statements, in light of Federal Trade Commission’s Green Guides.

The Green Guides have been around since 1992.  The latest version was updated in 2012.  They “outline general principles that apply to all environmental marketing claims and provide guidance regarding many specific environmental benefit claims.”  The purpose is to cut down on deceptive practices regarding green marketing.  The Green Guides are not law and are not independently enforceable.  But, the FTC can take action if someone or some entity makes an environmental claim inconsistent with the guidelines.

When you come across a product with a green certification seal, for example, from an independent third party, that has to meet the endorsement requirements in the Green Guidelines.  When you come across materials from a provider of a product, make sure the product is certified.  For instance, if you get a manufacturer’s or vendor’s sales brochure for overhead lighting and it has a seal that says “EcoFriendly Building Association” find out what is being endorsed.  If the lighting manufacturer or vendor is just a member of that association, that does not mean that the association evaluated that product.  It may not have any environmental benefits.  Consumers should also make sure that if a product is endorsed by a independent third party, that the certification is legitimate.

The Green Guides has sections focusing on claims such as carbon offsets, non-toxic products, renewable energy, ozone-friendly, recyclable, and renewable materials.  You can see the latest Green Guides by clicking here.