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Green Construction Faces Legal Challenges
March 8, 2011

Legal claims over sustainability promises vs. performance of certified green buildings are beginning to mount—and so are warnings to A/E/P and environmental consulting firms, The Zweig Letter reported in a recent issue.

In February, insurance broker and risk management firm Ames & Gough issued warning urging design professionals to consider carefully the contractual language regarding “standard of care” and “scope of services” in addressing projects that pursue the U.S. Green Building Council’s LEED certification.

One of the most critical provisions in any contract for professional design services relates to the standard of care under which the design professional will be required to render its services. In the absence of contract language to the contrary, a design professional will be held to a common law standard of care commensurate with that of other professionals providing the same services to a geographically similar community.

“However,” Manhattan-based construction and real estate attorney Stephen Del Percio told The Zweig Letter, ZweigWhite’s weekly management journal that caters to the design industry, “on a green building project, an owner may seek to hire a design firm specifically because of its sustainable design expertise. Accordingly, it may attempt to hold the design professional to a higher standard of care than that which prevails in the industry. The standard of care has shifted.”

“In the spectrum of liability,” Del Percio continued, “legal challenges to green construction are making people more careful in what they’re promising.”

Contractual wording that stipulates attaining certain levels of LEED certification and promise of specific percentages of energy reduction “can be affected by owner and contractor decisions, or otherwise beyond a design professional’s control,” said Dan Knise, CEO of Ames & Gough.

Performance-based language such as “this design will achieve a LEED Gold rating” or “will reduce operating costs by 50%” in a standard of care provision may be problematic if the insurer believes that the design professional has provided the owner with the equivalent of a warranty.

Said Del Percio, since professional liability policies generally exclude coverage for claims arising out of the breach of a warranty, owners and design professionals should review language in their construction agreements for provisions that could potentially be construed by an insurer as the equivalent of a warranty.

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