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MANY EXPECT NEW LEGAL ISSUES AND LITIGATION FROM “GREEN BUILDING” TREND

Posted by Jonathan A. Barash

While there has been a great deal of discussion and media coverage regarding the benefits of “green building,” until recently, less attention has been given to the risks involved – particularly the legal risks.

Green Building (also called “sustainable building”) is an approach to building that focuses on minimizing the environmental impacts of construction, increasing the efficient use of resources, and contributing to the health and productivity of a building’s occupants. Green buildings can achieve “certification” by any one of several third-party organizations, the most popular and universally accepted one being the U.S. Green Building Council’s Leadership in Engineering and Design (LEED®) rating system.

While green building projects generally have the same legal risks found in conventional construction, additional claims may arise because of the enhanced expectations created by the green building process. Accurate or not, Shaw Development v. Southern Builders is considered by many to be the nation’s “first green building litigation.” Shaw concerned traditional construction claims, but also concerned the failure of the building to achieve LEED “Silver” certification and the related failure of the building owner to qualify for certain tax credits triggered by such certification.

Many predict increased litigation in this area as the number of green building projects continues to grow as a result of increased interest in sustainable buildings, as well as the billions in funding for such projects provided by the American Recovery and Reinvestment Act of 2009. (One commentator on the topic has even coined the term “LEEDigation” for such cases.)

Acknowledging these risks, several insurance companies have developed special “green building” endorsements or enhancements to their existing construction and property related polices. (A comprehensive study can be found in Marsh, Inc.’s report, The Green Built Environment in the United States: 2008 Year-end Update of the State of the Insurance Markets.

Like any “new” activity or product, the impact of green building on construction claims and litigation is not exactly known at this time. What has become clear is that industry participants are keeping a close watch.