As a relatively new industry, green construction has its own set of legal risks and those who build, market and sell eco-friendly structures need to know how to minimize their vulnerability, attorneys told an audience at the
West Coast Green Conference.
"Green means better buildings, it also means you have to have better contracts," said real estate and land use attorney
Douglas White with
Hoge, Fenton, Jones and Appel Inc. "The sophistication level required in documents has shot way up with green building."
White, attorney
Paul D'Arelli, who co-chairs the
Green Building & Sustainability Group at Greenberg Traurig LLP,
Cheryl O'Connor, the vice president of sales for
Summerhill Homes and a board member of
Build It Green, and Kim Diamond, the senior manager of Land Acquisition and Entitlements for
Pulte Homes, conducted the panel discussion, "Packing a Parachute: Practices that Minimize Risk and Prompt Best Use of Green Features," at the West Coast Green Conference. Their session was held Saturday, September 27, the third and final day of the conference in San Jose.
The panelists stressed that builders, sales and marketing reps and sellers should not make statements in any form that imply an outcome, commitment or guarantee regarding future performance of the building.
"People are so excited to market these products — and that's great — but you need to be careful what you say," said D'Arelli.
The warning to "watch what you say" was repeated throughout the session. The attorneys said it should be kept in mind in all dealings and discussions related to a project, whether they are face-to-face, documented in contracts, involve other written material including sales and promotional collateral, or involve hearings or situations in the public eye and in public record.
"You don't want sustainability statements to be made conditions of approval," said D'Arelli, referring to the entitlement process. "Watch what you and your agents say. Carefully tailor statements made in applications and (in) the public record of hearings regarding proposed green building ratings and objectives."
While the precaution to refrain from over promising and under delivering is standard in any business, the challenge with green construction projects is it's often difficult to tell — until it's too late — whether an aspiration for a building has been stated in such a way that the hope is interpreted as a given, according to the panel.
Getting the appropriate advice from experienced counsel or consultants who are also familiar with the environmental, regulatory, permitting and community issues related to construction in a project's locale is key, panelists said.
Every project is different and so are the many contracts that are associated with it, White said. "There is no magic 'green paragraph' " for legal documents, he said, though attorneys unfamiliar with green building often ask for one.
And about that word "green" ... "There is no uniform definition of green," White told the audience. "Green means something different to everyone. Define green terms used in any contracts." For example, a contract might state that third-party certification is being sought or express as a threshold that at least a certain amount of points are to be sought through a ratings or assessment system, he said.
The panelists said their goal is not to muzzle green builders, but point out how they and others can minimize their legal risks in view of the litigation that often occurs as a developing industry gets its footing. Green building litigation is emerging, but has yet to hit in what is expected to be full force.
"The suits are starting to come," D'Arelli said.
D'Arelli and White praised West Coast Green for including the topic among its panels. The lawyers said the discussion of legal risk can make green building proponents bristle and avoid the subject.
Both attorneys said it is essential for people in the industry to have a clear idea about best practices and worst practices to understand the magnitude of risk and reduce vulnerability. Front-ending related discussions among key players in projects is also important, they said.
"I think we're the best friends of green building — even if we're out there with the warning flag," said White. "This thought process is absolutely essential. Having this discussion in a transactional setting rather than in a litigation setting makes a lot of sense."
D'Arelli concurred. His parting advice for the audience: "If you go green, go informed and with your eyes wide open."
