The Leadership in Energy & Environmental Design (LEED) programs, as put forth by the US Green Building Council (USGBC), seeks to transform the way buildings and communities are designed, built, and maintained, by placing a greater emphasis on environmental sensitivity and energy efficiency.
Promoted in large part from the good public relations which lends itself to both the town building departments, as well as to proposed project Owners, these new construction practices have been adopted in full by several town code amendments. Some towns have already agreed to incorporate future program updates from the USGBC when released. In fact if you work in construction on Long Island you will likely be impacted by these new practices and regulations.
But there are emerging issues and potential downside risks involved with some of these new construction methods, despite their well intentioned goals. Significant issues regarding costs, methods and practices, as well as insurance issues can create a significant headache and unforeseen legal problems for the contractor, architect, or owner.[i] Considerable vagueness exists when the term ‘green construction’ is used. It is open to different interpretations as to what that exactly entails. Similar vagueness issues exist throughout the green construction process, creating the potential for disputes along the way.[ii]
With a focus on energy efficiency, design trends such as green roofs, rainwater runoff collection and re-use, as well as alternative energy generation systems pose numerous challenges in construction. These systems often add considerable weight and moisture issues to the underlying structures.
The insurance and surety industries are not yet able to properly price the risks involved with these methods of construction as they do not yet have a track record of statistical data to gauge the risk. When or if these systems should fail, or create damage to the surrounding structure, liability may be shared by numerous individuals and parties. [iii]
The impact on overall project cost by way of green construction is also vague and subject to interpretation. According to figures released by the USGBC, benefits received by way of ‘going green’ include higher marketability of the property, tenant retention, reduction in water and energy consumption. Those benefits sounds quite enticing when the USGBC claims that the average additional cost involved with a LEED certified building is between 2% and 5%.
Those figures sound quite convincing, and have been confirmed through some detailed cost analysis studies. Throughout 2008, data (was) gathered on 107 projects throughout the five boroughs of New York, 63 of which were either pursuing or had achieved Leadership in Energy and Environmental Design (LEED) certification, the report said. Surveys were conducted for buildings with and without sustainability goals. Data points included construction costs, design fees, LEED design fees, LEED additional fees, and commissioning costs. The average square-foot construction cost for a high-rise residential building without LEED certification was $436; while the average cost with certification was $440.[iv]
In addition to this cost / benefit debate significant legal issues often arise in a green construction projects. To avoid potential disputes specific attention needs to be placed on the review and drafting of construction contracts. This is especially true in the realm of a LEED certified project. It would be wise for the parties to the agreement to specify what each stakeholder’s role in earning the desired level of LEED certification is to be. The numerous tasks which must be performed, such as tracking, collecting, and of support documentation, should be clearly assigned. Architects specifically need to pay specific attention to the signing of credit submittal templates so as not to trigger an exclusion in their professional liability coverage.
Developers and owners are also well served in verifying the availability of your sustainable materials in advance of the construction schedule. Manufacturers and suppliers may only have limited availability of some items. Potential delays in the construction schedule may become problematic if they cause financial incentives on the project to expire.[v]
The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached via email at John@LIConstructionLaw.com or (631) 608 – 1346.
[i] See The Top 5 Legal Issues to Consider on Green Construction Projects, by Stephen Del Percio
[ii] See The New ConsensusDOCS 310 Green Building Addendum: Avoiding Green Legal Liability With Actions Over Words, by Gary L. Cole AIA, Esq.,
[iii] See Red-Hot Green Roofs a Hidden Green Building Risk for Owners and Insurers, by Stephen Del Percio
[iv] See Building Green Doesn’t Always Cost More, Says Report, by Charlotte Cuthbertson
[v] See The Top 5 Legal Issues to Consider on Green Construction Projects, by Stephen Del Percio
This is a general information article and should not be construed as legal advice or a legal opinion. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.