A green future: Limiting liability in green building

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By Safia J. Lakhani

The roots of “green architecture” can be traced as far back as the nineteenth century, with the innovation of roof ventilators and underground air-cooling chambers in London’s Crystal Palace and Milan’s Galleria Vittorio Emanuele II. Today, green building continues to grow in popularity. From complex commercial constructions to small-scale residential projects, there is a shift towards sustainable design and building techniques. With innovation comes risk and parties to green building contracts should be aware of their shifting roles and liabilities at these construction projects.

What is green building?

While there is no universally accepted definition of the term, green building has been described as the use of environmentally preferable practices and materials in the design, location, construction, operation and disposal of buildings. Today, one of the most widely accepted and utilized rating systems for environmental building is the LEED (Leadership in Energy and Environmental Design) certification program.

Developed by the U.S. Green Building Council in 1998, LEED was introduced to Canada in 2002, and is presently used in 132 countries around the world. LEED’s certification system operates on the basis of points assigned in respect of various categories: LEED Version 1.0 awards points based on site selection, water efficiency, energy efficiency, energy and atmosphere, materials and resources, and indoor quality environment of a building; the points correlate with different levels of certification.

Less widely used certification systems include Green Globes, the Building Owners and Managers Association (BOMA), the Built Green Society of Canada, and the National Association of Home Builders (NAHB).

The risks of going green

If they are not prudent, parties to green building contracts may assume greater risks than they would in a traditional construction contract. An architect at a green building site might warrant a “green design” and be found liable if the project is not LEED certified: ostensibly minor changes in the types of materials used may jeopardize LEED certification.

Contractors, in turn, may assume greater design liability than they would at a non-green project. The search for novel, sustainable construction materials poses a double risk: there may be delays associated with locating these materials, and unanticipated defects arising from their use.

Finally, if the term “green building” is not adequately particularized in the contract documents, both architects and contractors are at risk of not meeting client expectations.

Standard form contracts

There are two standard form contract addendums in the American context that give insight into the distribution of liabilities amongst parties to the contract.

The ConsensusDocs 310 Green Building Addendum (the addendum) allows the parties to the contract to define what is meant by the terms “green” and “green building.” This contractual form also carves out a role for the “green building facilitator,” whose responsibility it is to coordinate and facilitate project design and ensure its completion. Significantly, the Green Building Facilitator assumes most, if not all of the risk for failure to achieve “green goals” at the project.

In contrast to the addendum, the American Institute of Architects’ B214 (2007) (the AIA Contract) expressly provides for LEED certification, though it allows the owner to specify what level of certification it wishes to achieve.

The AIA contract does not designate a separate design professional to monitor the “green” elements of the project: rather, the architect is not only responsible for certifying the project, but also for surveying the materials to be used and reporting back to the owner if particular materials pose a risk to the LEED certification of the building. The architect also assumes greater liability in this model than in the addendum.

The future of green building in Canada: Mitigating risk

Given the rise of green building in Canada and globally, it is likely that standard form contracts will emerge in the near future.

In entering into green building contracts, it is important for all parties to be aware of the potential risks they may be assuming, and to mitigate those risks where possible. For architects, this may involve avoiding language that mirrors the AIA contract, where the architect is liable not only for green design, but for certification on the whole.

Contractors and designers might also think twice about marketing a structure as green, and instead describe the particular components of the project that will reflect elements of green construction. Perhaps the most important aspect of “green building,” however, lies in managing client expectations and in ensuring that trades are sufficiently well-versed in green building materials and technologies to execute the project.

Safia J. Lakhani practices construction law at Glaholt LLP in Toronto. She can be reached by email at slakhani@glaholt.com.

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