The luxury condominium building Riverhouse in lower Manhattan has attracted considerable attention since it opened in 2007, usually in regard to such things as celebrity residents or a management power struggle over slow sales. But the latest news from Riverhouse, an environmentally friendly building that is a candidate for LEED Gold, has taken the legal and architecture communities by surprise: The owners of a condo in the building have filed a lawsuit charging fraud, misrepresentation, and breach of contract because Riverhouse allegedly does not meet its much-touted sustainability-performance standards.
Now that sustainability is an integral part of design practice and the business and marketing strategies of architecture firms, it’s inevitable that legal claims and liability issues concerning green building performance will appear. Currently, case law is scant—one reason the Riverhouse lawsuit has drawn so much attention. Meanwhile, another dispute has played out in Eagle River, Wis., after a group of area residents challenged a LEED Gold rating of the local high school, which was completed in 2006. They claimed the facility did not meet the U.S. Green Building Council’s gold-standard requirements; this was rejected by the USGBC. An appeal was also rejected after the USGBC conducted a challenge review and ordered two additional technical reports. “There is no reason to believe the project failed to meet all the LEED prerequisites and credits it has attempted,” the USGBC wrote in a letter to the school district last April.
“These issues will come up more often,” predicts Jeff York, associate general counsel at HOK, especially because a growing number of clients, such as schools, are requiring LEED certification. What’s more, cities and states are encouraging sustainable projects by offering tax abatements—usually for property taxes—that are tied to LEED status. Currently, LEED initiatives are found in 45 states, 14 federal agencies or departments, 17 school jurisdictions, and 41 institutions of higher education.
When New York firm Gwathmey Siegel & Associates Architects took on the renovation and expansion of the building now known as the Yale Arts Complex, LEED Silver was mandatory for all new Yale University buildings. What if LEED and performance goals had not been met? Elizabeth Skowronek, a senior associate who worked on the project, says the answer is clear: “In that regard, we don’t guarantee anything. We can’t,” she says, adding, “except that we will do everything in our power to provide the highest professional standard of care.” The Yale Arts Complex, completed in 2008, achieved LEED Gold.
Guarantees, or the lack thereof, are part of ongoing discussions among architects, lawyers, and clients about the legal liability of LEED-certified and other high-performance, sustainable buildings. As such, firms are fine-tuning how they talk about these topics in contracts and in client conversations.
“Early on we may say, ‘Let’s try for gold,’ and the team has a good-faith intention of achieving that, but as the project goes along the scope may change, so we always have to ask: ‘Are we still on track?’” says Ken Sanders, a principal and managing director in Gensler’s San Francisco office. “You have to talk about this with the client in real time.” As for contracts, Sanders notes that while striving for LEED adds to project objectives, “we don’t see a need for special language beyond the stated goals we are working to achieve.”
HOK’s York describes the firm’s LEED contract as a “completely normal” design contract, in that it spells out goals and objectives. But it also has a paragraph stating that “the owner recognizes that LEED ratings are subject to many outside factors,” which, York notes, means that the architects “can’t guarantee achieving that goal.” It’s all about “expectation management,” he adds, since “unmet expectations can spark lawsuits.”
Another issue is the extra cost required to gain LEED certification, especially LEED Platinum. Paul Stoller, a director in the New York office of environmental design consultancy Atelier Ten, says that Atelier Ten’s contracts contain a disclaimer noting that if a project is going for LEED, it will require extra work and cost more for items such as energy analysis and building commissioning. “This can easily add $100,000 to the price, and for a full-scale building, hundreds of thousands of dollars,” paid for by the client or owner, Stoller says. He adds that about half of Atelier Ten’s LEED projects have come in at the anticipated level; apart from a couple of projects not yet completed, the rest have come in at a higher rating.
One factor complicating the legal liability aspect of LEED buildings is that so many hands are involved, from the design team on through the construction contractors, as well as independent commissioning inspectors and, finally, the USGBC and its autonomous certification body, the Green Building Certification Institute (GBCI). “The design team takes on implied obligations to deliver some sort of LEED certification, but what is tricky is that ... it’s in the hands of the GBCI,” Stoller explains.
Nicholas Holt, director of the technical department at Skidmore, Owings & Merrill’s New York office, suggests that LEED certification levels should be talked about as an aspiration rather than a guarantee. “Some clients come in saying, ‘Guarantee me gold,’ but that’s usually because they don’t know the process,” he says. After explaining how LEED is achieved and pointing out all of the parties involved in certification, Holt continues, “we say, ‘We need to have realistic aspirations.’ ”
Of course, much depends on a building owner, who might cut a budget, backtrack on original plans, not follow through on maintenance and operation, or perhaps pave over a green roof. This could lead to a lower certification level or dropping down from a level already awarded, according to LEED 2009 regulations. (The USGBC will review certifications, but it does not “decertify” a building or monitor ongoing operations. There is discussion in the industry over whether either or both of these actions should be included in the next iteration of LEED.)
“Once the owner is in the building and operating it, all bets are off, so it’s dangerous to make promises,” advises lawyer Stephen Del Percio, a LEED accredited professional in the New York office of Arent Fox.
