The Black Ink of Green Building

In the past decade, the popularity of “green” building has grown exponentially. But while sustainable building methods and materials continue to develop rapidly, many of the design and construction contracts surrounding green projects have not kept pace. Many contracts fail to address the unique and complex legal risks that accompany green building projects, especially those that aim to achieve third-party certification through LEED or a similar program.

The American Institute of Architects (AIA) has recognized the legal challenges and released modified templates of its most popular form agreements to address specific issues of sustainable projects. The modified agreements bear the suffix “SP,” for “Sustainable Project,” and contain provisions that can easily be incorporated into other agreements.

Planning Responsibilities

One of the most important new provisions is in the agreement between the owner and the architect. The modified agreement now includes a section called “Scope of Architect’s Sustainability Services,” which makes the architect primarily responsible for the development and implementation of the project’s sustainability plan.

To create the sustainability plan, the architect must consult the owner about the chosen certification program’s requirements, and then host a sustainability workshop with the entire project team to establish the sustainability goals for the project. This is not a novel concept, as project teams have been using design charettes to plan sustainable projects for some time. In fact, the new LEED V4 rating systems, scheduled for a July 2013 release, will likely make these types of workshops a prerequisite to LEED certification.

After the workshop, the architect must prepare the project’s sustainability plan. This key document defines the specific roles and responsibilities of each team member and becomes part of the contract. Among other things, it should clearly describe how the project will achieve the points necessary to obtain certification and the documentation that must be submitted to the certifying authority. The plan also allocates risk should one member of the team fail to fulfill his or her duties.

Managing the Process

The architect is responsible for managing the certification process, including the collection of required documentation from the owner and contractor. The architect must submit the documents to the certifying authority and seek clarifications or pursue appeals when necessary. The owner must pay any additional certification costs that arise.

It is well known that the AIA forms generally are friendly to the architect, and the SP documents are no exception. The agreement between the architect and the owner states that “achieving the sustainable objective is dependent on many factors beyond the architect’s control . . . the architect does not warrant or guarantee that the project will achieve the sustainable objective.”  The agreement between the contractor and owner includes a similar disclaimer in favor of the contractor.

Further, both the contractor’s and architect’s agreements with the owner extend the standard waiver of consequential damages to include those “resulting from the failure of the project to achieve the sustainable objective, or failure to achieve one or more sustainable measures.” While these provisions are necessary and desirable from the perspective of the architect and contractor, the owner may feel differently.

Sharing Risks

Both agreements disclaim responsibilities for other risks associated with green building. One such risk is the specification of sustainable materials that have had limited testing or verification and may not perform as intended. If any such materials are to be used on the project, the architect or contractor must discuss their use with the owner, and the owner must issue a written decision regarding the materials. If the owner directs the architect or contractor to use the materials, the architect and contractor are entitled to rely on the manufacturer’s representations and all risk of nonperformance is shifted to the owner.

The form agreement between the contractor and the owner includes several provisions unique to contractors. It requires the contractor to develop and implement a construction waste management program and adds the words “reuse or recycle” to the standard provision regarding the contractor’s duty to clean up. If the contractor wishes to make a substitution, he or she must explain any impact it may have on achievement of the sustainable objectives. This is important because a product or manufacturer may have been specified to achieve a certain certification credit, and a substitution may jeopardize that credit.

Finally, these documents recognize that third-party certification requires work after both substantial and final completion, so the achievement of substantial and final completion is not tied to the achievement of the sustainable objective. The architect is not responsible for recertification, or for the subsequent revocation or reduction of a certification.

The AIA’s new SP documents are a helpful guide for contracts for sustainable projects as they cover many of the legal risks associated with green building.  As with any project, however, the key to success is in clearly defining the parties’ respective roles, responsibilities and expectations. Thus, these forms will only be as good as the detailed sustainability plan for the project.

Chad Michaelson is a partner at the Pittsburgh-based law firm Meyer, Unkovic & Scott. For more information, email Michaelson at cim@muslaw.com.

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