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Mid Atlantic Real Estate Journal — Commercial Office Spotlight — February 27 - March 12, 2015 — 3C
C ommercial O ffice P roperties By Neil Andrew Stein, Esquire, Kaplin Stewart Be Green, Not Green With Envy
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ombining the words “green” and “real es- tate” can invoke a
sometimes leading to disputes. A good example is a court’s 2014 grant of summary judg- ment to a product supplier on the grounds that the suit filed by the building owner almost ten years after the construction was completed in 2001, was time-barred. But the Fourth Circuit Court of Appeals has now overturned that decision, setting the stage for a trial in which the building owner, the Chesapeake Bay Foundation, will square off against behe- moth Weyerhaeuser. At issue will be the Foundation’s at- tempt to prove Weyerhaeuser's
liability for construction flaws at the Foundation's Annapolis "Platinum" rated headquar- ters. The green design called for exposed structural wood made with a special coating to prevent rotting. After rotting was discovered, the Foundation determined that Weyerhaeuser had not used the contracted-for protective coating, which may not have been effective in any event. The advent of green build- ing technologies and designs are certainly a positive step in creating building and construc- tion techniques that will create
more ecologically friendly and energy sustainable systems. However, the potential litiga- tion risks in a variety of areas may lead one to invoke the old adage that “no deed goes un- punished.” A builder or owner must maintain diligent risk management practices to an- ticipate as much as possible the consequences of being green. There are plenty of strategies available to balance the green goals of an owner or developer with business realities and risk evaluation. However, no project owner or design pro- fessional (or attorney for that
matter) should succumb to scare tactics and “fear of the unknown.” Be green, not green with envy. Neil Stein is a principal at Kaplin Stewart and mem- ber of the Land Use, Zon- ing & Development group. Stein has over 25 years of experience representing real estate owners, devel- opers, lenders and build- ers in complex land use, zoning, environment and corporate matters, as well as design professionals in contracting and business structuring. n
range of emo- tions, begin- n i n g w i t h apathy, and continuing to fear and per- haps even to o p t i m i s m . While green building con-
Neil Stein
cepts continue to mature, the actual use of "green building" techniques, designs and con- struction materials are still relatively new. The United States Green Building Council is a private organization that has created and operates a the "Leadership in Energy & En- vironmental Design" system. Rating levels, using a points system, may include benefits such as property tax breaks and financing incentives, as well as the intangible benefit of an enhanced reputation. Nonetheless, different com- panies, in different markets, facing unique economic condi- tions, may decline to go green for a variety of reasons. Many building owners, developers and contractors fear the belat- ed discovery of a serious defect in design or construction. As the demand for green build- ings grows, the risks associated with their construction will continue to evolve. In the fu- ture, courts are sure to address legal issues pertaining to green building design, construction and ownership. As a result, legal, design and construction professionals must stay ahead of the curve by identifying and addressing areas of potential li- ability, but without frightening their clients into retreat. Unquestionably, risk arises because green construction requires an increased up-front cost, an often complicated LEED certification process and the often unknown future performance of green products and systems. Project owners commonly require additional contract provisions and war- ranties, which come with an increased exposure to potential liability for breach of contract or warranty by design profes- sionals and contractors. The performance of new products and technologies that are be- ing developed for green con- struction may be risky. Many of these products are being developed quickly and are not being properly field tested,
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