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Building Green? Be Careful!

11/24/2009

by Stephen L. Polozola

Across the nation, builders and homeowners are implementing the benefits of green building. Green building efforts are almost exclusively voluntary and they are driven by increasing consumer demand for environmentally conscious structures. However, green building carries with it liability and the potential for litigation. Just as mold lawsuits were the “in thing” 10 years ago, disputes regarding the construction of green homes are on the horizon. The homebuyer’s perception of what “green” means often substantially differs from the builder’s. If you are building or are considering building a green home, here are a few points to consider.

• Be careful representing the expected performance of the home, such as potential energy savings in terms of dollars. This can be dangerous especially when the failure of the home to meet the promise is quantifiable. Should these savings not materialize, a homeowner might claim fraud. Too often, the conditions in which a buyer lives can impact the realization of such savings. For example, a homeowner that keeps the house extremely cold in the summer may not realize the savings that were advertised. Only make claims of home performance that are measurable and that you can back up with third-party verification.

• Identify the green building standard used to construct the home. There are a variety of green standards available, including the LEEDS and Green Built North Texas programs. Each program contains different standards regarding performance, efficiency, and sustainability. Be sure to clearly articulate the standard you have implemented, especially if the construction is certified to meet the particular standard.

• Commonly-used terms are often undefined and vague. Consideration should be given to the consequences of representations made regarding the quality or expected performance of green building techniques or materials. Also, the parties should consider defining terms such as sustainable, certified, healthier or green. For example, homebuyers may believe that sustainability means that green building components will last longer, when in reality they have a shorter life because they are high performance materials. Additionally, using the term certified may imply that the home was inspected by an independent third-party when in reality it was not. A well-drafted contract should identify the certification to be obtained, the standard applied to obtain such certification and the method used to ensure the home meets the standard. Homebuyers paying more for a green home often have higher expectations, demand a higher standard of construction and believe certain products come with longer lives, require less maintenance and will result in savings on energy costs. If performance fails to meet these expectations, the homeowner may seek recourse. Defining green terms within the construction contract can help the parties avoid a potential lawsuit.

• Consider what warranties will be provided on the green building. Because most green terms are vague and unable to be clearly defined, the builder should not warrant conditions such as functionality or sustainability. The builder should only warrant that the construction satisfies the Texas Residential Construction Commission’s Limited Statutory Warranty (if dealing with residential construction), that all warranties provided by the manufacturer on appliances will transfer to the homebuyer, and that the home will be built in compliance with building codes. Further, to avoid creating a green warranty by implication, builders should also incorporate a disclaimer into their contracts. This disclaimer should address that sustained green building and functionality is a combination of home care and continued home maintenance. Moreover, the disclaimer should include language that by building a green home, the builder is not providing any additional warranties or guarantees on the performance of certain products that are not provided in the contract.

• Builders intending to market a structure as green must clearly define what their descriptive terms mean in the context of the transaction. To help the industry with the potential legal ramifications of green building, the Federal Trade Commission has published advisory Guides for the Use of Environmental (Green) Marketing Claims. Use of this Guide can help builders define expectations. Additionally, the parties are best served by identifying a clear standard, itemizing those components of the home that are green home, avoiding representations to sell your green project and scrutinizing advertising materials to ensure accurate representations are made.

Like all construction, green building has rewards and risks. Green building offers unprecedented opportunities for builders and allows homeowners to become environmentally conscious. While the potential for lawsuits will no doubt rise, builders and homebuyers can potentially avoid costly lawsuits by considering these points, which should help keep the green in their pockets.

Stephen L. Polozola is an attorney with Decker, Jones, McMackin, McClane, Hall & Bates P.C. in Fort Worth and focuses on residential construction. The commentary implies no specific legal advice. Contact Polozola at 817-336-2400 or spolozola@deckerjones.com

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