Green building has hit the real estate scene remarkably quickly, but little attention has been paid to the legal implications of this new area. As green building and ecological sustainability considerations are becoming more prevalent, new regulations are being enacted by local governments around the country and old regulations are being adapted to embrace green building practices.

State, local and federal dollars are being made available for green building projects through tax incentives and grants. Insurance companies and financiers are making products and instruments for green building projects available. As a result, there are new legal issues to consider when embarking on a green building project, including: drafting construction and design contracts that incorporate green building standards; navigating the local building and zoning approvals processes and securing public financing; negotiating with insurance and financial institutions and resolving disputes over green building projects that fail to achieve their sustainability goals.

Green building projects large and small must obtain permits from local governments, but the regulatory environment is in flux. In many places the zoning and building codes were developed in response to the health and safety issues of a century ago, and certainly not developed with green building in mind. In others, due to lack of action on the federal level, local governments are creating new regulations to encourage sustainable development. As old regulations are being adapted to new technologies and new regulations are developed, attorneys can provide critical guidance on the local regulatory landscape as part of the planning for a green project.

Furthermore, private and government entities are providing significant financial incentives to encourage green building. For example, Gov. Edward G. Rendell's newly released energy independence strategy earmarks $150 million ($50 million for grants; $100 million for loans) for green building projects. Fireman's Fund offers discounted pricing for building owners who commit to greens standards, and provides specialized insurance to allow for repair or replacement of green building projects in the event of a loss. Lawyers have a unique role in identifying and securing access to financial incentives and risk management tools.

Participants in the development process will require new contracts to ensure compliance with green building goals. Most of the entities establishing criteria for the performance of green building are private, nonprofit organizations like the United States Green Building Council (USGBC). Many local regulations and incentives for green building are directly linked to these certifying criteria, particularly USGBC's Leadership in Energy and Environmental Design (LEED) standard. If a project must achieve a certain LEED or similar rating to qualify for funding or approval, the construction and design contracts should reflect that ambition.

Finally, although the green building movement is in its halcyon days, new expectations will inevitably lead to conflict. A multimillion-dollar development project will fail to gain the LEED credits required to secure a government grant, and litigation will doubtless ensue.

Green building is a new field, and therefore seasoned "green building" attorneys simply do not exist. Therefore, when considering an attorney to advise a green building project, look for one who:

• Is a member of the United States Green Building Council or similar organization, and preferably accredited in their certification program,
• Has researched the local regulations and government funding opportunities in your area,
• Has published and presented on green building issues, and
• Can be a thoughtful and creative member of the project team.

This article is reprinted with permission from the June 14, 2007 issue of The Legal Intelligencer © 2007 NLP IP Company.

The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.