It seems you can’t swing acertified 2-by-4 anymore without hitting another builder claiming to be green. That saturation of the sustainability message in several markets is tempting some builders to boost energy or environmental performance claims to maintain differentiation—and sales.
But such tactics, especially if they imply or specify superior-performance qualities in a new house without proper backup, can open builders to legal risks from disclosure fraud to defect litigation. “If a home buyer believes a house will cause fewer asthma problems because it has a certain rating or label, but it doesn’t necessarily perform that way, it might be a breach of the builder’s warranty,” says attorney Ujjval Vyas, principal of Alberti Group in Chicago and a frequent speaker on the green building conference circuit. “Rating systems and labels are not a proxy for actual performance.”
Mismatched expectations among and between builders and buyers regarding a home’s actual ability to save energy, reduce water use, or improve indoor air, is the biggest risk Vyas and other legal experts see in green building’s booming popularity. “Promising and delivering it are two radically different things,” he says. “But a promise has legal ramifications.”
While managing green building risk is a relatively new segment of the legal profession, builders need to implement mitigation tactics to protect themselves. For instance, be aware of possible conflicts between warranties and eco-friendly products, especially those without a long track record of performance. And, in the rush to meet certain standards, try not to ask so much of crews and subs that it results in potential defects and litigation.
Builders also may find that, legally, a rating system or green building certification is riskier than it’s worth. “If you build a quality product already, you don’t need that [implied] proxy,” says Vyas. Instead of trying to compete on a green label, says Vyas, “one-up the competition on [actual] performance.”
Learn more about markets featured in this article: Chicago, IL.