In a heartbeat, Tom Hoyt, co-founder of McStain Neighborhoods, recalls a striking example of how painful and costly missteps in building green homes at a high volume can be.

GREEN GROWTH: McStain Neighborhoods' Stapleton in Denver, Colo., combines New Urbanism, redevelopment, and green building principles. Located 10 minutes from the city's downtown area, the community boasts walkability, parks, and open space. Photo: Courtesy Mcstain Neighborhoods Back in the mid-1990s, the Denver, Colo.-based company decided to install cutting-edge heating systems in its Indian Peaks community outside of Denver. McStain chose what was then a state-of-the-art, high-efficiency heating system for the homes. Designed for multifamily communities, it was a ducted, forced-air system that derived heat from a hot water heater via a heat exchange coil.

The problem was, in a multifamily installation, the system used a large boiler as opposed to a typical residential hot water heater. In the single-family application, water heaters of the time were not capable of providing sufficient BTU values consistently.

"It was a poor piece of engineering," says Hoyt. "We had 189 of them installed before we realized it."

By then, there was no chance of retrofitting the systems to make them perform better. Homeowners wanted heat, not necessarily technology. To preserve the company's reputation, McStain replaced all the hot water systems with conventional, gas-fired, forced-air furnaces that were both efficient and proven over time.

Lesson learned. Now McStain experiments with new technology on one or two homes at a time, creating real-life beta tests for innovations and new products.

"Really, it's a shame how much the liability world stifles innovation," says Hoyt, an architect by training who has been working to build sustainable "green" houses for 40 years. "You need to be so careful." It's a lesson attorneys, those who advise builders about liability and keep an eye out on trends in liability claims, are working to inculcate in the many newbie builders jumping on the green building bandwagon.

When production home builders pick the wrong product and install it on a big scale, the cost of a misstep is exponential. Because many green building products and techniques are unfamiliar, the risk is even greater. Then add on the risk associated with exposure to liability on new products.

"You have all the normal risks and responsibilities that always exist [in home construction], plus some new elements in terms of methodologies, requirements, and products," says Keith McGlamery of Ballard Spahr Andrews & Ingersoll, one of 100 LEED® accredited attorneys in the country. "Any time you add that many new elements, you can have some confusion and the possibility of error. ? You increase the stakes dramatically."

The stakes get even higher during an economic downturn, like the one seen in the housing and financial markets in 2008.

"As economic conditions worsen, there is less margin for error," says McGlamery. "Budgets are restricted and suppliers, subcontractors, and so forth may have financial difficulties; there are certainly lots of impacts on the project, and sometimes those impacts can put a project or developer in such peril that they end up in litigation."

While the risks may be great, the potential rewards of differentiating your product from others are as well, says Hoyt.

"The worse [the market] gets, the more convinced I am that our platform, where we have really focused on trying to be the leading edge of production green, is the place to be when we come out of this," he says. "When the market comes back, it's going to be a different market."

"Green building is happening now," says Jay B. Freedman, a construction litigation specialist with Newport Beach, Calif.-based Newmeyer & Dillion LLP. "The goal is to make sure it's done right. ? I think the industry is going to educate itself over the next three years."

In the meantime, here are five places where attorneys experienced in green building practices and pitfalls say builders seeking to go green can go seriously astray.

1- Piecemeal Green

"The No. 1 way of preventing problems is to go with green building from the very beginning of a project and [ensure] the entire team–all of the players, including the vendors, suppliers, and designers–are aware so everyone understands what their role is and how it fits into achieving green certification," says McGlamery. "It's both expensive and more difficult if you decide partway through the project to go green."

That's because a truly green house can't be cobbled together on the fly. Its design and construction take into account every aspect of the house, from where it's built and how it sits on the lot to the materials used in its construction and how they work together. More than a collection of sustainable parts, it is a series of systems that work together to create a high-performance machine. Replacing, altering, or failing to correctly install any links in that chain can create a house that isn't green.

"Putting Energy Star appliances in a house with glazing on the windows that allows the house to roast in the afternoon and cause you to run the air conditioning 24-7 [won't make a house green]," McGlamery says.

The integration and education of the entire team, from site development through sales, can't be overemphasized, lawyers say. Every team member should know the role they are playing to make the house sustainable and environmentally friendly, even to the point of specifying it in their contracts.

McGlamery offers an example from a commercial office project that shows what can happen when even one part of the team isn't clear on its duties.

An office building that had promised tenants LEED certification was nearing completion and a major tenant was days from moving in when the painter ran out of paint, and his supplier was out of the low-VOC paint required for the LEED rating. So the painter, concerned only with matching the paint's color, finished the job with paint that was't low-VOC. That one act disqualified the building from receiving the certification, and the tenant, promised a building with a certain certification, threatened to sue.

"If you think about it, that painting subcontractor probably had one of the smallest contracts on the project," says McGlamery. Yet his decision probably cost the developer many times the value of his contract.

Because some green products require exacting or unusual installation methods that could lead to failure if done incorrectly, it's imperative to make sure the trades receive training on the techniques with emphasis that the installation needs to be done correctly every time.

"Builders just can't do green projects on a business-as-usual basis," explains Newmeyer & Dillion's Freedman.