Page 294 - The Green Building Bottom Line The Real Cost of Sustainable Building

272 CHAPTER 9

related to such risks from its design and construction professionals. If, for example, a
developer knows that the tenant with whom it has signed a letter of intent will require
that its premises be at least 30 percent more energy-efficient than premises in other
buildings, then the developer may ask the architect to warrant that the building will
meet that requirement. If 70 percent of construction waste must be recycled, then a
developer may demand a specific guarantee from its contractor that this will be done
and include measurement documentation and other reporting requirements in the con-
struction contract.
Architects and contractors will, of course, resist provisions of this sort, and the form
contracts published by the American Institute of Architects and commonly used in
commercial transactions do not include many such provisions. Developers must be
prepared to specifically negotiate warranties, guarantees, and the like where they feel
those protections are necessary.
Architects may be particularly unwilling to warrant that specified products will not
be defective (as opposed to whether the product was appropriate for use in the proj-
ect). For product defects, developers will likely need to look to the product warranty
(and should examine the warranty prior to agreeing to the product’s use).
For a project where the developer is seeking LEED certification, many contracts
will obligate either the architect or the contractor to complete documentation required
for certification. These documents will require the party completing them to make cer-
tain statements regarding different aspects of the building’s construction and perform-
ance, but developers should not rely on these statements as warranties that will run to
the developer’s benefit. (Architects or contractors concerned about this issue might
consider including specific language in their contracts that their completion of LEED
documentation is for certification purposes only and does not create any sort of guar-
antee in favor of the project owner.)

2. Damages
Ensuring that an architect or contractor has assumed the responsibility to do some-
thing, of course, does not automatically protect a developer. Developers must also pay
attention to the damage provisions of contracts to ensure that, if a design professional
defaults, the developer can recover all or some portion of this damage.
How should damages be calculated? In some cases the parties can predict the harm
that would arise from a default with some specificity. A contractor might fail to do
something and prevent a developer from obtaining a LEED credit, making it impossi-
ble for a project to obtain Silver certification and for the developer to get a discounted
interest rate on its loan. An architect’s design might fail to qualify the building for a
tax credit. For situations like these or where damages could be predicted to fall within
a certain range, parties to a contract might negotiate a liquidated damages provision
whereby the design or construction professional would agree to pay a sum certain if it
failed to achieve an obligation in its contract.
In most situations, however, it will not be possible to know in advance how much
damage would result from a default. In this situation, the best a project owner may be
able to do is ensure that the contract gives it the right to make a claim against the default-
ing party and to beware of provisions that limit the damages that may be recovered.