We are increasingly called upon to give legal opinions that a green building is LEED certified, ‘certifiable’ or otherwise really a green building.
The purpose of a legal opinion given in a commercial real estate transaction is, most simply put, to provide the recipient of the lawyer’s writing with comfort regarding specified aspects of the transaction.
One might ask why they need an opinion from a lawyer that their building is green? The best response is because in many instances their lender requires it. While legal opinions are given in a variety of commercial contexts, they are increasingly being required as part of the due diligence by lenders when making loans secured by (i.e., a mortgage) a green building.
The size and nature of a transaction may well affect the scope of the opinion requested and in larger traditional mortgage financing as well as bond financing, lenders attribute increased value in the security being provided for loans when a building is LEED certified or the like.
Opinion letters are often given by the borrower’s attorney at the request of and for the benefit of the lender. Traditionally, legal opinions in the context of loan transactions provide assurances that the loan documents are valid, binding and enforceable. Often legal opinions arising from the purchase of real estate involve assurance that the improvements exist accordance with applicable zoning, subdivision and other land use laws and regulations. Opinions are also given, from time to time, that a project complies with environmental laws. And now counsel to borrowers and sellers are being called upon to provide assurances that the real property and improvements which exist or are to be constructed have been designed and exist or will exist in accordance a stated green building standard, rating system or code.
Additionally, as increasing numbers of governments make green building mandatory or offer incentives for high performance buildings, purchasers and lenders alike want assurances that a building is in compliance with those green building laws. Tenants, who with greater frequency are required by law or policy to lease only green premises (from the federal government to multi family residential builders and colleges to retail builders) are a fast growing requester of opinions.
We also receive requests to give opinions of counsel that a project is LEED ‘certifiable’ or ASHRAE 189.1 compliant or complies with Enterprise Green Communities criteria; commonly associated with qualifying fir governmental incentives. Committing that a project will be LEED certifiable versus certified by GBCI increases certainly and lowers risk.
And while we believe a lawyer should not be asked to be an additional warrantor of facts, the distinction between questions of law and fact may at time be difficult to separate. In giving an opinion, a lawyer is not and should not be thought to be providing a guaranty or insurance against loss.
As a function of the fact that there are more green buildings being constructed and those building are being bought and financed, we will be giving increasing numbers of legal opinions that green buildings are ‘really’ green buildings.
2 comments
With respect, this is wrong-headed. The professional they should be seeking an opinion from is a civil or architectural engineer, whose professional opinion IS REQUIRED to take into account the “generally accepted” interpretation of building standards and codes at all levels of relevant jurisdiction.
Lawyers will of course get involved when the interpretation of those standards and codes is argued in court, but their role there will properly be the marshaling and argumentation of evidence, including expert opinions from qualified professionals — not the lawyers’ opinions.
Stuart, good article and something that needed to be said. The legal problem vis-a-vis LEED ‘compliant’ building is a misnomer as it is very rare that you find a LEED building performing as a LEED building. Certainly when the GBCI approves the data set and provides an agreement as to how many points are achieved they are only really saying ‘at that moment in time’, nothing more. (You can design and construct the greenest building in the world but if you don’t operate it that way, and collect the data to prove it then….) But this discussion will soon be overshadowed by the rush to ‘healthy building=healthy employees’. Here the lawyers are going to have a field day where buildings are designated as being ‘healthy’, which by extrapolation will equal more productive employees equalling higher profits. Neither subset of ‘healthy’ is directly quantifiable yet already we are seeing more and more requests for ‘provable data’. So Stuart, dust of the wig, get the gown laundered and get as much sleep as you can right now because you are going to need it.
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