§ 16.8 - Purchase and Sale of Green Buildings

• Jurisdiction: Washington

§16.8 PURCHASE AND SALE OF GREEN BUILDINGS

The premium commanded by green buildings is well documented. There clearly is money to be made in designing, constructing, leasing, and selling a green building. This opportunity nonetheless comes with significant risk. To begin with, once a building is characterized as "green," owners, tenants, and purchasers of green buildings likely have heightened expectations regarding quality of construction, lower maintenance, a longer useful life, energy savings, enhanced indoor air quality, and possibly other more subjective "comfort" issues. Exacerbating this problem is that there is no single definition of what it means to be "green."

Sellers of buildings may seek an advantage over competing properties by characterizing their properties as "green" in one respect or another. Problems arise, however, if that characterization is false or misleading. For example, a homebuilder might advertise that a home is green or sustainable or certified when it is not. A claim that building components or materials are green may be false. A home may in fact not meet promises or forecasts of durability, energy savings, or enhanced indoor air quality.

Courts have found liability for fraud or misrepresentation when a seller made false or misleading statements concerning the performance and quality of a building or its construction. See, e.g., Grange Co. v. Simmons, 203 Cal. App. 2d 567, 575, 21 Cal. Rptr. 757 (1962); Unger v. Campau, 142 Cal. App. 2d 722, 725, 298 P.2d 891 (1956). Liability also has been found where a seller fails to disclose known defects, building code violations, and insufficient water. See, e.g., Green Trees Enters., Inc. v. Palm Springs Alpine Est., Inc., 66 Cal. 2d 782, 785-86, 427 P.2d 805 (1967); Herzog v. Capital Co., 27 Cal. 2d 349, 352, 164 P.2d 8 (1945); Pearson v. Norton, 230 Cal. App. 2d 1, 8-11, 40 Cal. Rptr. 634 (1964); Doran v. Milland Dev. Co., 159 Cal. App. 2d 322, 325, 323 P.2d 792 (1958).

Purchasers and operators of green buildings should take extra care in procuring property insurance. See Darren A. Prum, The Next Green Issue:...