New Orleans, May 13 – About six years ago, attorneys who were involved in home building and construction litigation were in a frenzy as “mold is gold” lawsuits were emerging around the country. At its peak, the “mold is gold” movement was about 10,000 lawsuits strong. But, according to David Jaffe, a vice president for the NAHB’s Construction Liability and Legal Research Department, the mold litigations just dropped off the charts, partially due to a loss of interest by the media and lack of scientific evidence. The decline may also have partially stemmed from increased builder efforts to improve installation techniques, history suggests.
Ultimately, the lawyers did not find a pot of gold at the end of the mold rainbow, but they may have found another prey to pounce on. It appears as though the new mantra for lawyers who want a piece of the home building industry will be “green means green.”
“None of us can be naive enough to think that there aren’t going to be any claims or litigation [when it comes to green home building],” Jaffe told builders during a workshop at the NAHB’s National Green Building Conference. “I can see the headlines now: ‘The perils of green.’”
David Crump Jr., director of research for the Construction Liability and Legal Research Department, echoed Jaffe’s sentiments. Crump suggested that companies use caution when describing themselves as “green” because homeowners may perceive that to mean more than what the builder is actually carrying out. Builders should be straightforward and specific about their practices and should not overstate the green features they offer.“Irrational exuberance,” Crump said, may lead to fraud, overstatement, and vague, misleading terms that can end in an expensive lawsuit.
Although no lawsuits have emerged, it is only a matter of time, Jaffe warns. His department has fielded a number of inquiries concerning green litigation issues, and if builders don’t begin to prepare to protect themselves, more will follow.
Crump suggested that green builders become familiar with, and use, terms that can protect them, such as “results may vary” and “certain maintenance is required,” particularly when building to standards such as the NAHB Model Green Home Building Guidelines. A builder may have constructed to the NAHB standards, but that isn’t an ironclad guarantee that the clients’ home will perform to their levels of expectation, especially if the homeowners do not follow the proper maintenance guidelines.
And your company’s language isn’t the only thing that should be monitored. Crump said your team needs to be aware of any mandatory state and local green building programs and standards. If not, your business may find itself on the wrong end of a consumer protection act lawsuit.
Subcontractors present another potential litigation issue. Crump’s advice is to make sure that they are thoroughly trained in every green application your company uses and that they sign an indemnification clause.
One of the biggest safety blankets a builder can rely on is a well-drafted contract with the homeowner that covers the aforementioned as well as permitting substitutions, addressing delays and cost overruns, and dealing with design flaws (if an outside design professional did the design).
And what about green products? Should a builder be liable for defects? In order to avoid this pitfall, Crump suggested that a disclaimer in your contract state that your company merely supplies the product but does not stand behind it.
Both men also recommended hiring a third party green expert to monitor all green issues. “This person should be able to determine whether a product is indeed green or not,” Crump said. He adds that companies should contact their insurance carrier to see if any green litigation is covered. As the latest green movement continues to steamroll, insurance companies too must soon address litigation issues.
“Your success will depend on your ability to protect yourself from liability,” Jaffe stated.
More coverage from the NAHB National Green Building Conference:
National Green Building Conference Kicks Off
Hope Among Heartache
NAHB Honors Top Green Builders
NAHB Recognizes “Building With Trees” Developers
Custom Green Home Opens Its Doors to the World