The next building you buy, finance or develop may
be “green.” As the use of green building standards
like LEED® or ENERGY STAR® has become commonplace,
human health standards such as WELL Building
Standard™ have emerged, micro-grids and rooftop
solar arrays have proliferated and green leases
have become more common, the nature of deal due
diligence has changed.
Lenders and building purchasers need to modernize
their due diligence procedures to reflect the new
reality. Building developers and owners need to
understand the concerns buyers and lenders may have
so they can take appropriate steps to avoid any
Most of the real estate industry has not updated
its due diligence to comprehensively reflect the
“green” changes of the last decade. Buyers need to
know whether they can replace the roof without
paying for business interruption because the
rooftop solar must be temporarily removed. Lenders
need to know whether a building is committed to tap
into a new district heating system when the life of
the current boiler ends. Sellers need to document
the accuracy of their representations in obtaining
LEED status, particularly if there is any risk that
major tenants could leave if that status was lost.
We have represented nonprofit green building
standard developers for almost two decades.
Moreover, we represent numerous energy companies
that are working with building owners to use their
rooftops for energy production. If our
building-owner clients or their lenders run into
problems with these programs, it will harm not only
them, but also these beneficial programs, because
others will be less eager to engage. Consequently,
it is important that everyone involved in green
buildings understand how to manage green building
The good news is that the risks involved in these
types of matters are far less than the
company-breaking risks of the Comprehensive
Environmental Response, Compensation &
Liability Act (CERCLA) and hazardous substances.
More good news is that the risks are easily
manageable in the due diligence process. With a
better understanding of green risk, building
purchasers and their lenders can avoid costly
problems and project disruption. Sellers can
anticipate their concerns and prepare proper
We’ve prepared a list of the top five green issues to watch for in due diligence and risk assessment
for green buildings.
For those who are interested, we will be drilling
down into some of the issues with buying or
financing green buildings and the best ways to
successfully manage these issues. Please mark your
calendar for February 15, from 12 to 2 p.m. (ET),
for a webinar discussion of green risk assessment.
More details will follow.