Are You Sure Your Building is Certified?
If you ever question the value of green building certification, run a search for press releases touting LEED certification for new projects. I see hundreds of these releases every week. But if you are purchasing a LEED building or space, how can you ensure that it truly is LEED certified?
Fidelity National Financial (FNF) created the LEED Project Certification Data Report (LEED Report) to address this issue. The LEED Report allows parties to "obtain data regarding a LEED project's certification status" for $1500 per project.
In the image, you can see the categories covered by the LEED Report. Of particular interest to me is the certification challenge status. Could you imagine purchasing a property or space without knowledge that it was going through a LEED certification challenge? The LEED Report presumably would prevent such a scenario.
I was also intrigued by the limited nature of the LEED Reports. FNF makes it clear that the LEED Reports are not an insurance product:
"The LEED Project Certification Data Report (Report) is not an insurance policy. The purpose of the Report is to provide informational services, not to allocate risk. . . . [FNF] obtains data from the database used by the United States Green Building Council (USGBC) and Green Building Certification Institute (GBCI) and delivers the data to the Ordering Party for the benefit of the Principal. [FNF] promises the Principal that the Report accurately reflects the information in the database. If [FNF] provides information that does not accurately reflect what is in the database, [FNF] has limited liability and has no obligation to defend the Principal. . . . [FNF] has no other liability and under no circumstances, under any dispute, will [FNF's] liability to any Principal exceed $50,000."
Fidelity National Financial is primarily known as a title insurance company. Title insurance generally protects an owner from lawsuits arising from the ownership of a property. But the LEED Reports are simply informational in nature -- they do not provide protection for an owner if problems arise out of a property's LEED certification.
It seems there is an opportunity to create a LEED insurance product.
What do you think?
Chris - An interesting idea. I am not sure that LEED certification is a title matter per se. Even if it were considered to be the equivalent of a land use restriction, coverage under a title policy would be excluded under the standard exclusion for laws affecting the use of the property. That said, if a title insurer (or any other insurance company for that matter) were interested in marketing this type of product, it would most likely resemble patent infringment insurance, and would require the insurer to perform an independent review of the GBCI record in order to get comfortable on the risk. I'm not sure that any insurers are equipped to do that just yet. The other way to approach the legal guaranty question, I guess, is to venture into the area of third party legal opinion practice, whereby the developer's counsel would opine that the Certification was validly issued and has not been revoked. The opinion giver, presumably, could rely upon the FNF certification. The bottom line is that counsel is well advised to obtain this certification as a back-up to a developer's (or owner's) contractual representations and to flag any potential issues with the status of the project certification.