This law firm is 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 some or all of the parties to the transaction with comfort regarding specified aspects of the transaction.  

One might ask why the need for an opinion from a lawyer that a building is green? While legal opinions are given in a variety of commercial contexts, they are increasingly being required as part of the due diligence by lenders, investors and purchasers of green buildings. The opinion we are most often asked to render is required by a lender.

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 green bond financing, lenders attribute increased value in the security being provided for loans when a building is LEED certified or the like, so they want to know the building is really green.

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 are being called upon to provide assurances to the parties 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.  

From time to time we are called upon to render opinions to government agencies and entities and that work will only expand as green building requirements become inculcated in government.

We also receive requests to give opinions of counsel that a project is ICC 700 ‘certifiable’ or ASHRAE 189.1 compliant or complies with Enterprise Green Communities criteria; commonly associated with qualifying for governmental incentives. Committing that a project will be LEED certifiable versus certified by GBCI increases certainty 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.

There is no single accepted form of green building opinion. The Legal Opinions Committee of the American Bar Association does not yet provide standardized language in this area. And while a bit of inside baseball, the form of opinion this firm provides in modeled after a widely accepted zoning opinion form. 

Many of the opinions we give are actually in the role of “other counsel” or “special counsel” addressing only green building issues, and are relied upon by other and local counsel who are representing the building owner.

As a function of the fact that there are more green buildings being constructed and those building are being sold and financed, not to mention the explosive growth of green bonds, we will be giving increasing numbers of legal opinions that green buildings are ‘really’ green buildings.