Warning — this is an article about contracts. If that’s not your bag, go ahead and push the snooze button on your alarm clock.

However, if you are considering obtaining or are in the process of obtaining LEED certification of a sustainable building project, this article will highlight some must-know information about the rights, duties and liabilities that apply mainly to owners, those who register LEED projects, and those who act as the owner’s agent with respect to the Application for LEED certification.

There are three contracts that apply to all LEED projects: (1) The Project Registration Agreement (PRA), (2) the Project Certification Agreement (PCA), and the Terms and Conditions for the Use of LEED Online (Online Terms).

Because the LEED certification process requires use of LEED Online for all projects, the Online Terms are important. However, since the Online Terms deal more with website terms of use than with the certification process, discussion of the Online Terms is left to intellectual property attorneys.

The LEED certification process begins with the registration of the project with the Green Building Certification Institute (GBCI), which makes available to the registrant tools to assist with planning and implementing the LEED aspects of the project in accordance with the comprehensive rules of the U.S. Green Building Council.

After substantial completion of the project, an Application for Certification must be submitted to GBCI that contains detailed information about the project to show that the project meets requirements for certification and achieves the required number of points for the level sought. GBCI reviews the application materials and decides whether and what to award. There is no guarantee that the project will achieve any LEED certification level.

This last point is critical, because failure to achieve LEED certification can have severe consequences for a project, including loss of financial incentives and tax benefits, loss of rental or other income, loss of environmental benefits, lost productivity of occupants, occupant dissatisfaction with the final building, increased design and construction costs, and third-party claims.

Because certification of a building often involves high stakes for an owner and the USGBC and the GBCI have been the subject of recent legal attacks, on Jan. 11, these organizations issued revamped and streamlined contracts that impact projects seeking LEED certification.

While the Project Registration Agreement and the Project Certification Agreement are not identical and deal with different aspects of the certification process, the two contracts have several similar protections for the USGBC, GBCI, and, in some cases, their subcontractors (GBC), including:

• Damages from claims against the GBC are limited to $5,000 under the PRA and $15,000 under the PCA plus, in each case, fees paid minus any prior refunds;

• GBC disclaims all warranties of any type including merchantability and fitness for a particular purpose, all liability arising from use of application for designing or constructing a project; all representations that the application or services are complete and/or free from errors or omissions; and any warranty or representation that the project is structurally sound or safe, constructed in accord with applicable law, or free of mold, mildew, or volatile organic compounds;

• Claims against GBC are barred unless written notice and details of the claim are provided to GBCI no later than 180 days after the act or omission claimed to have caused damage;

• No lawsuit may be filed until at least 60 days after the above notice of claim is received by GBCI unless delay would cause a claim to be barred by the applicable statute of limitations;

• Sale or disposal of substantially all of registrant’s interest in project terminates application for certification unless new owner is substituted on application with written notice to GBCI;

• The GBCI’s 90-page LEED Certification Policy Manual is incorporated into the PRA and the PCA and contains comprehensive rules as to the registration and certification process including, for example, a detailed process for appealing a GBCI decision on a certification application; and

• The contract is governed by law in the District of Columbia and all claims must be brought in a D.C. court.

The PCA has a few other notable provisions, such as:

• Failure of GBCI to meet any time lines is not a breach of the PCA and will not result in a fee refund;

• Applicant indemnifies and holds harmless GBC against third party claims arising from registration, application review process and/or award or revocation of LEED certification except if caused by GBC’s gross negligence, willful misconduct or wanton or reckless behavior or the claim is caused by negligent behavior of GBC and there was no contributory negligence on applicant’s part;

• The person submitting the Application for Certification must be the owner of the property or a person expressly authorized by the owner to act as its agent. If an agent submits the application, the owner must sign and submit a Confirmation of Agent’s Authority and acknowledge that the authorized agent has no liability as to the project and that the owner is solely responsible under the PCA for any errors, omissions, misrepresentations, or contract breaches. The agent has no liability to the GBC unless the agent knew that the owner did not have the authority to appoint it as agent or that the named owner was not the entity with the legal right to possess and control the project.

Note that drafters of design and construction contracts involving LEED projects must take note of these contract terms and harmonize the language of all contracts so that their terms are consistent and clear.

Owners should take special note of the terms of LEED contracts as they severely limit the rights of owners who pursue LEED certification of their projects and GBCI is unlikely to agree to changes in its standard contracts.

Harvey Berman, a LEED Accredited Professional, is a partner at the law firm of Bodman PLC practicing in its Ann Arbor office. He is chair of the firm's Construction Practice Group and represents clients in construction, real estate, and business matters. Contact him at (734) 930-2493 or at hberman@bodmanlaw.com.