green building features

Back in December of ’10, I gave you a list of lease provisions that are crafted to address topics unique to “green” buildings. Here’s another version or update on the list:

  • insurance provisions
  • annual environmental performance report (access to space, access to the report, etc.)
  • carbon credits (they belong to Landlord!)
  • building operations (in compliance with applicable green building standards)
  • substitution of space (same standards as original space)
  • janitorial and cleaning services (and specifications)
  • utilities and compliance with applicable green building standards
  • bicycle storage
  • tenant finish requirements (for example, high-efficiency plumbing fixtures, appliances, light bulbs, etc.)
  • use of renewable energy suppliers

If you’re dealing with a green building, consider having both this list and the earlier list at your elbow as you review leases in the building. Green buildings are different; so are the leases. (For my other comments on “green” buildings, search the blog with the search term “green.”) If you have additional provisions to add, please share them with us by commenting below.


If you collateral is a green building, then a litany of unique issues and approaches come into play.

Recently I discussed this topic with Bill Weinberg – my green building expert.

Here are a few "high level" issues offered up by Bill to get our attention (prior blog) –

  • What is nature of the collateral?
  • What are some unique operational and maintenance features, including contract warranties?
  • Get a green building expert involved

These high level issues impact due diligence, and terms of negotiation and forbearance agreements (prior blog).

Now let’s focus on more specific topics and tasks:

  • Identify latent or "hidden" green building features

A green building may include a mix of obvious and subtle green building technologies. It will be easy to spot the fifty foot windmill, but you might overlook –

– the non-toxic paint
– low-emitting carpet
– recycled content building materials
– pesticide free landscaping
– specialized software to operate lighting, shades, solar panels, HVAC and other building operating systems

Just because a building looks like every other normal building, do not assume that it does not have green features.

As Bill previously noted, you risk losing the value of innovative features if you do not identify and properly maintain these features. 

  • Is the building recognized, or pursuing recognition, under a certification program?

Examples include these programs: LEED, Green Globes and Energy Star

  • If the building is pursuing certification (for example, during a construction loan or a "repositioning" of it in the market), what additional steps are necessary to cross the finish line?
  • If the building has already obtained certification, what steps are required to maintain the status?  (For example, periodic reporting and associated book keeping requirements.)

Here are a few ways that I’d address all of this:

  1. Due Diligence: expand scope of work for third party (environmental) reports –
    – look for green building features
    – examine local building records to determine if the building is certified or has applied for certification
    – what are the record keeping and re-certification requirements for the particular certification (and evidence of compliance or status of re-certification)?
  2. Negotiation agreement term
    – list green building features (and warrant that the list is all-inclusive)
    – list certifications and permits, or applications for same (and warrant that the list is all-inclusive)
    – add covenants regarding applicable record keeping (with delivery of copies to lender or servicer)
    – include these features in legal compliance covenants (and related default events)
  3. Forbearance agreement term (same as #2)

If you have suggestions, comments or war stories, please add them below.