Going green? Consider these items.
Here’s an oldie, but goodie. Recently, I have had a few discussions with people interested in “green” and/or modular homes. Ever wonder what it might be like to own the greenest of homes? How about the issues you might face in building one? Here are a few things to consider.
Green building attorneys are generally removed from the day to day issues facing the owners and contractors building the project. On a commercial project, these issues are more transparent and attorneys are utilized more often. But green-built residential projects are more of a secret. Attorneys are generally disassociated until a problem arises.
Some of the more interesting (perhaps troubling) issues that arose for the owners:
- Finding Financing - Financing parties are simply not ready for green building. With a bunch of untested technologies in play, banks and lenders are unwilling to take the plunge. The interviewee advised that it had to come up with 35% out of pocket to make this work. The owners had to pay for much of the green technology in the home – adding up to about 15% of the total cost. Owners should expect to difficulty and prepare early.
- Appraisal Nightmares - This was the most saddening issue to read. Lender appraisers are simply untrained to evaluate the green building market. As time goes forward, I expect appraisal outfits to train appraisers to understand the different green building bodies, especially as we move closer to a mandated building code. For now, owners should expect some rigidity and may want to research and suggest a green-experienced appraiser.
- Owners Need Education - A green home loses its purpose, if its not used correctly. Unfortunately, most builders are simply given the task of installing green technology and turning over control to the owners. Owners need to understand that they are expected to use the home correctly, to maximize the benefit of their green home. Owners should seek out training, or contract for education from their contractor (if available).
Some of the information in this article is also very helpful green home builders:
- Ensure Secured Financing - Many home builders want to see a commitment letter from a financial institution before building. This is a must with a green built home. Green building comes with cautious lending. In some instances the owner is expected to pay out of pocket for a lot of the work that you are doing. Be sure that you can confirm that funds are available. If the owner is expected to pay a significant portion out of pocket, you may consider using an escrow fund to secure funds during construction. While liens are available for security, nothing is better than cash.
- Complete Planning Before Starting - A very valuable component to a dispute-free building process: complete design and planning before building. The owners stressed that they spent a year on design and had a complete set of plans prior to building – this is an incredible stress reliever. Even on conventional projects, builders know that owners often change their mind, plan on the fly, and make a mess of scheduling. Contractors should have completed design drawings and a confirmed building plan before starting. This should be a part of your contract.
- Provide Education - Owners are buying a well-oiled machine from you. But, owners can easily let performance fall to pieces by improper use. Contractors should consider selling education as part of their contract. You may consider inviting the owners to the site to view the systems after they are installed, explaining how they work. After completion, you should perform a walk-through and tutorial of all the systems and how they work. You may also want to teach your customers how to read their energy statements to ensure that the systems are up to snuff. Education is a worthwhile add to your contract.
For owners, contractors and attorneys – building green is still a learning process. Listening to those who go through it – priceless.
What other problems have you seen – or might you foresee?
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