One thing that Battery Park City’s LEED Gold hopeful Riverhouse has never lacked for: publicity. Some of that media attention has been of the brand-friendly kind — Leonardo Di Caprio bought a condo! Tyra Banks bought a condo! These people are very famous! Or at least Leo is! But much of the recent attention directed at Riverhouse has not been very flattering. A series of legal squabbles between the developers – the Sheldrake Organization and the zombie iteration of the Lehman Brothers real estate partnership — were both notably ugly and notably public, although Riverhouse condos continued to sell well during the exchange of lawsuits and accusations and vague intimations of pre-foreclosure legal action.
A series of price cuts on the apartments probably helped, there, but in a certain, bottom-line sense, the steadiness of the sales amid all those PR bloopers is not really all that surprising. For one thing, everyone already knew that New York City real estate is (spoiler alert) populated by hugely litigious egomaniacs. For another, it’s not like the condos for sale at Riverhouse were diminished any in quality by the bickering money-men behind them. A LEED Gold imprimatur, David Rockwell interiors, a snappy design courtesy of Polshek Partnership, the usual luxury condo amenities: these are the things buyers wanted from a condo at Riverhouse, and it they had every reason to expect that all those things would be worth the money. And all the more reason to be angry if, say, Riverhouse’s vaunted air-filtration system didn’t work. Or if that ultra-efficient HVAC system didn’t actually keep the apartments warm in the winter. Or if the residences weren’t properly insulated. Or if several aspects of the design missed LEED Gold standards by 49%. Any of those things would be bad. All of them are alleged in a recent lawsuit filed against Riverhouse’s developers by a resident. Our own Stephen Del Percio broke this story over at Green Real Estate Law Journal, and the suit shows every indication of being a pretty big deal for one of New York City’s great green hopes.
The suit’s demand for $1.5 million in damages is kind of a grabber, but Stephen identified something more intriguing — and which could possibly make a bigger impact across the green building spectrum — than the intimation that one high-profile green building didn’t live up to its own hype. “This type of construction litigation is not uncommon, the purchasers also claim that ‘the building’s much-heralded ‘green’ heating system consistently fails to provide adequate heat’ to their unit and that this failure is a condition which is ‘is materially different from those represented by the project sponsor and its principals in the condominium offering plan,’” Stephen writes. “These allegations – which are the the basis for two claims in the complaint alleging fraud and misrepresentation – mark the first time we have seen claims asserted against the developer of a green building for the developer’s alleged failure to deliver the project as represented during pre-construction.” This is an important first, and could set a precedent that real estate developers aren’t likely to like. Allegations against one green building’s developers for not delivering the green goods are gossip; a legal precedent establishing that a green building’s developer can be sued for (alleged) fraud and misrepresentation for not delivering the green goods is something that could change the way green building gets done. The suit could also ding the reputation of the USGBC’s LEED, since it highlights LEED’s single most glaring flaw: its tendency to grade on the blueprints, rendering actual building performance something of an afterthought.
Stephen goes on to explain the legal ramifications of all this far better than I could — he is, after all, a lawyer; I am a moonlighting sports blogger with an insulation fetish — and it’s really worth clicking here and reading his whole post. And while it might be foolish to guess at the possible future impact (if any) on the green building business… well, there is a comments section for that, if you’re feeling it. This will obviously be a story worth watching, and Stephen and I will have more on it next week.