Originally published in New York Law Journal on June
20, 2012.
What is green due diligence and why would a prospective buyer,
tenant, or lender bother with it? As in other areas of the green
revolution, the answer ranges from advocacy to dollars.
Many organizations, such as federal agencies, national tenants,
lenders, and investors, now have green requirements for new leases,
loans, and purchases. They have made the policy judgment that they
want the buildings that they lease, acquire, or finance to be
green. They are advocates of green. Hence, before leasing,
buying, or lending, they conduct due diligence to verify the
"greenness" of a property.
Many other investors, tenants, and lenders do not care whether a
building is green—they are concerned with property value.
What is the return on investment? How good is the cash flow? Does
the property have physical defects or problems with its legal
status (zoning, etc.)? Are the lease terms competitive? These
parties
