Are you aware of the Liabilities and Guarantees on new constructions?

In 1.999 the Spanish Government issued a new law, Ley de Ordenacion de la Edificacion, to regulate the liabilities and guarantees associated with new constructed homes. The building industry is one of the leading ones in Spain and was in need of some regu-lations to protect consumers. That new law identified the agents involved in the construction process and established their liabilities.

Liabilities:

The Ley de Ordenacion de la Edificacion establishes three different liabilities depending on the seriousness of the damages. The initial date of each liability period is the day the developer formally accepts the building from the builder as fully finished and in compliance with the approved project and construction regulations.

• Ten year liability: it refers to those cases where there are serious damages affecting structural elements of the construction that may affect partially or totally the mechanical resistance or the stability of it and the viability of the property to be dwelled.

• Three year liability: it refers to those hidden flaws or defects of the construction or its systems and installations that may affect the habitability of the building like cracks, damp, etc.

• One year liability: it refers to those defects apparent to the naked eye and affecting the finishing aspect of the works. Those are the ones that will appear in a snagging list on new developments.

The liability rests on the agent responsible for the works although the developer will be always held jointly liable. The period to exercise the right to claim is two years from the time the damages become apparent. However, damages caused by force majeure, third parties or the owner of the property are excluded from those liabilities.

Guarantees:

• Ten years liability: this is to be cover by a ten years liability insurance (what is commonly called “seguro decenal”). The Land Registry, with some exceptions, will not registry the property without that insurance.

• Three years liability: it is cover by an insurance specifically designed for the damages to be covered.

• One year liability: to be cover by an insurance, usually from the builder, on the minor defects detected during that first year. It substitutes the one year retention of the 5% of the total cost of building on the final payment to the builder.

Since each particular case is different, it is fully recommended that you check your own details with your lawyer.