In addition to ensuring their work meets the standards set out in the CTE, builders are also required to provide guarantees when they deliver the property. It has been a requirement for decades that new developments be sold with a 10 year structural guarantee; however, up until 1999 the law simply required that contractors and architects offer a guarantee upon the structure against ‘ruin’. In practice this was an empty gesture. The legal costs associated with pursuing a claim were often beyond the reach of the claimant and, in the event that a property did degrade to the point that it could be called a ‘ruin’ the financial burden on the guarantor was normally so high that they would simply declare bankruptcy. Rogue builders were effectively free to operate without consequence.
In 1999 the law was changed to address this problem. Ley38/1999 of the civil code requires that developers offer 3 guarantees.
Ten years over the structure of the building, that is to say the concrete, structural beams, supports, steel work and foundations etc; the components that are vital to the structural integrity of the building.
Three years over the elements of the build which are necessary in-order for the property to be granted a habitation certificate, for example the electrical and sanitation installations.
One year over the finishing materials for example, plaster, floor tiles, doors etc.
In order to ensure that the guarantee is enforceable the law also required that all properties built by a developer with the intention of being sold take out an insurance policy, called a ‘Seguro Decenal’, to cover the ten year structural guarantee. It is not possible for the property to be entered into the land registry, and therefore impossible for the legal title of the property to be transferred, without evidence of this insurance.The new law had a very positive effect on the construction industry, not least because insurers do not like paying money out. To minimize the risk of having to make a payout the insurers will only offer a policy if they are certain that the build quality is of a high enough standard. To ensure that the build quality is up to scratch the insurers require that the project is inspected by the OCT (Oficina de Control Technico) at crucial moments throughout tha build, from the architectural stage through to completion.
The overall effect of the law is that new build properties, bought from a developer, are now built to a higher standard and backed by an independent 10 year guarantee.
It is important to note that the Seguro Decenal only covers the 10 year structural guarantee, the second two guarantees that I mentioned above are the direct responsibility of the developer. It is therefore important that you do a thorough snagging list before completion. Again we will deal with this in detail below.