LEGAL - The Ten Years Insurance

Ten Years Insurance 

With the aim to provide consumers with a wider protection, Law 38/1999 of the Building Planning was drafted, and came into force on the 6th of May of 2000.  This law regulates the process to build properties, determining the responsibilities of the intervening parties in the mentioned process, and establishing a whole series of guarantees, justified by the high money outlay that acquiring a property involves.

The Building Planning Law obliges the developer to arrange for the so called Ten Years Insurance, with a guarantee to cover during ten years all the damages caused by construction faults or damages that affect directly the building resistance.  The developer is the insurance holder and the beneficiaries of this, after the sale, are the buyers.

The insurance of material damages or caution insurance must guarantee, during ten years, the compensation of the material damages caused in the building by defects or damages originated in or affecting the foundations, supports, girders, cast irons, retaining walls or any other structural elements that endanger directly the mechanical resistance and stability of the building, according to what is stated in Art. 19 of the Building Planning Law.

If the building license was granted after the 6th of May of 2000, it is compulsory to sign the ten-year insurance. In fact, the Notary demands this insurance when the deed of declaration of finished building is signed, or when the supporting affidavit authorisation deed is executed. Law 38/1999 is applicable not only to new building but also to works of renovation and rehabilitation that do alter its architectural shape, and the works labelled as belonging to historical and artistic nature.

Therefore, the insurance is not the alternative to the quality that the building process must require, but it is the most suitable mechanism so that the buyer can identify those who are responsible for the possible damages that the property could show during the ten years following the delivery of the property. The best way to find solutions, in practice, when determining the origin of the damage, is the existence of an insurance company to take charge of these problems.

The mere fact to arrange for a ten-year insurance with an insurance company implies that the building in question is going to be submitted to strict technical controls that an independent company will carry out from the beginning (preparation of the foundations) until its completion, what constitutes and additional guarantee, since the insurance company itself, with the objective to minimize the insured risks, asks the so called OCT (duly authorised control companies) the supervision of the whole building process, up to the point of, should an OCT has not supervised the mentioned process from the beginning, in practice it is impossible to arrange for the ten-year insurance with a insurance company.

In other words, the ten-year insurance constitutes a prime guarantee for the purchasers of properties in Spain.