Apr 052013

Decenal insurance policy Spain

Do you have a Decenal insurance policy on your new (under 10 years old) property in Spain?

Of course, this may seem a silly question – as all new Spanish houses should have a 10 year ‘Builder’s Guarantee’ (Decenal Insurance policy).  Indeed, a Decenal insurance policy (similar to a NHBC insurance policy in the UK) is obligatory, by Spanish law, for any new property constructed by a builder in Spain.

However, there is a loophole in the Spanish law relating to the imposition of Decenal policies for new build Spanish properties – that (whilst, perhaps, sensible for people building a house for their own long term use) has been taken advantage of by unscrupulous builders and colluding conveyancing lawyers.

The loophole states that a self-build project (auto-promoción) in Spain does not have to have a Decenal policy.  This is when the owner of the property chooses to be designated as the builder of the property concerned, in which case he can ‘decide’ whether to have a Decenal policy or not.

Obviously, having a Decenal policy is an additional expense for any builder.  Worse still (for the builder) is the fact that the providers of Decenal insurance policies inspect the construction of the building to be insured (during various stages of the building work) and also analyse concrete samples etc. for their structural integrity.

In short, if a builder in Spain can get away with not providing a Decenal insurance policy then it is very much in his interest.  He avoids paying for the Decenal insurance policy and does not have to comply with any of the obligatory inspections undertaken by the Decenal insurer’s experts.

Well, as you can imagine, over the past few years, a significant number of Spanish property owners have unwittingly been designated as ‘auto-promoters’ or the builders of their own properties.  This is irrespective of the fact that a ‘professional’ builder or developer (backed by an architect etc.) has actually undertaken all the work.

Spanish houses and the 10 year Builder’s Guarantee (Decenal)

–          Vital insurance backed protection against structural movement

–          Obligatory for all new builds (since 2002)

–          Exemption for self-builders

–          Not all new properties (built within the last ten years) have a Decenal policy

–          Retrospective Decenal policies can be obtained

The end result is that many people have had a house built and yet lack a Decenal policy, the insurance backed guarantee that expressly provides cover for structural instability – one of the most potentially expensive problems any property can suffer.

So – what happens if you do not have a Decenal insurance policy?

Well, firstly you cannot sell your new Spanish house until ten years have elapsed.  Or, at least, you can – but only if the new buyer expressly agrees to buy the property understanding that there is no insurance backed guarantee relating to the structural integrity of the property concerned.  Frankly, only a mad or ill-advised buyer would do this (obviously!). So, selling your property before ten years have passed is very difficult and could result, at best, in you significantly reducing your property price to take into account that you are selling something is perceived as being unsound.

Secondly, needless to say, you will have no insurance backed cover should your property suffer from structural defects.  This, as I have written before, is a reasonably common problem with property in Spain due to (amongst other things) the often poor standard of building that occurred during the boom years for Spanish property.  This was made worse by construction of properties that were built on unsuitable land or with inadequate foundations.

Obviously, if you have a property that is less than 10 years old then you should check to see if you have a valid Decenal insurance policy.  If you have – then fine.  However, if you do not have a Decenal then you should seriously consider your position!

Fortunately, you can get retrospective Decenal insurance, subject to an inspection of your property.

So, all is not lost!

If you do not have a Decenal insurance policy and want to know how to obtain one or how to get a retrospective Decenal insurance policy then do contact us.  We can provide you with all the details that you need – and an excellent Decenal insurance provider who is based in the UK and who can provide you with comprehensive cover (all in English).

Jul 062012


If you are the owner of a new property in Spain, now may be the time to check your home carefully for any structural defects.  I say this because any newly built home in Spain should have a Decenal Insurance policy (10 year building guarantee in Spain).

So, if you have a Decenal Insurance policy then this may be close to running out – if your home in Spain was built during the early years of the Spanish property boom.

Needless to say, once your 10 year building guarantee in Spain expires you will be liable for any structural defects and remedying these can be extremely expensive.  Indeed, if ever you need insurance then it is for remedial structural works!  Almost by definition these can be complicated and the costs of rectifying a given problem can be far greater than those incurred during the original building process.

Certainly, the last thing that you should do is to ignore anything that looks as though it may indicate a structural fault.  Whilst minor cracking in all properties is common – anything more than that should be checked by a fully qualified (and independent of the builder!) professional.  This is particularly true if you see indications of movement (see Indications of Building Defects for examples and images of potential problems).

Decenal Insurance (10 year building guarantee in Spain) was made obligatory on the 6th May 2000 when a law ( La Ley de Ordenación de la Edificación’) was passed which made it obligatory for any new build property in Spain to have an insurance-backed, 10-year guarantee (similar to the NHBC scheme in the UK). In Spain, this scheme is called the seguro decenal and is often referred to as the ‘builder’s guarantee’ or just the Decenal.

Unfortunately, the Decenal is by no means as comprehensive as its UK (NHBC) equivalent (although the NHBC has been criticised for some of its ‘get out’ clauses!). However, you must be especially wary of relying on the Spanish Decenal to resolve all your new building problems in Spain. Indeed, the very term ‘builder’s guarantee’ is misleading. The Decenal essentially only covers issues related to structural stability and resistance. This leaves many other potential issues unprotected, such as leaking roofs or damp.

Nonetheless, it is important to have a Decenal policy and you should be extremely wary of buying a new Spanish property that lacks this cover, if it was built after May 2000.  Indeed, the lack of a Decenal may indicate that your property (or intended property!) may not be legal – so beware and make sure that your Spanish conveyancing lawyer checks this detail!!

In theory, Decenal insurers are legally obliged to pay out to the owner of a new build property in Spain if there is a proven structural stability issue that needs correction. This is irrespective of whether the fault is due to the builder or architect and whether the problem is because of negligence, faulty materials or processes.

However, typically decenal insurers are extremely tardy about honouring their obligations. Indeed, usually they refuse to accept a claim unless negligence is proven in court. This is because they know full well that if, for example, an architect is proved negligent, then any remedial costs will be covered by the architect’s own professional indemnity insurance.

So, although Decenal insurers are legally obliged to act, in reality,they rarely do so until forced to do so. This is despite the fact that they can potentially recover their costs from the builder or architect responsible for the defective or negligent work.

If you think that your Spanish property may have structural problems or building defects then contact us.

We can then assess whether your suspicions are right or not.  If your worries prove to be correct then we can prepare a formal report and then help you make your claim against your Decencal insurers.  Should there be a dispute then our legal department can provide you with the help you will need to process your claim and we can then manage the remedial works required.