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).