This obligation applies not only to new building but also to reconstructions and reforms which change the layout of a property in any way.   The guarantee has to cover defects in construction and must be provided by an insurance policy, known as a “Seguro Decenal” taken out by the builder which provides cover on a reducing basis for 10 years after completion of construction.

Subject to three exceptions, if you buy a property without “Seguro Decenal” the Land Registry will refuse to register your purchase.   

The three exceptions to the requirement to provide a 10 year guarantee are:-

• First, if a property is built or reformed for your own use, and the property does not change hands during the 10 years following completion of the work, but If you are a self-builder or carrying out substantial renovation of older property which you may want to sell in the future you may be obliged to provide a guarantee of the work to your buyer.  
• Second, if the property is more than 10 years old and an architect provides a certificate stating that construction was completely finished before 6^th May 2000. 
• Third, if you agree to release the Seller from the requirement to provide a “Seguro Decenal” and this is recorded in the Escritura at completion.

If a property is built or reformed and transferred between members of the same family a guarantee must still be provided.  

For the whole 10 year period the guarantee must cover the structure, and all load bearing elements of the property.

In addition, for the first year after completion, the guarantee must cover not only structural defects but also defects in finishes and what might also be called “snagging”, and for three years after completion of the work, the guarantee must also cover the installations for plumbing, sewerage, electricity, insulation, and normal use of the property.

The time periods are calculated from the date the completed building work is handed over to the owners, and should any defects arise it is vital that the builder is notified in writing immediately, as defects not notified to the builder within two years after they arise are not covered under the guarantee.

The value of the insurance policy must be for the entire cost of the building work together with professional fees and any other necessary expenses, together with an allowance for inflation and there must not be any “excess” on the policy. 

The guarantee need not cover your consequential financial losses; damage caused to adjoining property; damage to furnishings; damage caused by work done after completion of the building apart from that done to rectify original defects in construction; damage caused by misuse of the property or failure to carry out adequate maintenance; and finally any damage caused by fire or explosion unless resulting from a defect in the original installations.

Should you have to make a claim on the guarantee the insurer can either settle the claim by making a cash payment to you, or by arranging for the repair of the defects.

If you want to buy a property without an original “Seguro Decenal” there are a number of specialist insurance companies which may be able to provide insurance retrospectively but the premium can amount to 15% of the rebuilding cost of the structure.  Some insurers will even provide quotes “on-line”.   Remember that the policy need only cover the value of the buildings and not the value of the land that  they stand on.

Because of the high cost of providing the “Seguro Decenal” some property sellers may ask you to agree to waive this requirement.  If this is the case, and you are prepared to go ahead with you purchase you should get the property inspected by an engineer or architect before committing yourself to buy.  In addition at completion the Notary must include a clause recording your agreement to release the seller from their obligation to you.

As always, take professional advice before committing yourself to buying any property, especially if you are concerned about the quality or legality of any building work.