Guide to building insurance for new builds in Spain

Guide to building insurance for new builds in Spain

When you buy a new-build property in Spain, you automatically become a beneficiary of insurance against defects in construction. Depending on the type of fault, the insurance policy lasts from one year to ten. In this article, we look at the policy type and what it covers.

About building insurance for new builds in Spain

Under Spanish law, all construction companies must take out insurance covering defects in new-build properties. The developer is the policyholder and must contract a 10-year insurance plan for each development.

When a property is sold within the development, the buyer becomes the beneficiary of the insurance policy. Subsequent buyers also benefit from the cover, which lasts ten years from the date of official completion of the project.

This means that individual tradespeople and companies involved in the construction process are accountable to owners for material damage, defects and faults in the building. However, they are only accountable within a certain time frame. This varies from one to ten years, depending on the nature of the fault.

Did you know? Time is of an essence when making claims on building insurance for new builds in Spain and you can only make a claim within a certain time period (see below).

Three time periods for different faults

Building insurance in new properties runs for a maximum of ten years. However, within that decade, there are two other time periods of one and three years.

One year

This part of the insurance covers material damage that affects elements of the finishes in construction. Examples of these include cracked bathroom tiles or doors that don’t shut properly.

Three years

The 3-year limit policy allows you to claim for material damage caused by building elements or installations that affect the habitability of your home (see below). For instance, dampness in the rooms or drainage problems in a bathroom.

Ten years

This is the maximum period the building insurance for new builds in Spain is required to cover. In this case, the policy includes claims on defects or faults affecting the resistance and stability of the building. Examples of this type of defect would be shifting foundations and damage to any structural element.

Did you know? The insurance policy requires the developer to fix any defect that appears within its corresponding time limit at no cost to you or other owners.

Defining habitability

Spanish law defines habitability as having four main areas, as follows:

  1. Environmental and health and hygiene protection: a home must have acceptable conditions of safety and waterproofing and proper management of all types of waste.
  2. Protection against noise: sounds must not endanger the occupants’ health or stop them carrying out their usual activities.
  3. Energy efficiency and thermal insulation: energy use should ensure comfortable living conditions.
  4. Other functional aspects: elements of construction and facilities should allow satisfactory use of the building.

Get your free guide to buying property in Spain. 

Claiming for a building defect

As well as claiming within the appropriate time period (one, three or ten years), it’s also important to make the claim in the correct way. You should always claim in writing and the initial contact with the developer should be through registered post or even better, by burofax (a service available at Spanish post offices and one of the best ways of sending a document).

By registering your initial claim, you will have official proof that the developer has received it and the date of reception.

Multiple liabilities

A defect may not necessarily be the fault of the developer. It could be the result of negligence by the architect or poor craftsmanship by a builder. Sometimes, it isn’t possible to tell who the responsibility lies with. In these circumstances, Spanish law applies joint liability.

If this is the case with the defect you want to claim for, you must claim within two years of noticing the damage.

Type of damage covered

New-build insurance in Spain covers a variety of damage types including:

  • Defects endangering the stability of the building (e.g. in the foundations, floor supports and beams).
  • Material damage to secondary work, installations and equipment in the building caused by major damage elsewhere.
  • Costs of rectifying and eliminating the threat of subsidence.
  • Costs of demolition and removal of debris (as a result of damages covered by the policy).

Find out how to avoid abusive clauses in new-build contracts in Spain. 

Optional cover

Some insurance policies include cover for other defects such as:

  • Secondary work
  • Waterproofing of decks.
  • Waterproofing of facades. 
  • Waterproofing and sealing of basements.
  • Waiver of appeal against the builder.
  • Waiver of appeal against the contractor and / or subcontractor.
  • Waiver of appeal against the technical direction.
  • Damage to pre-existing goods.
  • Revaluation of insured sum and franchises.

Defects that are not covered

  • Even the most comprehensive building insurance policies don’t cover everything and there are some defects that aren’t part of the policy. They include:
  • Physical injury or economic damage other than those protected by the General Building Act.
  • Damage to properties adjacent to the building.
  • Damage to belongings located within the building.
  • Damage produced by work carried out after individuals take ownership except work to fix construction defects.
  • Damage caused by misuse or lack of proper maintenance of the building.
  • Damage through fire or explosion except that caused by defects in the building itself.

Get expert advice on building insurance for new builds

All too often developers and their insurance companies try to avoid paying for fixing defects in new-build properties and it can be difficult to make a successful claim on your own. It’s therefore important to take legal advice and put the matter of professional experts.

Costaluz Lawyers will be only too happy to help with your claim. Just get in touch with our friendly team for a free no-obligation chat.  

2 thoughts on “Guide to building insurance for new builds in Spain”

  1. I am a new homeowner (townhouse) in Spain and thus not familiar with the laws and warranties. I have bought a new build from a developer and they tell me the one year warranty has expired as the unit was built in 2019. Covid had delayed the sales of the units. I have owned since June of 2023 and when I arrived the air conditioning system and hot water were not in working order. They denied any responsibility for the air conditioning saying it was a warranty issue with Daikin. Due to the extreme heat and after a week of suffering, I hired someone at my expense to fix it. It still is not functioning to 100 percent and another visit is required. Also I had no hot water due to a pipe that was not connected and as such burst when it was turned on. Again with a flooded kitchen, I hired someone immediately at my cost. Lastly, as part of our agreement to purchase, there was a large glass panel that was broken. The house closed without being repaired. The developer is ignoring my requests. I still have some leaking pipes in the bathroom that again were not properly attached (glued in joints).
    Many of the new owners are fighting to have similar issues addressed. The air conditioning in many of the units did not work. Some units were flooded due to poor plumbing.
    What are our options as new homeowners on dwellings built in 2019 but not occupied until the last yr for many and until this spring for most. Does the three yr warranty apply to systems such as plumbing or air conditioning.
    Regards,
    Andrea

    1. Maria Luisa Castro

      Dear Andrea,

      I’m sorry to hear about the issues you’re facing with your new townhouse in Spain. The situation you’re dealing with is certainly challenging, but there may be legal options available to you.

      In Spain, the Law of Building Planning (Ley de Ordenación de la Edificación) regulates the warranties for new properties:

      A one-year warranty for finishing defects: This is likely the warranty that the developer is referring to, which covers elements like painting, carpentry, and other finishes. This warranty starts from the date of the end of construction.

      A three-year warranty for defects that affect the habitability of the property and the proper functioning of the installations (like plumbing or air conditioning). This starts from the date of the end of construction.

      A ten-year warranty for structural defects.

      In your situation, given the nature of the defects you’re describing, it seems that the three-year warranty should apply, as it covers elements affecting the habitability and proper functioning of installations. It seems that your property’s issues fall within this category.

      The developer should therefore be responsible for the repair of these defects, regardless of the one-year warranty for finishing defects being expired. The delay in the sale of the units due to COVID-19 should not affect the start of this warranty period, which is counted from the end of construction.

      However, it is crucial to act promptly and officially communicate these defects to the developer in a form that can be certified (e.g., burofax or a certified letter), as there are time limits to claim these warranties.

      Our firm can provide legal assistance to ensure your rights as a homeowner are protected.

      Best Regards,

      Maria L. de Castro
      General Director
      Costaluz Lawyers

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