Decenal Construction litigation – Prop Trust Verified

1. The Building Planning Law (LOE)

The Law 38/1999, of November 5, on Building Planning (LOE)It is the fundamental legal framework that regulates responsibilities in the construction process in Spain. For real estate expertise, this law is the mandatory reference in any litigation related to construction defects.

1.1. Objectives of the LOE

The LOE pursues several key objectives:

• Order the building process.
• Establish the obligations and responsibilities of the intervening agents.
• Guarantee the quality of the building.
• Protect the interests of users (buyers, tenants).
• Regulate the guarantee and insurance regime.

1.2. Scope of Application

The LOE applies to:

• New construction buildings:Homes, offices, shops, industrial.
• Interventions in existing buildings:When they affect the structure, configuration or enclosures.
• Does not apply to:Minor works, provisional constructions, protected monuments (except structural interventions).

2. Building Agents and Their Responsibilities

The LOE identifies the following agents, each with specific responsibilities:

2.1. The Promoter

Definition:Natural or legal person that decides, promotes, programs and finances building works.

Main obligations:

• Obtain the construction license and other authorizations.
• Sign the stakeout record and the work reception record.
• Hire the rest of the agents (designer, builder, DO, DEO).
• Subscribe to mandatory insurance (ten-year, property damage).
• Deliver the final work documentation to the owner.

Responsibility:Main person responsible for the buyer. Responsible jointly with the other agents for material damage caused to the building due to defects or execution defects.

2.2. The Designer (Architect)

Definition:Agent who, at the request of the developer and with the appropriate academic and professional qualification, drafts the building project.

Main obligations:

• Write the project in accordance with the applicable regulations.
• Establish the technical specifications of materials and systems.
• Direct the work (if you are also the Work Director).
• Maintain project documentation.

Responsibility:For project defects that affect the resistance, stability, habitability or functionality of the building.

23. The Builder

Definition:Natural or legal person who contractually assumes the material execution of all or part of the works.

Main obligations:

• Execute the work according to the project and the instructions of the DO and DEO.
• Have adequate human and material resources.
• Hire mandatory insurance (CAE, civil liability).
• Deliver the finished work to the promoter.
• Exercise the optional direction of the work (through the project manager).

Responsibility:Due to defects in execution, use of inappropriate materials or non-compliance with technical standards.

2.4. The Construction Director (DO)

Definition:Competent technician (architect) who directs the development of the work.

Main obligations:

• Direct the material execution of the work.
• Interpret the project and resolve contingencies.
• Qualify the suitability of the materials.
• Record the relevant instructions in the Incident Book.
• Sign the layout document and the final work certificate.

Responsibility:Solidarity with the builder for material damage caused to the building due to defects or execution defects.

2.5. The Director of Work Execution (DEO)

Definition:Competent technician (technical architect/surveyor) who assumes the function of directing the material execution of the work and qualitatively and quantitatively controlling the construction.

Main obligations:

• Quantitative and qualitative control of construction.
• Reception of materials and verification of their suitability.
• Verification of the units of work executed.
• Preparation and subscription of the documentation of the executed work.

Responsibility:Due to defects derived from poor control of material execution.

2.6. Other Agents

• Quality control entities and laboratories:They carry out tests and controls.
• Product suppliers:Responsible for defective products.
• Building Owner:Responsible for damages caused by lack of maintenance.

3. Terms of Responsibility: 1, 3 and 10 Years

The LOE establishes three liability periods depending on the nature of the defect. This is one of the most important provisions for the real estate appraisal:

3.1. Term of 1 Year: Workmanship Defects Affecting Finishing Elements

Ambit:Defects in completion or finishing of the work.

Examples:

• Damage to paints and coatings.
• Defects in interior and exterior carpentry.
• Small cracks in plaster and tiling.
• Defects in flooring and pavements.
• Failures in mechanisms and taps.

Responsible:Builder.

Insurance:It is NOT covered by decennial insurance. The buyer must complain directly to the builder.

3.2. 3 Year Term: Defects Affecting Habitability

Ambit:Execution defects that affect construction elements or facilities that cause non-compliance with habitability requirements.

Habitability requirements (art.3 LOE):

• Hygiene, health and environmental protection.
• Protection against noise.
• Energy savings and thermal insulation.
• Other functional aspects of the construction elements.

Examples:

• Dampness due to leaks on facades and roofs.
• Thermal and acoustic insulation defects.
• Failures in installations (electrical, plumbing, air conditioning).
• Cracks in non-structural elements.
• Ventilation defects.

Responsible:All agents (promoter, designer, builder, DO, DEO) jointly.

Insurance:Partially covered by ten-year insurance (depending on policy, typically optional).

3.3. 10 Year Term: Defects Affecting the Structure

Ambit:Material damage caused to the building by defects or construction defects that affect the foundation, supports, beams, slabs, load-bearing walls or other structural elements, and that directly compromise the mechanical resistance and stability of the building.

Examples:

• Differential foundation settlements.
• Structural cracks in pillars, beams or slabs.
• Corrosion of reinforcement that affects the load-bearing capacity.
• Pathologies in structural elements of wood or steel.
• Defects in load-bearing walls or screens.
• Failures in containment structures.

Responsible:All agents jointly.

Insurance: MANDATORY covered by ten-year insurance(art.19 LOE) for residential buildings.

4. Decennial Insurance: Mechanics and Claims

The ten-year warranty insuranceIt is mandatory for collective housing buildings since the entry into force of the LOE. It is the key instrument to guarantee coverage of structural defects.

4.1. Mandatory Coverage

The ten-year insurance must cover:

• Material damage caused to the building by defects or construction defects.
• That affect the foundation, supports, beams, slabs, load-bearing walls or other structural elements.
• That directly compromise the mechanical resistance and stability of the building.

4.2. Insured and Policyholder

• Insurance policyholder:The promoter.
• Insured:All intervening agents (promoter, designer, builder, DO, DEO).
• Beneficiaries:The owners and third-party purchasers of the building.

4.3. Insurance Amount

The minimum insurance amount is:

• For residential buildings:100% of the final cost of material execution of the work (including optional fees, taxes, etc.).
• For other buildings:It is not mandatory, but if it is contracted, the amount is freely agreed upon.

4.4. Coverage Term

• Start:From the date of receipt of the work (without reservations) or from the correction of the reservations.
• End:10 years since the beginning.
• Claim:The damages must appear within a period of 10 years.
• Prescription:The action to claim prescribes after 3 years from the manifestation of the damage.

4.5. How to Claim Decennial Insurance

1. Immediate communication:As soon as structural damage appears.
2. Documentation:Deed, final construction certificate, policy, expert report.
3. Contradictory expertise:The insurance appoints its expert, the owner his.
4. Negotiation:Agreement between experts to determine causes, responsibilities and amount.
5. Repair or compensation:At the policyholder's choice (normally).

4.6. Typical Decennial Insurance Exclusions

• Damage caused by the owner (poor maintenance, unauthorized renovations).
• Pre-existing damage to the insurance contract.
• Damage to non-structural elements (unless otherwise agreed).
• Damage due to force majeure (earthquakes, extraordinary floods).
• Damage due to soil defects not detectable with adequate geotechnical studies.

5. The Expert as a Determinator of Responsibilities

In construction litigation, the expert witness plays a crucial role:determine the causes of damage and assign responsibilitiesbetween the different building agents.

5.1. Expert Methodology in Construction Litigation

The expert must follow a rigorous methodology:

1. Document analysis:Project, final construction certificate, Building Book, minutes, quality control reports.
2. Eye inspection:Visit to the building, exhaustive photographic and video documentation.
3. Technical tests:Georadar, ultrasounds, thermography, materials testing, monitoring.
4. Cause analysis:Determination of the root cause of damage (5 Whys method, Ishikawa diagram).
5. Attribution of responsibilities:Identification of the agent or agents responsible according to LOE.
6. Damage quantification:Repair budget, loss of value, lost profits.

5.2. Root Cause Determination

Determining the root cause is the most critical part of the expert report. Examples:

• Differential settlements:Cause: poor geotechnical study (designer), insufficient foundation (builder/DO), or unforeseen overload (owner)?
• Roof leaks:Cause: design defect (designer), poor execution (builder), or lack of maintenance (owner)?
• Cracks in facade:Cause: lack of expansion joints (designer), poor execution (builder), or vehicle impact (third party)?

5.3. Attribution of Responsibilities

Depending on the root cause, responsibility is attributed to:

6. Relevant Jurisprudence of the Supreme Court

The jurisprudence of the Supreme Court has been shaping the interpretation of the LOE. Some key sentences:

6.1. STS 426/2022, of May 12

Question:Concurrence of actions (LOE vs.hidden vicesof the Civil Code).

Doctrine:The LOE is the special rule that prevails over the Civil Code for construction defects in buildings subject to its scope of application. The 10-year term of the LOE prevails over the terms of the Civil Code.

6.2. STS 563/2023, of July 20

Question:Concept of “structural element” for the purposes of decennial insurance.

Doctrine:It is not only structural elements that support loads. So are those that contribute to the overall stability of the building, including certain enclosing walls and bracing elements.

6.3. STS 145/2021, of March 18

Question:Responsibility of the promoter for defects in execution.

Doctrine:The promoter is jointly and severally liable with the builder for execution defects, even if he did not directly participate in the construction. This joint responsibility is a fundamental guarantee for buyers.

6.4. STS 789/2020, of October 28

Question:Interruption of the limitation period due to extrajudicial claim.

Doctrine:The extrajudicial claim to the ten-year insurance interrupts the limitation period of the action, as long as it is clear, unequivocal and aimed at obtaining coverage for the incident.

6.5. STS 234/2019, of April 24

Question:Concurrence of causes (design defect and lack of maintenance).

Doctrine:When several causes occur (e.g. design defect and lack of maintenance), the degree of contribution of each must be determined to attribute proportional responsibilities.

7. Practical Cases of Construction Litigation

7.1. Case 1: Differential Settlements in Residential Development

Promotion:Building with 30 homes in Murcia, delivered in 2019.

Pathology:Differential settlements detected in 2023 (year 4). Diagonal cracks in 8 homes.

Expertise:Complementary geotechnical study revealed the presence of expansive clays not detected in the original study. Insufficient foundation.

Responsibilities:

• Designer (60%): Deficient geotechnical study.
• Builder (30%): Insufficient foundation.
• DO (10%): Poor execution control.

Claim:€380,000 (micropiles + restoration).

Result:Favorable ruling. Ten-year insurance covers €365,000.

7.2. Case 2: Widespread Roof Leaks

Promotion:Building with 50 homes in Barcelona, ​​delivered in 2017.

Pathology:Widespread leaks on flat roofs. Affectation to 20 homes on the attic and top floor.

Expertise:Drone inspection and flooding tests revealed multiple defects: insufficient slope, poorly executed waterproofing, clogged drains.

Responsibilities:

• Builder (50%): Poor execution.
• DO (30%): Poor control.
• Designer (20%): Design with insufficient slope.

Claim:€280,000 (complete cover replacement + interior damage).

Result:Extrajudicial agreement after 8 months. Complete repair executed.

7.3. Case 3: Acoustic Insulation Defects

Promotion:Building with 40 homes in Madrid, delivered in 2018.

Pathology:Acoustic insulation between homes much lower than that required by CTE HR. 25 complaints from owners.

Expertise:On-site acoustic tests (UNE-EN ISO 16283) confirmed non-compliance: 6 dB lower than the legal minimum in dividing walls.

Responsibilities:

• Designer (40%): Insufficient partition design.
• Builder (40%): Poor execution of partitions.
• DO (20%): Poor control.

Claim:€320,000 (installation of acoustic tiles in 25 homes).

Result:Favorable court ruling. The agents carried out the repair works.

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