Mitzyboy

Just a word to the wise after speaking to a local developer, if you buy a new build in Spain it is a legal requirement that it has a ten year guarantee.

If you manage to get a house without a 10 year guarantee, then you may actually be prevented from selling it within the 10 years, and if you do manage to sell it then the new buyer can sue you for any structural damage whilst he owns it within those 10 years.

An insurance company has to be involved right at the beginning to issue the policy, at the project lodgement stage.

This means that for some illegal builds it may be possible that by the time the property is legalised a 10 year policy cannot be issued, and you are stuck.

Fred James

You can sell the property without the 10 year insurance. The buyer has to be aware that there is no insurance and agree that he is buying without it.

We built a new house and had all the necessary surveys etc but as we were classified as the promotors we were not obliged to have the insurance as it was for our use.

The escritura makes it clear that we cannot sell it for 10 years unless the buyer is aware and accepts that.

Since we have had all the surveys etc (at a cost of over 5000€) we can take out the insurance at any time - the later we leave it the cheaper it will be.

Mitzyboy

Interesting ..... not according to a solicitor ...... apparantly it is illegal to sell with no insurance, although it is possible to do it (like most things in Spain). Its happened to a couple of houses in our area and theyve been told that they risk being sued if they sell without the ins, even if the buyer is aware, because of the legal requirement.

Fred James

I can sell my house so long as the buyer agrees to it. My escritura is quite explicit on this and it was explained in detail by the notary. Maybe it is different because I was not required to have the insurance. If the house was illegally built without insurance then that could be a different situation.

Mitzyboy

Ah well, what can I say ..... there seem to always be two sides to every story!

alaninspain

Be careful and aware regarding the 10 year warranty on new buildings. The developers/builders take out an insurance policy to cover any claims against them for defercts in the building structure. When things go wrong, the developer is responsible for reparation but in practice this can be delayed by years as the developer will say it is the builder's responsibility, who in turn subcontracted to another company which has now gone bust. Just make sure you have a lawyer well versed in property law.

EsuriJohn

Hi Fred James,

We are in exactly the same position you were with a proper geological survey and are the promoters building for our use but as ever there is a catch.

We have funded everything so far but we may need a mortgage towards the end depending on the standard of finishes and the stock market.

I have started to research the mortgage market for self build and have hit one or two snags.

1) they want their surveyor to inspect at each stage , we are already at the concreting of footings stage and

2) they require the builder to carry very comprehensive builders insurance and I must have the 10 year policy.

I guess this is in case I default they will want to sell on to recover their losses and could not without the insurance.

Regards,

John.

Fred James

I think it must, as always, depend on the bank.

We got a small mortgage (to reduce our tax income tax bill and minimise IHT) just before the house was finished. We had no problems at all with the 10 year insurance. They never asked about it and as previously mentioned, the escritura says we cannot sell it without the agreement of the buyer to waive the requirement for the insurance.

They did not even ask whether we had gone through the survey process to get the insurance.

All that said, the requirement for the 10 year insurance only came in at the time we were building so the banks may have become a bit more aware of it than they were 4 years ago.

bchapl

We have had (yet another) delay with completing on our new-build in Hondon. However, this time we are quite happy about the delay as it relates to the 10 year insurance. The mortgage bank will not allow us to complete without this insurance and neither will the notary. So, it would appear that it is a legal requirement that this ins is in place prior to completion, as Mitzyboy states, and also that the banks are becoming more aware of this requirement. Also, as John and Kath have said, the banks are anxious to cover themselves if we default on the mortgage. In the end, it is also safeguarding our investment too, which is why the notary will not allow completion until the ins. is in place. Another frustrating wait, I'm afraid, but, as said, this time we feel it's in our best interests!
Hope you're all well!
bchapl

alaninspain

bchapl: In previous years the banks were not too concerned with checks on building insurance because property values were rising so quickly, if there was a default on the mortgage they could foreclose and sell at a good profit. Now that some property values are at an almost standstill, and taking longer to sell, plus the Spanish government is making banks declare where money is coming and going, they are much more cautious. A good thing too.
PS I only sent this smilies because I did not know what a ROFL was.
I thought perhaps I could buy a couple of tickets if the prize was worth it.

Fred James

As I said before, if you are the promotor of the project and the house is for your own use, then this rule does (did?) not apply.

Is this the situation in your case or are you buying from the builder or another promotor?

bchapl

Hi Alaninspain and Fred James,
Thanks for the replies. We are buying from the builder, but were introduced to him by an estate agent (who was referred to us by our accountant in the UK). This builder is a lone builder and we know he is as anxious to sell (so he can begin another project) as we are to buy. As said, we feel that the insurance can only be a good thing for us, despite yet another delay (we have, to date, had 5 'firm' completion dates). We are lucky in that we appear to have a very good lawyer who has informed us that she will not, under any circumstances, allow us to complete without this buildings insurance and, as said, the bank won't allow it either, nor will the notary. We feel this is to our benefit, although I am a novice at all of this, so I read all the threads avidly! Thanks for all the good advice on many of the threads and thank God I found this forum. You've all been most helpful. I think we've got to the stage where we're almost adopting (or at least, understanding) the Spanish 'manana' attitude! What's another delay, after all? At least we're not paying the mortgage yet!
Best wishes to all (the weather in the UK is absolutely appalling, by the way, more like November than August, but you probably knew that anyway)!

P.S I don't know what a ROFL is either!

jdr

What is the smilie doing ????

Fred James

In which case he is the promotor so he has no option but to provide the insurance.

We bought our plot and employed a builder to build the house which makes us the promotor.

As the house was for our use we obviously have the option not to insure ourselves against any problems!

What is so good about this law is not the insurance as such, but the fact that a house has to be built to strict rules with all the necessary surveys and with independant third party supervision.

Mitzyboy

I know there are different scenarios Fred, but having checked with the solicitor on this and in response to the comment about being able to sell the property without an insurance as long as the buyer is aware, he said:

This is not true. The ten year´s guarantee is a legal requirement in order to register your property. I guess no one will buy a house if he / she can not register the house in his or her name.

So according to him this applies if the resale was originally legal, illegal or whatever. The original builder owner of course doesn't need one as a self promoter, but the "problem" would seem to occur on the next re sale within 10 years.