Bankruptcy - and administrators

We purchased our house in 2007 and 2010 the builder went into bankruptcy. ;We kept 70.000 euros back from the builder as there was no building insurance placed on the house. ;We have large cracks appearing around the outside walls and also n the house. ;The floors are coming up and the tiles are breaking due to them only been laid on gravel. We had to have the swimming pool rebuilt as it was full of cracks,  Our solicitor negotiated with the administrator we use 17,000 euros to do the pool and the damp on all the inside walls and the roof which was leaking due to a large hole under the tiles . ;We have had a full report from an independent architect who says this house still need 112.000 euros to put right. Our solicitor phoned us in December to say the administrator was collecting all outstanding monies owed and they could no longer allow us the 17,000 euros as they had a shortfall in monies!! We are now in Spain and went to see the solicitor yesterday who now tells us that he is suing the architect who designed the house but it could take a few years. He now also tells us that you cannot neogotiate a reduced price with the administrators?? we are both coming up to 70 years old and we don't have years to wait for the house to be put right. On our arrival here we had to have the hall floor dug up as we couldn't open the door to get in. ;Cost 600 euros. ;The floors alone will cost between 8-10 thousand which need doing as soon as possible.I don't suppose anyone else has had this problem. ;Any advice would be appreciated. Something I forgot to mention, 2 years ago it cost us €3216.000 to have an illegal mortgage lifted from our house which the builder had taken out and forged our signature.  I wrote to the British Consulate iN Alicante but they don't want to be involved.  The cost of the house new was €236,000.  Plus IVA of course.

This message was last edited by daisymil on 18/04/2015.

Maybe some questions to consider are:

Is the speed of the defects occuring at an accelerated rate, in which case will the property continue to deteriorate to an extent whereby no further expense could be warranted, i.e not financially viable to "make good" the works?

Might the conveyancing lawyer and architect be jointly and severally responsible? Is it a legal requirement for a builder to provide  insurance, and if so does this make the original conveyancing lawyer equally culpable (failure to ensure insurance was in place prior to completion), together with the architect who signed off the project? In other words should the original build and legal team (i.e. the project architect and conveyancing lawyer) be placed on written notice regarding their own failures of duty? Could compensation according to your own independent architect's report (for the excess beyond the amount withheld) come from their own legal indemnity insurance cover, or does the witholding of monies absolve the build and legal team of their legal responsibilities in any way?

Might all legal scenarios be worth exploring further before pursuing a legal course of action that could ultimatley be compromised? Perhaps a fully independent legal opinion should be sought here?

This message was last edited by ads on 19/04/2015.

All completed developments have a Building deffect Insurance policy to claim against

How long liabilities do last after building is finished?

a) For 10 years, of material damages caused in the building due to defects or vices that affect the foundations, supports, beams, floor structure, charging wall or another structural elements, that directly compromise the mechanic resistance and the stability of the building.

b) For 3 years, of material damages caused in the building by defects or vices of the building elements or the installations that produce the breach of the habitability requirements of the provision 3,1,c.

 The builder will also answer for the material damages by vices or execution defects that affect the elements of finishing of the works within a year deadline.

What are the habitability requirements mentioned below?

The habitability requirements set by this Act in article 3.1.c are as follows:

 Article 3. Basic requirements of building.

In order to guarantee the safety of people, the welfare of society and the protection of the environment, buildings must be designed, built, maintained and conserved in such a way that will fulfill these basic following requirements:

The article lists a series of requirements under three different categories. We will cover those regarding habitability, as mentioned in article 17:

(a: regarding functionality)

(b: regarding safety)

(c: regarding habitability)

c.1) Hygiene, health and protection of environment so that acceptable conditions of healthiness and comfort in the internal environment of the building and so that this won´t damage the close environment, guaranteeing a proper management of all kind of refuse.

c.2) Protection against noise, so that the perceived noise won´t put people´s health at risk and will enable them to carry on their activities properly.

c.3) Saving of energy and thermal insulation, so that a rational use is made of the necessary energy for the adequate use of the building.

c.4) Any other functional aspects of the building elements or the installations that will enable a satisfying use of the building.

What is a “ruin” legally speaking?

In this regard we should mention, by way of example, the Supreme Court ruling of 4 March 1998 as an expression of the concept of ruina (serious building defect) that in an evolutionary way, Supreme Court Case Law has been consolidating:   

"... The concept of ruin is not the restrictive one which means the total destruction of the work, but one much broader: that of a functional ruin which reaches either the whole building or part of it, exceeding the level of just current imperfections. The doctrine of this Court is settled: serious defects that make possible the loss of the property or make it useless for the purpose which is proper, as well as those who, by exceeding current imperfections, entail a violation of the contract or affect the livability of the building. 

Who needs to prove the damage?

The injured party must prove the damage, once established, it is presumed "rebuttable" that the same has occurred for reasons attributable to those responsible for the building process. 

Who can use these actions?

These actions are granted to the owners and third party purchasers of buildings or part thereof, in case they are subject to division.
 
The action regarding the buildings standing in horizontal property regime rests with the president of the community of owners. Therefore , the decision to claim against construction defects or vices covered in the Building Act must  be agreed in general meeting .The president is the legal representative of the community, with sufficient capacity to grant power of attorney to solicitors and barristers and hold the representation in Courts.

Who the action is directed against?  

The action can be directed against: developer, builder, designer, project manager or director of commission work under his purview. 

We must differentiate between direct action against the building agents and the internal action among the stakeholders in the process against the ultimate responsible for damages. 

 When it is impossible to identify the cause/causer of the damage, or it is proved the existence of guilt without being able to specify the degree of involvement of each party, the liability is joint and several. 

What could exempt them from liability?

The grounds for exemption from liability are accident, force majeure, act of third parties or of the injured himself.

What are deadlines for the use of these actions?

The Building Act establishes in its Article 17, three warranty periods depending on the type of damage.

10 years: for defects or flaws in the foundation, supports, beams, slabs, bearing walls or other structural elements affecting the stability of the building.

3 years: for defects or defects that affect the habitability of the building.

1 year: for defects involving elements of termination or completion of the building. This damage will be sole responsibility of the builder.

When does time limit start being counted?

The time-limit shall commence from the date of receipt of the work, without reservations or from the correction of these.

This is a time of expiry (no prescription) that does not allow interruption or suspension.

Article 18 of the LOE provides that actions to enforce the liability for defects or defects in the building prescribe after two years since the damage occurs.

Therefore, the damage must occur during the warranty period (Art. 17 LOE), and then the injured party has the above time limit (two years) for filing the appropriate claim.

What are the compulsory guarantees that builders need to provide to property owners?

The system of guarantees for the building work is regulated in Article 19 of the General Building Act.  They are legally compulsory for the developer finishing a development.

For one year:

Property damage or liability insurance to guarantee, for a year, compensation for material damage arising from construction defects affecting elements of termination or completion of the building, which may be substituted for the retention of a 5% the amount of execution of the work. The insured sum insured will be of 5% of the final cost of the work, including professional fees.

For three years:

Property damage or liability insurance to guarantee, for three years, compensation for material damage due to defects or vices which affect the habitability of the building. The insured sum is of 30% of the final cost of the work, including professional fees. 

For ten years:

Property damage or liability insurance to guarantee, for ten years, compensation for material damage from construction defects or defects that affect the foundation, supports, beams, floors, walls or other load-related  or building elements related to structural stability. The insured sum will be of 100% of the final cost of works, including professional fees. 

How can I be sure my recently built off plan property has all the necessary guarantees?

No public deed of new work will enter the Land Registry if it does not prove the constitution and full payment of the above guarantees (Art. 20 of the General Building Act).

You can check on the existence and details (Insurance Company) in the Land Registry.