SPAIN Law and Practice Contributed by: Marta González-Llera, Toni Barios, Jorge del Castillo and Rafael Baena, Cases & Lacambra
ties involved in the building procedure that are liable to the owners and third-party purchasers of buildings or parts of buildings from the date of reception of the construction works. The liabil - ity may be joint and severally requested when it may not be allocated individually and when there is a concurrent fault, without it being possible to specify the involvement of each agent in the damage caused. The contractor usually assumes the risk of dam - age or destruction of the construction works until the delivery of the completed works to the developer, including some period of guarantee after delivery of the works. The LOE establishes specific periods during which a claim may be made against the party involved in the construction, depending on the type of the defect affecting the building: • for a ten-year period, for damages caused to the building affecting structural elements which compromise the stability of the build - ing; • for a three-year period, for damages caused to construction elements which result in the failure to fulfil habitability requirements; or • for a one-year period for damage due to defects in construction affecting elements of the finished building. The developer and the rest of the building agents may be deemed liable for construction flaws under the regime of Article 1,591 of the Spanish Civil Code. 7.3 Management of Construction Risk In addition to the guarantees stated in the LOE some typical guarantees that may be agreed upon are as follows:
• withholdings; • work certifications (partial and final work certificate); • bank guarantees; • the developer’s right to designate or impose subcontractors for certain parts of the pro - ject; and • restrictions on the use of materials. On the contractor’s side, there are commonly agreed measures, such as advance payments or rights to suspend work if payment is delayed. 7.4 Management of Schedule-Related Risk There is no standard form to establish any mechanisms to cover the events of breach by the contractor of any of the partial milestones or the final time limit fixed in the works deadlines programme. The owner is entitled to claim damages in accordance with the Spanish Civil Code, but the assumptions of force majeure shall not be attrib - utable to the contractor. In the case of serious delay, the owner shall be entitled to terminate the contract. It is standard practice to specifically regulate these points in the contract. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Construction contracts always require the works to be completed by a specified date and in a specified form. Despite the guarantees stated in Act 38/1999, of 5 November 1999, on Build - ing Development, additional guarantees may be agreed to ensure the execution of a construction project (see 7.3 Management of Construction Risk and 7.4 Management of Schedule-Related Risk ). Comfort letters, bank guarantees, parent
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