Developers and the reform of article 1964 of the Civil Code

The reform of article 1964 of the Civil Code: why does it matter to property administrators?

Under the new reform, developers will be liable for construction defects for only 5 years instead of 15.

Dear Property Administrator: Please be careful, and warn home buyers who might claim for construction defects for breach of the contract of sale against the developer that they have only five years to claim.

It is only 5 years if the home was bought on or after 7 October 2015.

But if it was bought before 7 October 2015, the claim will in any event become time-barred at the latest on 7 October 2020. For example, if you bought in 2010, you will not have the 15 years the law previously granted, but only 10 (5 are taken away), until 7 October 2020.

Until now, if the 3-year periods for habitability defects had become time-barred, we had one last opportunity to claim for construction defects, which was to bring an action for breach of contract against the developer/seller within a period of 15 years. The reform has shortened this, and only 5 years are now allowed.

Buyers will have to be on their toes (and some still see this as almost an advantage), since the period for habitability damage appears to be extended (claims can be made within 5 years instead of 3), and the 10 years (for structural damage) remain the same.

It is not all that positive, because not only is there less time, but other requirements must be met to bring an action under article 1101 (the one with the former 15 years, now 5). It must be proved that the developer-seller has committed a series of breaches of what was agreed. The action must be brought specifically by the buyer who bought directly from the developer, not by a second-hand buyer who bought the house within the period.

So we have 6 months (latent defects), 1 year (finishes), 3 years (habitability), 5 years (contractual) and 10 years (structural). And there is one more period: 2 years to bring the lawsuit from when the damage becomes known, in claims under the LOE. That period is treacherous: even though there are 10 years for damage to the structure and foundations, if it is on record that it is failing and we notify the developer that it is failing, and we do not file the lawsuit within two years of that notification (even if we are only in year 5 when we detected it), the claim will become time-barred at year 7, not year 10.

Those who bought in 2012 will feel frustrated by this very recent reform of article 1964 of the Civil Code: they had a 15-year period and could have claimed against the seller for breach of contract until 2027. But now, as explained, that claim will have a deadline of 7 October 2020 (they cannot afford to be complacent): the period has been cut by 8 years.

This may sound like a jumble of periods, dates, actions and limitation periods; perhaps it is. But let us summarise it and make it simple:

• Ask about your doubts, and do not remain passively uninformed. If you see problems in your buildings, ask us.
• Do not let time go by, because it does not work in your favour, and damage does not heal itself.
• As soon as you have suspicions, feel free to consult us (that is what we are here for); we in turn need time to inspect the property thoroughly, gather information, prepare an expert report and, where appropriate, prepare a formal demand or burofax and/or the lawsuit.
• We will be happy to examine each case, define the problem, classify the damage and explain how long you have to claim.

Once the periods have passed, nothing more can be done. We have seen clear-cut cases, with substantial damage and obvious culprits, where nothing at all could be done because the time limit had run out.