We have very often seen and heard people confuse, in everyday speech, building contractors with developers in claims for construction defects. Although for some this clarification will be obvious, they are not the same thing, and it is worth distinguishing between them in order to determine liability and know who to sue.
Unless it is one of the big firms, the building contractor is usually a company with hardly any assets: it owns machinery, concrete mixers, building materials, scaffolding and cranes, has a foreman or two on its payroll, office staff and secretaries, and finally the tradesmen and labourers who make up its workforce, sometimes on a temporary or occasional basis. Sometimes it even hires the machinery it uses. In other words, contractors have few or no assets.
The developer is nothing like a building contractor. The developer is, literally, the party that promotes the works. It is usually the owner company that probably already had or bought the land to build on, hired the architect to design and supervise the construction and one or more building contractors to build it, and during construction it tries to sell the flats it is building, receiving advance payments. It therefore has to have a bank behind it to guarantee those payments. It is normally quite solvent, as it owns the flats and commercial premises in the building, which take a while to sell, as well as a stock of commercial floor space in finished buildings awaiting sale.
Having established these differences, we can see that developers normally have assets and are solvent, whereas building contractors do not. We would therefore say that it is not advisable to “take action against a building contractor”, or, as homeowners often put it, for the lawyers to go after the building contractors, to “sue the building contractor”, but rather, where appropriate, to sue the developer. And why? Because, in addition to the previous argument, the law protects the consumer, buyer or user of the homes far more against the developer than against the contractor.
In fact, none of the purchasers or buyers of the homes has entered into a contract with the building contractor, whereas the buyers DID enter into one with the developer as seller, so all the claims arising from breach of contract are fully provided for in the Civil Code and ready to be enforced.
Furthermore, the liabilities and guarantees of the two are different under the Spanish Building Act (Ley de Ordenación de la Edificación, LOE).
The building contractor is just one more liable party, and is only liable, where applicable, for poor workmanship affecting finishes or aesthetic damage, or for damage impairing the habitability of the homes, which can only be claimed within 1 and 3 years respectively. That said, it is of little use if, in the end, even if the case is won, the contractor has hardly any assets.
The developer, however, not only bears joint and several liability for any liability of any party involved in the construction, owing to its culpa in eligendo (liability for the choice of contractor), meaning that the developer will be liable in any event for any damage. In addition, as we said, it must answer for its contractual liability as seller.
And of course there are other options: suing the site management team (architect and/or technical architect), or even suing their insurance company to cover the professionals’ liability.
If you have any questions, get in touch with us.
DPcon Reclamación Daños Constructivos.
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