We are going to talk briefly about a contractual concept that causes real headaches for those who want to build a house in Spain, and especially for British, Irish, Dutch and Belgian citizens who have Spain as a place for holiday residence and buy lands in very nice places on the Costa Blanca such as Moraira, Calpe, Javea, Denia, Benitachel, etc.
We refer to the construction contract or contract for the execution of work which is the one that must be formalized by the owner of a land, that is the developer, for the construction of a house according to a technical project.
The essence of the construction contract, which is for the builder an obligation to do, is not a mere activity, but the obtaining of a result, the projected house.
As specialists in real estate law we can assure you that this contractual relationship generates many problems.
In fact, when the interested party wonders what to consider in order to build a house in Spain, the answer for us is simple: one of the most important things when building or thinking about building a house in Spain is to make a good construction contract with a builder of your trust, with an architect, a professional who will make a design of your taste and thus be sure that it is always complying with urban regulations.
The importance of this contract lies in the fact that its purpose, the construction of a house according to the construction plans drawn up by the architect hired by the client, is carried out over a long period of time and whose purpose, the house to be built, is usually of a very high economic nature.
The risk that this construction contract essentially has for the buyer is the possibility of abandonment of the work by the constructor in a situation of controversy or disagreement.
We have seen terrible cases of builders who have abandoned the construction due to disagreements with the owner of the building area, and they have left the construction site half-finished with the problem for the buyer, of having to find another builder to finish the work, and the significant increase in price that this will entail, as they will have previously paid out significant amounts that exceed the work done.
The hiring of a new builder and the fear of repeating the same experience is something that is considered by the interested party as a nightmare and with good reason.
As a result of our experience with British, Irish, Dutch and Belgian clients and in the area of the Costa Blanca we will try to explain very briefly the different legal aspects of the subject and also give some minimum advice that you should follow but always keeping in mind that there is nothing better than consulting a lawyer specialized in real estate law in order to avoid problems.
DEVELOPER OR OWNER OF THE CONSTRUCTION SITE
A developer is a land owner who wishes to contract the construction of a house on his land.
This person must be the owner of the property and will be responsible for the payments to the builder.
The documentation to apply for the Building Permit and the subsequent First Occupancy Licence, is the responsibility of the owner who must sign the documentation even though it is prepared by the builder and the Technicians.
Without prejudice to other responsibilities that may be contracted by other participants, the owner of the construction site or developer is legally responsible to the City Council for compliance with the urban planning Law in terms of construction of a home, so that he will be the first responsible if any illegality is committed.
Therefore, the owner must demand strict compliance with the technical project, approved by the City Council, and not accede to unauthorized modifications that will later be the consequence of sanctions.
BUILDER
For a start, the first important act for a land owner is to choose the builder, and our advice, our first one, is to look for recommendations from those you may know. The experience and prestige of the builder are guarantees that should be taken into account.
Many times it is the architect himself who introduces the builder, and you should ask this professional to recommend you several builders and to give references, and for this purpose it is important that the builder presents works that have been carried out by him.
Sometimes you know the builder because he owns the land you want to buy and at the same time that he sells the land he builds a development of houses already approved or planned in a residential area. Well then in this case it is important that you make sure of the fame and prestige of the builder.
WHEN A LAND IS SUITABLE FOR BUILDING ACCORDING TO URBAN REGULATIONS
In Spain, and therefore in the Costa Blanca, the possibility of building and the urban planning capacity of a plot is established and included in the urban planning of the city.
A piece of land can only be built on, it is only allowed to build on it if it has the condition of a plot, and it will only have this condition the land that appears in the urban plan of the Town Hall as being suitable for building.
A previous step for the Town Hall to grant us the Building Permit will be that the piece of land is suitable for building or that it has the capacity to build on it, given that if the land on which you want to build is not urban you must not acquire it.
As a previous step you should take into account that the land you are going to buy is suitable for building and you should also know what volume of construction is allowed on it because this will always condition you when you want to make a construction project.
And now, we tell you from Carlos Baño Leon lawyers specializing in real estate law, that you should seek the advice of a lawyer who will get you the legal verification of the urban nature of a land.
Never buy a piece of land trusting what the seller or the real estate agency tells you, never do it and make sure of the urban nature of the land first.
BUILDING PERMIT BY TOWN HALL
The building of a construction project is conditioned by the approval of a Licence for Major Works by the Town Hall.
This licence application shall be submitted by the builder with the signature of the developer and with the construction project’s progress drawn up by the architect.
Only the concession of the licence will authorise the beginning of the construction, which will finally be supervised by the Town Hall when approval is requested by means of the First Occupancy Licence.
According to the Town Hall the processing of this License will take more or less time and this is something that the buyer of a land should know. That is why it is so important that the construction contract establishes a deadline for the builder to present the license immediately, because if the uncertainty of the moment in which the license is going to be issued is not taken into account, the uncertainty of the moment in which the builder is going to ask for the license will have to be added, which can mean a great delay.
Therefore, and we don’t get tired of saying this: in the contract this circumstance must be stipulated.
The granting or not of the licence and its consequences should also be included in the contract for the execution of the work, hence the importance of supervision by a lawyer.
Carlos Baño León’s specialist lawyers will advise you properly at all times so do not hesitate to contact us.
SOME RECOMMENDATIONS FOR THE CONTRACT
With no intention of being exhaustive, given the complexity of the contract in question and the many obligations that are contracted in it, to which we would have to add the variety of construction methods, we list some recommendations that we make and that are the most frequent, with which we want to show you the importance of having good legal advice and in this case if you trust Carlos Baño León lawyers, specialists in real estate law, you will never regret it.
1. The contract for the construction of the work establishes that the length of the work will start counting from the moment the Town Hall grants the Major Works Licence, but it does not include the moment at which the builder agrees to apply for this licence.
In this case it is correct that the duration or term to build starts from the time of obtaining the license because if not, you cannot start but it is true that usually is not included in the contract the term that has the builder to ask for the license, so we can be in situations of defenselessness because if the builder is late in asking for it and there is nothing planned we will have problems.
2. Because we are going to have problems due to the fact that the builder, when signing the contract, usually asks for an important deposit in advance, so he will always have the upper hand. Normally they ask for 20% and this means that without having started they will have this money from you, so from that point on they have an advantage and if the contract is not well done, this will result in a situation of dominance on the part of the builder.
3. Usually the builders never include the right to terminate the contract by the owner.
This right is included in article 1594 of the Spanish Civil Code and the interested parties are never aware that they have this right although, in addition, if they don’t know that they are exercising it, they can get into real trouble because in the case of cancellation, which is recognised in this case, the builder would be entitled to receive compensation, which is usually determined by the courts at 15% of the price of the contracted work, so as you can imagine, this is a very high amount of compensation.
We have witnessed advice from other colleagues where the client has been advised to exercise this right and this has caused a real problem to the client.
If the builder is breaching the contract, there are other mechanisms that can be used without harming the customer’s pocket.
Lawyers specializing in real estate law in Alicante will help you if you have problems or difficulties with your builder.
4. There is much guile in the matter of increase or modification of material and contracted works and we are well aware of this and of course in the change in the agreed price.
5. One of the most problematic points during the execution of a construction is the delay or lag that a construction can suffer in relation to the agreed deadline. Needless to say, it is of extraordinary importance that the developer or owner of the construction site should not allow himself to be convinced by the builder and he should establish a very clear deadline and doesn’t accept many conditions that are usually placed by the builders, always alien to them, to justify the delay.
Apart from maintaining a demanding position on the matter, appropriate compensation must be established.
There are so many issues to be considered in the contract and of such importance for its future that we cannot understand what can be done without the intervention and advice of a specialist in construction law such as the lawyers of Carlos Baño León.
There is so much casuistry generated by this type of contracts that we could not compile it without turning this article into a boring text that will end up being abandoned. Therefore, we offer you to contact our lawyers specialized in real estate law in Costa Blanca, Alicante, and we will help you to have a calm and successful contractual relationship.
Along with this article are the problems that can arise, the most frequent conflicts and you can obtain information in this article from this law firm.