Decenal Insurance: The Ten-Year Guarantee for New-Builds on Mallorca

Anyone buying a newly built villa, a terraced house or a new-build apartment on Mallorca will almost always come across a term that has no direct equivalent in Germany or the UK: the decenal versicherung spanien – also called seguro decenal or ten-year insurance. It is the most important safeguard that Spanish building law gives buyers against cracks, foundation damage and other structural defects that often only become apparent years after moving in. In this guide you will learn what legal basis lies behind it, what exactly is covered, who is required to take it out, how the ten-year period actually runs, and what you absolutely need to look out for when buying or reselling a new-build property.

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What exactly is the Decenal insurance?

The Decenal insurance is a special construction warranty insurance that safeguards the structural safety of a new build for ten years after completion. It protects the buyer from being left to cover the costs of serious construction defects should the developer, building contractor or architect already be insolvent, untraceable or legally unreachable by that point – a problem that, before the introduction of compulsory insurance, repeatedly led to total losses for buyers in Spain.

Unlike a conventional building insurance policy, the Decenal policy does not apply to every kind of damage, but only to structural defects that directly endanger the mechanical strength and stability of the building. Cosmetic defects, leaking windows or damp damage to render generally do not fall under it – other warranty mechanisms and insurance policies exist for those.

The legal basis: Ley 38/1999 (LOE)

In many respects Spain has modelled its building law on the German system, albeit with a considerable delay. While Germany has had a Bauträgerverordnung (developer regulation) as consumer protection since as far back as 1974, it took until 1999 for Spain to pass a comparable specialist law for the construction sector with Ley 38/1999 – the Ley de Ordenación de la Edificación (LOE).

The background was the construction boom that began with Spain's tourism development in the 1960s. After years of legal proceedings, many buyers ended up with no compensation at all because developers, building contractors and architects had become insolvent or had changed their legal structure – meaning that even claims upheld by the courts came to nothing.

Article 19 of the LOE has since regulated the protection of the buyer of a newly built flat or house over a period of ten years against material damage to the building caused by defects or faults in foundations, supports, beams, ceilings, load-bearing walls or other structural elements that directly affect the mechanical strength and stability of the building. Since the year 2000, every developer has been obliged to take out Decenal insurance to provide this protection.

Note: The LOE defines the developer very broadly – as any natural or legal, public or private person who, alone or jointly, using their own or third-party funds, has building works carried out for themselves or for third parties. This can therefore also be a private investor who has land developed and the houses subsequently sold.

What exactly does decennial insurance cover?

The policy covers material damage arising from defects or faults in the basic structural fabric of the building that directly impair its mechanical strength and stability – regardless of whether these defects become apparent just months after completion or only years later.

Please note: Decennial insurance is not an all-round construction insurance. It exclusively covers damage affecting the mechanical strength and stability of the building – not every type of construction defect. To protect against damage to household contents, liability, or building damage during ongoing use, you should additionally consider a home contents insurance in Spain.

Who must take out decennial insurance?

In principle, the developer – i.e. the party who has the property built in order to subsequently sell it to third parties – is obliged to take it out. Only if the decennial insurance is proven to the notary when the purchase contract is signed can the notarisation proceed properly. For the buyer, the policy is therefore a central element of the notarial review when purchasing a new-build property.

An important exception applies to self-builders: anyone who builds a single-family home exclusively for their own use and does not sell it to third parties is, in principle, not subject to this insurance obligation in this form. However, if the owner later decides – still within the ten-year period – to sell, the question of retrospective insurance may become relevant (see below).

When does the ten-year period begin?

The period does not begin with the start of construction or with the purchase contract, but with the building completion certificate – i.e. the formal act by which the private architect or the relevant municipality confirms completion of the building. This date is decisive for calculating the remaining term upon resale, not the date of your own purchase contract.

1. Building completion certificate issued by architect or municipality – starting point of the ten-year period
2. Presentation of the decennial policy to the notary before the initial notarisation
3. Handover of the property to the first buyer
4. Ongoing cover for structural damage until the end of the ten years
5. In the case of sale within the period: assessment of whether and how the remaining term is transferred

Resale within the ten-year period

This issue becomes particularly relevant when a property is to be sold before the ten years since the building completion certificate have elapsed – for example, because a private owner sells their owner-occupied new-build house earlier than expected. In this case, the obligation to present a decennial insurance is not absolute, but only applies if the buyer does not expressly waive it in the notarial purchase contract.

In practice, it is not entirely straightforward to find insurance that covers only the remaining period until the ten years after the building completion certificate expire – many insurers only offer such "remaining-term policies" to a limited extent. If, for example, less than a year remains until the period expires and the buyer does not wish to formally waive the requirement, it may be sensible to make a private arrangement to hold the notary appointment only after the ten-year period has elapsed.

Note: If, as a seller, you are transferring a property while still within the ten-year period, you should clarify the topic of Decenal insurance early on with your notary and – if you have one – with your property purchase lawyer, so as not to jeopardise the notary appointment shortly before signing.

Decenal insurance and the purchase process at the notary

When buying a new-build property directly from the developer, presenting the valid Decenal policy to the notary is a fixed part of the notarisation appointment. As a buyer, you should ideally have the policy shown to you before the reservation, not just on the day of the notary appointment – this way you avoid delays if documents are missing or incomplete.

Check in particular:

1. Is the policyholder identical to the developer registered in the Land Registry?
2. Does the policy actually cover ten years from the date of building acceptance?
3. Is there confirmation of the building acceptance by an architect or the municipality?
4. Are there any exclusions or special features that your property purchase lawyer should clarify before signing?

Anyone who is also acquiring a plot of land or an existing structure should also check the entries in the Land Registry and find out about the building permit for the project, as a valid building permit is likewise a prerequisite for a legally secure new-build purchase.

What happens without a valid Decenal insurance?

If the Decenal policy is missing or incomplete, the buyer faces significant financial risks in the event of a claim: structural defects such as cracks in load-bearing walls or foundation damage can be very expensive to repair, and without a functioning insurance policy, often the only remaining option is civil action against the developer, building contractor or architect – with all the uncertainties that made exactly this situation so risky for many buyers before 1999, when the responsible parties were insolvent or had changed their legal form.

Note:Even if a developer can theoretically present the policy, you should have it checked to see whether the sum insured realistically matches the building volume and whether the policy actually runs from the date of the official building completion (bauabnahme) – not just from a later date that is more convenient for the developer.

Checklist: Decenal insurance when buying a new build

• Request presentation of the valid Decenal policy before the notary appointment
• Cross-check the building completion date against the start of the ten-year period on the policy
• Cross-check the identity of the policyholder and the developer in the Land Registry
• In the case of resale within the period: clarify the remaining term and any options to waive it
• For privately self-built properties: check whether and when a sale to a third party is planned
• Also check: building permit and possible illegal extensions
• Legal review of the contract documents before signing the reservation agreement

Most common mistakes

Many buyers rely solely on the developer's claim that a Decenal insurance policy "is in place", without actually inspecting the policy and checking the building completion date. Another classic mistake: when reselling a self-used new-build property, the question of the remaining insurance cover is only raised shortly before the notary appointment – by then it is often too late to find a suitable remaining-term policy or to cleanly postpone the appointment. Also common: the Decenal insurance is confused with a general building or home contents insurance, even though it exclusively covers structural defects.

What happens after the ten years?

Once the ten-year period from the building completion expires, the statutory protection provided by the Decenal insurance ends. For damage occurring after this point, this specific policy no longer applies – from then on, responsibility for maintenance and repairs lies with the owner themselves. Anyone letting or reselling their property should be aware of this point in time and, if necessary, consider a regular building and home contents insurance as well as regular technical inspections such as the IEE/ITE inspection in order to identify structural risks at an early stage.

Conclusion

The Decenal insurance is a key component of buyer protection for new builds in Mallorca and throughout Spain – enshrined in law since 2000 through Ley 38/1999. It protects against structural building defects that endanger the stability of the building for ten years and must be proven at the notary appointment for the purchase contract. Anyone buying a new-build property should check the policy at an early stage; anyone reselling a property within the ten-year period should clarify the question of remaining insurance cover with the notary and lawyer in good time so as not to jeopardise the sales process.

Official sources

• Ley 38/1999, de 5 de noviembre, de Ordenación de la Edificación (LOE), Article 19 – Boletín Oficial del Estado: https://www.boe.es/buscar/act.php?id=BOE-A-1999-21567