THE TEN-YEAR RULE: “DECENNIAL LIABILITY”
In seeking to protect the interests of building owners and purchasers, France enacted the Spinetta Statute in 1978. In particular, under Articles 1792 and 1792-4-1 of the French Civil Code, builders can be found liable for up to ten years (“decennial liability”) from acceptance of the construction works when the building suffers from damages of a certain gravity, without any requirement to prove fault, to claim for repairs.
Builders are widely defined under Article 1792-1 of the French Civil Code as (1) architects, contractors, technicians, or other persons bound to the building by a contract of hire of work (2) any person who sells, after completion, a work which he built or had built (3) any person who, although acting in the capacity of agent for the building owner, performs duties similar to those of a hirer out of work.
Decennial liability is a matter of public order, which means that it is impossible to exclude it, either contractually between a building owner and the builders, or between these and their insurers.
Moreover, decennial liability survives whatever change may affect the ownership of the building, to the benefit of every successive purchaser of the property.
In parallel, with the purpose of making the Civil Code provisions efficient, the French Insurance Code provides for compulsory insurances, both for the building owner and the builders.
Thus, under Article L 241-1, a builder must be covered by compulsory liability insurance (known as “assurance de responsabilité obligatoire”); and under Article L 242-1 a building owner must be covered by compulsory insurance against damage (“assurance de dommages obligatoire”, commonly known as “assurance dommages-ouvrage”). Any breach of these provisions shall be punished by a six months prison sentence and/or a fine of € 75,000.
For significant building projects, it is usually the architect who is responsible for reviewing every contractor’s certificate of insurance. However an architect is not obliged by French law to advise building owners that they should have insurance against damage, as it is the law, and therefore all persons are required to fulfil their own legal obligations.
When purchasing a property that may have been subject to earlier building or renovation works, the notaire (who acts in a similar capacity to a conveyancing solicitor) should check whether the vendor holds the required insurance.
Anecdotal evidence suggests that it is not uncommon to find both builders and building owners who do not have the prescribed insurance.
Nevertheless, the system of construction law enacted in 1978 becomes fully efficient only when both parties are insured. Indeed, the compulsory insurance against damage is meant to prevent any situation from worsening by providing for immediate payment for the repairs without considering whose liability was involved.
Subsequently, the building owner’s insurer takes action against the builders’ insurers on a proven fault basis to be reimbursed for the repairs.
PROTECTIVE CASE LAW EXTENSIONS
Insurance companies reacted to the 1978 legislation by seeking to restrict its application. Consequently French case law was obliged to fight such an attempt to limit the purpose of the statute, mainly by interpreting the provisions widely.
The most interesting interpretations are those clarifying where decennial liability should apply.
Under Article 1792 of the French Civil Code, the damages on a work must, either endanger the strength of the building or, affecting it in one of its constituent parts or one of its elements of equipment, render it unsuitable for its purposes.
To give an example of “damage” intended by Article 1792; if a wall has been built, but later falls down, this would be considered as damage falling under the decennial liability rule. Visible defects like cracks in, or discolouration of the plaster, would not.
French case law had also to clarify what was to be meant by a “work”. Accordingly, it has determined that a work could be a retaining wall or a tennis court, for example, as well as major renovations of an existing structure or the building of a new one.
A crucial stage to make warranties start is the acceptance of the work without reservations, i.e. without mentioning visible defects. Indeed, it is only “hidden defects” (defects not observable at the time of acceptance) that will allow a building owner to claim for repairs on a non-fault basis.
Under Article 1792-6 of the French Civil Code, acceptance is the act by which the building owner declares he accepts the work with or without reservations.
It frequently happens that the parties do not execute a formal acceptance. French case law has consequently compensated for this by admitting tacit acceptance of a work. Accordingly, acceptance can result from payment for the work and/or entry into possession of the work, and/or a variety of other circumstances. This range of “other circumstances” has resulted in a degree of complexity leading to situations where insurers may wish to contest their warranty.
French construction law has incorporated a system that mainly consists of a protective decennial liability, with mandatory warranties/insurances attached to it, and its application, has been widely extended by case law. However, the apparent simplicity of this approach is quite blurred by the many other liabilities and warranties that also exist within construction law.
In the end, the mechanisms of French construction law are extremely complex to such an extent that neither building owners nor builders, can be completely prepared to avoid legal damages.
Obtaining the appropriate insurances, and formally accepting the works is nevertheless a relatively simple and effective method of ensuring protection against building damage.
Written by Nathalie Ardis