Last edited 15 Feb 2016

Decennial liability

Decennial liability is a strict form of liability that refers to the insurance taken out by the contractor or design team to cover the 10-year period following a project’s completion. This is to cover the costs in the event of a total or partial collapse of the building, or some latent structural defects that compromise the building’s safety and/or stability.

Construction costs can be significantly increased by the cost of the insurance. It may be up to 1.5% of the structural value.

As a concept, the French Civil Code introduced ‘responsabilite decennale’ to protect building owners who may not have had the expertise or technical knowledge to notice defective designs or construction at the point of project delivery, particularly latent defects.

In France, every contractor must be insured against decennial liability, whether the project is a new-build, redevelopment or renovation.

The countries that have codified decennial liability or similar in their civil laws include:

Algeria.
Angola.
Argentina.
Bahrain.
Belgium.
Bolivia.
Brazil.
Cameroon.
Canada.
Chile.
Colombia.
Egypt.
Finland.
France.
Gabon.
Indonesia.
Italy.
Iraq.
Jordan.
Kuwait.
Lebanon.
Mali.
Malta.
Morocco.
Netherlands.
Oman.
Paraguay.
Peru.
Philippines.
Republic of Congo.
Romania.
Saudi Arabia (on Government contracts).
Senegal.
Spain.
Sweden.
Syria.
Tunisia.
United Arab Emirates.

As decennial liability is a form of strict liability, it offers more security to real estate investors and property owners than collateral warranties which only apply in the event of a contractor’s specific breach or negligence. All contractors involved in a building’s construction are automatically responsible or liable for damages which compromise the solidity of the building or render it unfit for use.

As there are quite a number of possible defendants that could face financial penalties in the event of a collapse, this lessens the risk to the building owner of a contractor being becoming insolvent and so unable to pay damages.

The principles of responsibility are to ensure safety for the decade following the date on which the client signals acceptance of the completed work. Exemptions can be made in the case of force majeure, third-party fault or victim liability.

French civil law cases have found the fixing of a structure or installation into the ground to be a deciding factor as to applicability. Despite this there still remains some uncertainty about the extent of what is covered by decennial liability. Whilst a structural collapse, whether total or partial, would be clear, the liability has also been extended, in cases where expert evidence has been provided, and to defects that posed a threat to the building’s strength and safety. In France, the position is that decennial liability is applicable where it is certain that damage would have become sufficiently serious due to defects within the 10-year period.