Recent extreme weather conditions have brought renewed attention to the issue of defects in construction contracts. The Real Estate team at Cerejeira Namora, Marinho Falcão has prepared this Legal Update analysing owners’ rights, the applicable time limits and the contractor’s liability.
The recent periods of heavy rainfall and strong winds experienced in several regions of the country have placed the issue of defects in long-term buildings at the centre of legal debate. Infiltrations, cracks, detachment of materials and structural failures—often revealed by extreme weather events—raise relevant questions regarding the contractor’s liability and require the timely notification of the defects identified.
It is therefore essential to analyse the time limits that must be observed by those who commission such construction works (the Owner of the Works) in order to safeguard their rights.
At the outset, it is important to distinguish between situations in which the owner of the works qualifies as a consumer and those in which they do not, in which case they are treated as a professional. For this purpose, a consumer is defined as a “natural person who acts for purposes outside their commercial, industrial, craft or professional activity”.
Where the owner of the works is a consumer and defects are discovered within five years from completion of the works, such defects must be reported within a maximum period of one year from the date of their discovery.
In these circumstances, the owner of the works must, in the first instance, require the rectification of the defects and, where this is not possible, may request the execution of new works. If neither of these solutions is feasible, the owner may seek a reduction in the price or, as a last resort, termination of the contract, whenever the defects render the works unfit for their intended purpose.
In any event, the owner of the works may combine any of the above rights with a claim for compensation for all losses arising from the breach of the construction contract.
Should the contractor fail to acknowledge the owner’s rights, the owner of the works has a period of one year from the date of notification to the contractor in which to bring legal proceedings before the courts.
Furthermore, where the owner of the works is a consumer—that is, where the construction contract was not entered into for professional purposes—the contractor is liable for any lack of conformity that becomes apparent within a period of ten years in respect of structural elements, or five years in relation to other non-conformities. Where defects are identified, the consumer is entitled to repair or replacement, a proportional reduction of the price or termination of the contract, and may exercise any of these rights unless this proves impossible or constitutes an abuse of rights under the general legal principles. These rights lapse three years from the date on which the defect is reported to the contractor.
It is therefore clear that, where a consumer is involved, the legislator has chosen to establish longer limitation periods, reflecting the consumer’s position as the more vulnerable party in the legal relationship arising from a construction contract.