Warranty period and ten-year liability: the builder's responsibility in a new build

Buyers of a new build enjoy a special position granted by law: the builder bears significant responsibility for the building’s defects for several years after completion. But that responsibility is not unlimited, and it does not remain in force by itself. This guide explains what the two-year warranty period and the ten-year special liability mean in practice — and what the housing company must do to protect its rights.

Two periods of liability: the warranty period and ten-year liability

The warranty period — two years from completion

The builder’s warranty period for a new build is two years from the completion of the property (Housing Transactions Act 4:16). The statutory minimum period cannot be shortened by contract. During the warranty period the builder must remedy, at its own expense, every shortcoming that qualifies as a construction defect.

The defining feature of the warranty period is the burden of proof: during this time the starting point is that the builder must demonstrate that an observed fault does not stem from a defect or omission of its own making. If the housing company submits a claim about water damage or a sound-insulation problem during the warranty period, it is for the builder to show that the cause is normal wear and tear or something else — not a construction defect for which it is responsible.

This makes the warranty period the most favourable phase of all from the shareholders’ point of view.

Ten-year liability — ten years from the transfer of administration

After the warranty period comes ten-year liability, which extends to 10 years from the transfer of administration. During this period the builder remains answerable for the serious and latent defects covered by Chapter 4, Section 19 of the Housing Transactions Act (AKL 4:19), but the burden of proof rests on the housing company. In practice, what remains available to rely on is chiefly hidden defects — faults that could not have been detected in an ordinary inspection or recorded at the annual inspection.

During the ten-year liability period the burden of proof rests on the housing company: the shareholders or the board must be able to demonstrate that the issue is a construction defect within the meaning of the Housing Transactions Act, one that should not have been detected earlier — and not normal wear and tear or neglected maintenance.

Visible defect vs hidden defect

This distinction is the single most significant one in practice:

Note: the builder’s burden of proof during the warranty period covers both types of defect — visible defects as well as hidden ones. The burden of proof shifts to the housing company only when the warranty period ends, not after the annual inspection.

If a visible defect is left off the record at the move-in inspection or the annual inspection, the builder may legitimately argue that the fault did not exist in the first place or that the housing company has accepted it.

What must be done during the warranty period?

The annual inspection (AKL 4:18) — the single most important deadline

The developer is required by law to arrange an annual inspection within 12 to 15 months of the building’s completion (Housing Transactions Act 4:18). The inspection is not for the housing company to arrange — the developer convenes it. The housing company and the shareholders take part and bring every observed shortcoming into the minutes in writing.

The annual inspection is in practice the last easy opportunity to claim visible defects collectively. Visible defects left off the record are considerably harder to claim after the annual inspection — the builder may legitimately argue that the fault did not exist or that the housing company has accepted it. The warranty-period burden of proof nonetheless remains on the builder throughout the entire warranty period, not only up to the annual inspection.

Make a written claim without delay

Submit a claim as soon as a defect is discovered — without undue delay. A verbal notification is not enough; the claim must be in writing and clearly specified. The annual inspection is a particularly important moment, but a claim must be made whenever a defect is discovered during the warranty period.

Document every repair

A verbal notification alone is not enough. Every warranty repair must be documented:

• A photograph before the repair — proving the existence and extent of the defect
• Written confirmation from the builder once the repair has been carried out
• A photograph afterwards — proving what was done

Always confirm that the repair succeeded with an inspection of your own — do not rely on a bare “fixed” notification.

Claim inadequate repair quality at once

If the builder carries out a repair but the result does not meet requirements, submit a fresh claim immediately. An inadequate repair does not in itself end the validity of your claim — but a prompt new notification ensures that no uncertainty arises later as to whether the work was accepted.

Prepare for the end of the warranty period

Four months before the warranty period expires is a good time to commission a thorough re-inspection. Compile a list of all open and unresolved defects and deliver them in writing to the builder before the warranty period ends.

When the warranty period ends, the burden of proof reverses — after that, the housing company must itself be able to demonstrate that the issue is a construction defect.

What happens during the ten-year liability period?

In practice, only hidden defects remain claimable

After the warranty period, what remains available to rely on is, in practice, faults that could not have been detected in a normal inspection — visible defects should already have been recorded at the annual inspection. Read more about what a hidden defect is and who is responsible for it. Typical hidden defects include:

• Concealed failure of waterproofing (the damage first appears only as a damp patch or the smell of mould)
• Sound-insulation shortcomings in partition walls or intermediate floors that cannot be detected visually
• Installation errors within the structures of HVAC and electrical systems
• Shortcomings in fire stops or fire compartmentation that come to light during renovation

Act immediately when a hidden defect comes to light

Relying on ten-year liability requires that the claim be sent as soon as the defect is discovered — delay may forfeit the right. It must also be possible to demonstrate that:

1. The fault is real
2. It could not have been detected in an ordinary inspection
3. It stems from a defect or omission on the builder’s part

Order the ten-year inspection in good time

It is strongly advisable to commission a professional ten-year inspection about two years before the liability period ends (that is, around 8 years from the transfer of administration). An experienced building-technology expert will find concealed damage that board members may not necessarily recognise.

The findings of the inspection must be claimed immediately — it is the last chance before ten-year liability ends. After that, the ten-year liability under the Housing Transactions Act comes to an end. Exceptional situations, such as the deliberate concealment of a defect, may affect matters — consult a lawyer if you suspect fraudulent conduct.

Claims must be kept in force

Claims submitted during the warranty period and the ten-year liability period must be kept alive. A claim-based demand can become time-barred under the general law (Act on the Limitation of Debts (728/2003)) — typically after about three years from when the creditor is deemed to have learned of its claim. Limitation is interrupted by a reminder or by legal action. Limitation periods can vary with the circumstances and the contract — verify the exact position with a lawyer. Read more about making claims: Making a written claim to the builder: how to do it correctly and on time.

Timelines at a glance

Completion / handover
    │
    ├── 0–2 years: WARRANTY PERIOD (AKL 4:16)
    │      Burden of proof on the builder. All visible defects to be claimed.
    │      → Annual inspection arranged by the developer at the 12–15-month mark.
    │      → Carry out a thorough inspection 4 months before the warranty period ends.
    │
Transfer of administration
    │
    └── 10 years from the transfer of administration: TEN-YEAR LIABILITY (AKL 4:19)
           Hidden defects only. Burden of proof on the housing company.
           → Order a professional inspection at around the 8-year mark.
           → After 10 years, the liability under the Housing Transactions Act ends.

Note: ten-year liability is counted from the transfer of administration, not from the
completion of the building. These dates can differ by several months.

Track the deadlines automatically

VAREK tracks the end of your housing company’s warranty period and the running of ten-year liability, and reminds you in good time of the important steps — the warranty inspection, the renewal of claims and the ordering of a professional inspection. Defect reports and claims are stored in one place, where the entire chain of evidence is always available.

Contact us and make sure your housing company’s rights stay in force for the full ten years.

This is a general guidance article, not legal advice. The exact deadlines and procedures for claims depend on the contract and the circumstances — verify them with a lawyer or a qualified expert as necessary.