SPANISH PROPERTY OWNERS WATCH OUT!
DO YOU OR DID YOU HAVE A MORTGAGE IN SPAIN? THIS WILL INTEREST YOU!…
YOU COULD BE ENTITLED TO GET BACK SOME OF THE MONEYS PAID TO YOUR BANK DUE TO AN UNLAWFUL BANKING PRACTICE- DICTATED BY THE EU AND SUPPORTED NOW BY THE SPANISH GOVERNMENT. KEEP READING.
December 2016 has brought great news for those consumers with mortgages in Spain.
After several years of waiting we have just received knowledge that banks must refund in Spain all those charged unfairly due to the Mortgage Floor Clauses as stated by the European Union Tribune of Justice (TJUE), who through the famous 21st of December 2016 sentence, dictates that once their Mortgage Floor Clauses are declared null, the consumer has a right to have returned those monies which have unfairly been charged to them throughout their mortgage.
This sentence rectifies that one issued by the Supreme Court on the 9th of May 2013, which limited the effects of Mortgage Floor Clauses nullity, therefore limiting the consumer’s rights as only amounts starting on the 9th of May 2013 could be refunded.
Yet again it is the European Union Tribune of Justice, who once again has shed light and issued a sentence in favour of the consumer.
In response to the recent developments, various of our clients have expressed their concerns regarding the way in which they must act to be able to recuperate what is theirs by right, leading Canarian Legal Alliance (CLA) to try and answer as many questions as possible through this article.
What is a Mortgage Floor Clause?
Firstly, we will briefly explain what a “Mortgage Floor Clause” is and how this affects the consumers who have foreclosed a mortgage in which such clause has been introduced.
Issued by banks a Mortgage Floor Clause is a limit imposed on those interests agreed upon in your mortgage loan deed.
When a client applies for a mortgage loan, among their various obligations is that of returning the amount loaned to them by the banks, plus the interests that said loan ensues, calculated based on a specific interest rate (normally the Euribor).
Interests rates such as the Euribor, are subject to upward and downward alterations leading the clients to pay different amount of interest on their loan, depending on whether the Euribor rises or decreases.
Mortgage Floor Clause is a limit placed on the lowest interest rate, for example if we have an interest limit of 3.5% and the Euribor rate is at 2,00%, we would be obliged to pay the capital of the loan, plus the Euribor at 3.5%
What this means is that although the Euribor is below 3.5%, we must pay the quoted amount as it is the “floor” limit on the type of interest of our mortgage.
Is a Mortgage Floor Clause illegal?
Neither the Supreme Court or the European Union Tribune of Justice in their recent sentence have declared a Mortgage Floor Clause to be illicit
What both these judicial bodies stated was that as of when the Mortgage Floor Clause was added to a mortgage, it must contain all necessary information and be as transparent as possible for the good of the client-consumer. In other words, a client-consumer must be informed about its existence and the repercussions that may come with it.
Therefore, the Mortgage Floor Clause as whole is not illegal, only that what is considered abusive for not being negotiated individually and for not complying with the transparency requisites.
Once the clause is declared null and void, consequently the consumer must have restored that what he or she have paid due to its application., therefore re-establishing the situation in which their mortgage was prior to the addition of the Mortgage Floor Clause.
The European Union Tribune of Justice has ruled that all extra amounts paid when formalizing a mortgage must be refunded, in turn rectifying the Supreme Court ruling stating that refunds should be limited from the date 9th of May 2013.
How can I reclaim that what has been overcharged to me due to the Mortgage Floor Clause?
Once we have reached this stage it’s important to understand that the banks are not obliged to refund your money, motu propio (voluntarily). What this means is that if we want to get our monies refunded, we must begin a corresponding judicial or extrajudicial claim.
It’s because of this, that Canarian Legal Alliance recommends seeking professional advice from an assessor on whether your mortgage includes a Mortgage Floor Clause. If it is included, find out what is in our rights to claim back.
Despite the rulings issued by the European Union Tribune of Justice, the banks are still reluctant to refund their consumers all which corresponds to them. Instead they try to reach agreements in which again the consumers come out negatively affected due to them not receiving all that they have paid plus the corresponding interests.
Recently the Royal Decree 1/2017 of the 21st of January was published establishing an out of court complaint mechanism which the banks must follow and is of optional use for the client. What this does is help enter negotiations with a bank and in turn facilitate an agreement.
We recommend that even if you opt for this extrajudicial mechanism, you seek legal advice from specialist lawyers to see satisfied all that which rightfully belongs to us.
What does Canarian Legal alliance offer its clients?
Canarian Legal Alliance (CLA), is a law firm who specializes in financial banking law, backed up by an impressive track record.
We offer a comprehensive service, in which we claim through judicial methods or help you in negotiations with your bank by providing you with personal and professional advice.
Our team of lawyers will help you recuperate all that is yours by right.
Eduardo Alamo Perera
Canarian Legal Alliance Lawyer