Mortgage Floor Clauses

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Posted and filed under Legal Issues in Spain, Official Documents in Spain, Property in Spain.

The European Court of Justice has ruled over the New Year on Mortgage Floor Clauses, which are the clauses put in a mortgage deed by some banks which basically meant that when interest rates went down the bank retained a minimum floor clause, so customers paid more interest. They are being seen as “abusive clauses” against the benefit of customers, and banks will be penalised by having to pay back the client everything they overpaid as a result of this, if a legal claim is made.

There are 2 different issues:
 
1º) Bottom clauses.

These have been declared illegal by the European Courts. Therefore, clients can force the bank to erase this clause and moreover recover all the money paid as a consequence of the execution of the bottom clause.  This is very clear and a huge opportunity for clients to recover money.  To study and advise, we need a copy of the mortgage and the extract of the last mortgage payment.

We would then write to the bank and if they agree to accept they are at fault in an amicable manner, then we must start a legal action against them.
 
2º) Expenses for setting up the mortgage.

When you set up a mortgage in Spain you have to pay all the expenses (notary fees, land registry fees, stamp duty,etc). The Supreme Court has decided that this is an abusive clause as the beneficiary of the mortgage is the bank (the debt and the mortgage are 2 different things as the mortgage is just a guarantee that you are going to repay the debt. Therefore this guarantee benefits the bank and for that reason they must pay back all the expenses to register the debt).

We need copy of the invoices from the Land Registry Office, Notary, Stamp Duty in order to claim these. We must send a letter to the bank and if they don´t accept reimbursing the money we can start a legal action.

These new proceedings are very clear. The limitation period is December 2019 or 4 years since the mortgage was cleared.

Please contact Amanda on enquiries@spanishsolutions.net if you would like our help.

 

 

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