refinancing mortgage

Who should pay the opening fee for a new mortgage in Spain has been the subject of some legal dispute.

Spanish Supreme Court doctrine declares it a non-abusive clause while the European Court of Justice says the contrary. And eight recent sentences in Spain have added more confusion by agreeing with the European ruling.

ECJ Declares Opening Fee Abusive

For the European Court of Justice (ECJ), charging the fee for a new mortgage to the client is abusive. The ECJ’s ruling in July this year reiterates this and places the onus on banks to remove this charge.

The ruling takes the argument that the consumer receives no real service in exchange for the fee. Furthermore, the fee is already included in the mortgage itself, from which the bank makes money.

Spanish Supreme Court Disagrees

However, the Spanish Supreme Court continues to follow its own ruling made in 2019. Last year it stated that charging an opening fee is not abusive, a stance that has not changed despite the ECJ ruling earlier this year. This ruling also contradicts other recent Supreme Court rulings about abusive clauses in mortgages.

Legal analysts believe that by sticking to their original ruling and ‘ignoring’ the European decision, the Spanish Supreme Court is going against consumer rights.

Eight Spanish Courts Decide for Themselves

Meanwhile, eight Spanish courts have recently ruled in accordance with the ECJ.

Eight separate sentences all declare the charge of a mortgage opening fee to be abusive, ruling in favour of the consumer and against the bank in each case.

The provincial courts are in different parts of Spain, but all the judges have decided to take the ECJ decision into account. “They have abandoned Supreme Court doctrine and are following the route laid down by the ECJ,” said Eugenio Ribón, President of the Association of Consumer Rights (AEDC in Spanish).

Reasons Why Opening Fee Abusive

The recent sentences base their rulings on four facts about mortgage opening fees in Spain:

  1. The commission is not an essential part of the loan.
  2. There’s a clear imbalance against good faith that works against the consumer because the fee is not for any real service provided.
  3. The mortgage does not generate an actual cost for the bank so charging commission is abusive.
  4. Opening fees are based on a percentage of the capital borrowed, clearly indicating that absence of an actual service provided in return.

Longer Court Cases

Many analysts believe that the Spanish Supreme Court should adopt the ECJ July ruling and apply it to the doctrine in Spain. The fact that more than four months have passed since the ECJ ruling and there has been no change means that many Spanish banks will continue to appeal for as long as they can.

This translates to a much longer court process for the consumer. And keeps the appeal door open to banks.

Working example

An indication of the current confusion between European and Spanish doctrines is clearly seen in a recent case in Malaga. A client took the bank to court requesting that the clause charging him for the opening fee be declared null and void. At the first hearing, the court agreed with the consumer and confirmed that the clause was null.

However, the bank appealed and used the Spanish Supreme Court ruling of January 2019 as one of its main arguments. The new ruling said that it is not possible to evaluate whether this clause is abusive or not because it formed part of the price. It also states that it is a clause that clients can understand, thereby passing the transparency test.

In late October this year, a further appeal court in Malaga questioned the nullity of the opening fee, the only judicial body to do so to date.

However, the bank is likely to take the case to the Supreme Court, meaning the client will have to wait even longer for the refund of €7,200 in his initial claim.

Next steps

Despite the differences in the ruling, cases on opening fees for mortgages in Spain are still going to court. Clients generally start by making an informal claim to the bank, which is usually ignored. The next step is to take the case to court. At this stage, clients often expand their claim to include other clauses such as the floor clause or IRPH interest rate.

At Costaluz Lawyers, we champion consumer causes and in particular, those involving banks. We firmly believe that the Spanish Supreme Court should take the recent ECJ ruling on board and apply it to Spanish jurisdiction.

The opening fee for a mortgage in Spain is clearly abusive, in our view and therefore the borrower should not be liable for it in any instance.

Claim your mortgage expenses

If you have a mortgage in Spain, you may be a victim of abusive clauses in the contract and as a result, have paid far more in fees and costs that you legally should.

Get in touch with our expert team for a free consultation to find out how you can claim back money you should not have paid.

María Luisa de Castro

DIRECTOR

María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English speaking clients with legal problems in Spain.

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