List of all abusive clauses that a mortgage may contain

1. Clause of limitation to the minimum interest rate (floor clause)

t is usually located in the stipulation 3 bis with the denomination. “Límite a la variacióndeltipo de interés variable” It usually coexists with another upward limit (or ceiling). The abusiveness of the clause due to imbalance arises when there is a disproportion between the floor and the ceiling so that it is the Bank that is covered against the mortgagor. 87% of mortgage users were not informed by their bank of the inclusion of said clause.

2. Multi-currency clause

The Supreme Court, in its Judgment of November 15, 2017, declared the partial nullity of the multi-currency clause for generating a serious imbalance against the requirements of good faith

3. IRPH clause

Although the Spanish Supreme Court declared the validity of this clause in its Judgment of December 14, 2017, several questions have been referred to the CJEU by first instance courts of Barcelona, ​​Reus, and Almeria as well as by the Provincial Court of Salamanca, against the criterion of the Supreme Court. These courts affirm this clause lacks transparency. We are waiting for the decisions of the European Court.

4. Upward rounding clause

The interest rate is rounded by a quarter of a percentage point and always upwards for the benefit of the bank. The Supreme Court has issued repeated decisions in which it is made clear that these stipulations were not negotiated individually and are against the requirements of good faith, causing, to the detriment of the consumer, a significant imbalance of the rights and obligations of the contract parties

5. Review of interest at the request of the borrower

The Bank unilaterally establishes the need for the user’s request to activate the revision of interest on a loan which was granted at a variable rate. The Supreme Court declared these clauses null and void on December 23, 2015

6. French depreciation system

Using this system, although the capital is being amortized, the interest does not decrease because it does not take into account the capital already amortized.

7. Clause on the computation of interest to 360 days

Bank of Spain considers this as malpractice if the formula does not clearly show that a 360 base is being used and the loan contract just simply mentions a generic statement such as “days object of the liquidation, expressed in commercial days”or equivalent expression.

8. Delay interest clause

In cases of loans without a real guarantee, the Supreme Court considers that the default interest must not be more than two points higher than the remuneration interest agreed in the contract. In cases of loans secured by mortgages, Article 114 of the Mortgage Law sets a limit of three times the legal interest.

9. Anatocism pact

Suppressed, for mortgages, in the reform to the Mortgage Law of 2013. Delay interests can never become part of the capital.

10. Imposition abusive of personal guarantors

The validity of clauses inserted by the Bank by which they force the inclusion of a guarantor is questioned for two reasons.

  •  The capital is already insured by the debtor’s personal guarantee and by a mortgage
  • Lack of transparency when this clause (1) imposes the waiver of division and excuse benefits without explanation of these benefits or (2) the absence of indication of the joint and several nature of the guarantee.

It produces an over-guarantee which is disproportionate to the risk assumed by the bank

11. Waiver of the benefit of excussion, division, and order by guarantors and guarantors

The guarantor is hence placed in the same place as the debtor. And for the sole purpose of shielding the interests of the bank. Consequences of this resignation are not explained by the bank when adding these clauses to contracts.

12. Mortgage Expenses Clause

Clause by which Notary and Registry fees, property valuations, management fees, taxes… Were imposed on the borrower in full. Most of them have to be paid by the bank.

13. Clause on lawyer’s fees in case of litigation

Declared null by Supreme Court decision dated December, 23rd 2015 because they suppose a waiver or limitation of rights granted by Law to the consumer or user.

14. Opening Commission

There are several Courts in Spain that consider the opening commission abusive as they do not respond to the provision of an effective service to the user.

15. Study commission

By imposing these costs on the consumer, the Bank is transferring to the consumer the costs that the study of facts before mortgage granting implies.

16. Subrogation Commission

For the same reasons as the Opening Commission, they do not respond to the provision of an effective service to the user.

17. Clause of referral to the rates of the entity for the setting of commissions

The Supreme Court Sentence dated December 16th, 2009, confirmed the abusive nature of stipulations that referred to the “book of fees and commissions”. The information must be provided directly to the client at the time of signing the loan agreement

18. Postal expenses

Costs for postal notification to the user are imposed on the consumer. These clauses do not provide any kind of equitable distribution between the parties.

19. Commission for claiming debtor positions

This commission must be agreed upon and signed in the loan contract, and banks must act in accordance with the following principles:

  • It must be linked to the effective existence of a claim. A simple letter is not enough
  • It cannot be reiterated when claiming the same balance
  • The amount will be a fixed one, regardless of the amount of the claimed balance

20. Early expiry clause

This clause violates the principle of proportionality. The Bank can request the full amount of the loan just after one to three payments default. Both the Supreme Court and the General Directorate of Registries and Notaries have affirmed so. According to the postulates of the Court of Justice of the European Union in the Sentence of March 14, 2013, the full loan can only be claimed if the consumer has incurred an essential breach and in a high amount with respect to the amount of the loan.

Nor can there be early expiration in cases of:

  • Seizure of assets of the borrower or decrease in his solvency
  • Declaration of insolvency of the debtor
  • Non-payment of community expenses or any taxes levied on the property
  • Decrease in the value of the property
  • Impossibility of registration of the mortgage guarantee
  • Death of the debtor or guarantor
  • Other generic breaches of the obligations contained in the writing

The Court of Justice of the European Union is about to issue a ruling on a question referred by our Supreme Court in which this asks about foreclosures that include this clause. The response of the European Court of Justice may affect the Law on Real Estate Credits, now in the Congress of Deputies. In its articles, the advanced maturity is established with nine installments or 2% of the total loan.

21. Clause limiting ownership rights

Both the Supreme and the General Directorate of Registries and Notaries state that the clauses by which the Bank prohibits selling, leasing or encumbering the property without the prior consent of the creditor are null and void.

22. Clause prohibiting linking of the real estate to professional activity

They suppose an unjustified limitation of the principles of freedom to contract and of freedom of ownership.

23. Waiver of the right to be notified in case of sale of credit

Although Article 242 of the Mortgage Regulations allows the debtor to waive knowledge of the mortgage loan sale contract to a third party, this provision does not prevail over the Consumer Law. The Supreme Court says so in the Judgment of December 16, 2009. The cession can notdeprive of the rights that he himself has, that is, to free himself by paying the person who was the holder of the credit if he has not been notified.

24. Consent clause for the consideration of the executive power of all authorized copies of mortgage deeds requested by the Bank

It mocks the need for acceptance that the law requires the debtor to provide.

25. Clause fixing the appraisal value for auction

The appraised value for auction can not be less than 75% of the appraised value of the asset if the credit is not going to be securitized. If the loan contract is going to guarantee the issuance of titles, it will be of 100%.

In addition, the adjudication of the property by the entity, in the absence of an auctioneer, must be at least 70% of the auction value. Any clause contrary to these criteria is null.

26. Clause for which the entity is entitled to collect compensation for loss of property

There is no need for this clause because Article 110.2 of the Mortgage Act awards the bank the amount of compensation granted or owed to the owner provided the loss would have taken place after the constitution of the mortgage.

The clause that allows the bank to hire fire and damage insurance at the borrower’s expense is also null.

27. Election of Notary

The consumer/ debtor has the right to choose the Notary provided it keeps a reasonable connection with any of the personal or real elements of the business. The Notary must also assist the contractor who has a weaker legal position.

28. Clause of express submission and waiver of the jurisdiction itself

Prohibited by the Civil Procedure Law itself.

29. Product Tying Clauses

These clauses require consumers to contract additional financial services or products from the bank as a condition for granting a mortgage loan.

30. Compound Interest Clauses

While anatocism related to delay interest is mentioned, general clauses on compound interest might be considered abusive if not properly explained.

31. Interest Rate Hedge Clauses

Different from swaps, these clauses impose interest rate hedge products that can be complex and not always suitable for the consumer’s profile.

32. Note on Evolving Jurisprudence

It’s crucial to recognize that the interpretation and application of what constitutes an ‘abusive clause’ in Spanish law is subject to ongoing legal developments.

This evolving nature of jurisprudence is influenced by new rulings from the Spanish Supreme Court and the Court of Justice of the European Union, as well as by legislative changes at both the national and European levels. Therefore, while the clauses listed above are relevant under current legal understandings, their classification as ‘abusive’ might be subject to change based on future judicial decisions or legislative amendments.

33. Stay Informed and Protect Your Rights

Consumers and legal practitioners should stay informed about the latest developments in this area to understand their rights and obligations accurately. If you have concerns about the terms of your mortgage contract or believe you may have encountered an abusive clause, seek legal advice to protect your interests and rights.

34. Additional Clauses to Be Aware of

In addition to the clauses mentioned above, it’s essential to be aware of other potentially abusive clauses that may exist in mortgage contracts. Some of these clauses include but are not limited to:

  • Early Repayment Penalty Clauses: These clauses impose hefty fees on borrowers who wish to repay their mortgage before the agreed-upon term, limiting borrowers’ flexibility.
  • Interest Rate Floor Clauses: These clauses set a minimum interest rate that borrowers must pay, even if market rates fall below that level, potentially costing borrowers more in interest.
  • Excessive Default Interest Clauses: Some contracts may include clauses that impose exceptionally high interest rates in the event of default, which can lead to substantial financial burdens for borrowers.
  • Unilateral Contract Modification Clauses: Clauses that allow the bank to unilaterally change the terms of the mortgage contract without the borrower’s consent can be unfair and abusive.
  • Lack of Transparency Clauses: Clauses that make the terms and conditions of the mortgage contract unclear or difficult to understand may be considered abusive.

It’s important to consult with legal experts to thoroughly review your mortgage contract and identify any potentially abusive clauses that may impact your rights as a borrower. Protecting your interests and rights is essential in ensuring fair and transparent mortgage agreements.

2 thoughts on “List of all abusive clauses that a mortgage may contain”

  1. I believe the fraud banks are committing goes way beyond these issues. It would seem we own the thing upon signing the supposed loan agreement be it a house car or kitchen – it is proving very hard to prove and is an equity law matter not the rigged lower courts domain where we are viewed as corporations – dead entities. Can you help with this or not?

    1. Maria Luisa Castro

      Dear Heddi:

      Are you referring to the exclusion by the Supreme Court of consumer rights in the context of off-plan purchases?



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