The Spanish Supreme Court has recently emitted sentences that clarify who should pay costs associated with a mortgage and those of legal cases arising from abusive clauses in mortgage contracts.
At Costaluz Lawyers, we welcome both as a step in the right direction for more consumer rights for mortgages in Spain. We believe that the recent sentences also open the doors to more consumers claiming refunds from banks.
Who Pays Mortgage Costs
The Supreme Court has finally emitted jurisdiction that clarifies exactly who should pay for which of the costs associated with taking out a mortgage in Spain. According to the sentence, the following applies:
Costs of Mortgage Valuation
The Supreme Court has ruled that valuation costs be met by the bank not the consumer unless they are part of the 5/2019 Law. In practice, this means that banks are liable for the vast majority of valuation costs.
Property Registry and Paperwork Costs
Traditionally, Spanish banks have passed all costs associated with taking out a mortgage onto the consumer. However, those days are over and the recent ruling states that the bank is liable for both property registry and paperwork (gestoria) costs.
Notary Costs
In this case, they must be paid in equal parts by the bank and the consumer.
Stamp Duty
This tax (known as AJD/ Impuesto sobre Actos Jurídicos Documentados) corresponds entirely to the consumer.
Claiming Back Mortgage Costs
The latest jurisdiction opens the doors to a flood of claims against bank for refunds for mortgage charges. At Costaluz Lawyers, we anticipate that a majority of mortgage owners will be eligible for some sort of refund from their bank for unfairly applied mortgage costs.
If you believe this is your case, get in touch and our expert team will be only too happy to review it.
Who Pays Legal Costs
Another Supreme Court ruling looked at the question of who should pay legal costs in a dispute over floor clauses in mortgages.
A mortgage holder discovered a floor clause in his mortgage and requested an out-of-court settlement with his bank. The bank rejected this petition and as a result, the mortgage holder took the bank to court. Once the case reached the courts, the bank backtracked and recognised the sentence ruling that the floor clause was abusive.
However, the sentence ruled that both parties, mortgage holder and bank, pay their own legal charges. The consumer appealed against this decision arguing that because the clause was abusive, the bank should be liable for the costs in their totality.
The appeal was rejected twice, first by the local court and then by the provincial. However, when it arrived at the Supreme Court, jurisdiction shifted in favour of the mortgage holder.
Supreme Court Decision
Both the previous courts had ruled that the costs be divided because the case was presented before the Law 1/2017 allowing for out-of-court settlements for abusive clauses. While the Supreme Court recognised the ruling, it stated that the process was admissible according to Law 1/2017.
The Court therefore ruled that the bank pay all legal charges including those incurred by the mortgage holder.
Problems with Spanish Banks?
We are pioneers in Spain in fighting for consumer rights against Spanish banks. We have an impressive track record of success and have helped dozens of clients have abusive clauses removed from their mortgage contracts and receive refunds from banks.
Get in touch for a free consultation with our team who will ascertain your rights to a fairer mortgage contract and if applicable, refunds from the bank.
Maria Luisa Castro
