The fight for mortgage justice for home owners in Spain

THE recent court ruling by the EU Court of Justice, allowing customers of banks in Spain to reclaim billions of euros because lenders did not pass on savings from interest rate cuts on variable-rate mortgages, seems only the penultimate headache for Spanish financial entities.

The abusive nature of these contractual clauses, which makes them void, stems from the description made by the Supreme Court: “An abusive clause is such when the consumer is unable to have influence over its suppression or content, being left with the choice of accepting the clause and adhering to the contract or pulling out of the contract.”

Now, a less recent judicial ruling by the Spanish Supreme Court (Dec. 2015), which has only transpired now, appears to give consumers free rein to claim from banks ‘unilaterally imposed’ mortgage set up costs, i.e. notary and land registry fees, bank’s legal fees (gestoria) and even the tax (Stamp Duty).

The 2015 Supreme Court ruling contradicts tax laws in force –which stipulates without doubt that borrowers are to pay the tax- by resorting to consumer legislation, which prohibits businesses transferring to consumers taxes of products and/or services they benefit from.

Lower Courts in Barcelona and Zaragoza have relied on this ruling to order banks to return all mortgage costs to two borrowers.

But not all judges are of the same thinking.

Less than a month ago (Dec. 2016), a court in Oviedo (Asturias) ruled that the Administrative Division of the Supreme Court had passed judgement previously and had specifically exonerated banks from paying stamp duty even though it was clearer that all other mortgage-related costs could not be –unilaterally- imposed on the borrowers.

With these arguments, the court sentenced the Liberbank to reimburse the claimant notary and land registry fees, as well as gestoria costs but not stamp duty.

So who pays mortgage costs is still a matter under discussion; as there have been rulings for and against individual claimants, it is still too early to know whether borrowers are going to be winning any major victories in court.