The Supreme Court Judgement 705/2015 of 23rd December, declares ‘abusive’ the clause in which the financial entity BBVA imposes on the borrower the payment of all expenses, taxes and commissions derived from taking out a mortgage.
Although the Supreme Court’s judgement refers to a type of clause used by BBVA bank, it is applicable to any bank that has used these kind of clauses in a generic manner in their mortgage agreements, under which they transfer expenses, commissions and taxes to the mortgage consumer.
In the same manner as with fix rate or so called ‘floor rate’ clauses, in order for the courts to render them null and void; it is necessary that the mortgage holder or debtor makes the required formal complaint to the Customer Service Department of the bank, and where applicable, takes legal action through the courts.
Regarding the expenses incurred by the mortgage holder in the setting up of the mortgage, as established in Judgement 750/2015, those applicable are as follows:
- Notary and Land Registry Invoices. The Supreme Court’s ruling establishes that by not permitting a minimum reciprocity in the distribution of expenses deriving from the involvement of a Notary and the Land Registry, and making the borrower bear total responsibility for settlement, this produces an imbalance to the detriment of the consumer, for this reason the clause has been ruled unfair
- Stamp Duty. Equally the Supreme Court establishes that regarding Stamp Duty, the lending Bank or Entity shall be the taxpayer. Namely, payment liability lies with the Financial Entity rather than the mortgage consumer. For this reason, it should be included in the claim
Therefore, if you have signed a mortgage agreement which contains clauses making you liable for payment of all expenses, commissions and taxes, you may make the relevant claim in accordance with the following guidelines:
First you should make a formal complaint to the Customer Services Department of the Bank with which you signed the mortgage agreement. The complaint should be made in writing via registered fax with acknowledgement of receipt and certification of content, in order to place it on record for subsequent proof. Equally you can submit the compliant directly to the corresponding branch of the bank, in writing to the Director or Financial Controller, whom are required to issue a copy duly dated (to certify the registration date), and stamped with the official stamp of the branch or entity.
Within a reasonable period of time following the registry of the complaint (60 days), and in the case that you have not received a reply from the bank, or if the response is negative, it would be necessary to issue a court claim before the Court corresponding to the domicile of the Bank.
The claim lodged in court, will request the clause be rendered null and void due to unfair terms, and the restitution of the expenses payed as a consequence of the mortgage agreement in question. In order to do this, it is necessary to support the claim with proof of payment, fully documented with the corresponding invoices. The handling invoice issued by the bank at the time of the operation should include all payments made in concept of processing the deeds for the loan (Notary, Land Registry, Handling and Taxes). Due to the type of proceedings, the involvement of both a lawyer and a court solicitor are required.
As an example, we will take the claimable expenses for a mortgage set up in 2016 for the amount of 150,000 euros, with a legal liability in event of default amounting to 255,000 euros, and a tax rate of 1.5% (in the Region of Valencia). In this scenario, on top of the tax, around 425 euros in notary fees and 125 euros in Land Registry fees would be added. This amounts to a total of approximately 4,375 euros to be settled by the mortgage consumer due to the ‘abusive’ application of the aforementioned clauses imposed by the banks.
Who can claim a refund of their money?
The period in which you can recover the expenses incurred from your mortgage agreement is unlimited (there is no time-limit or deadline) due to the clause in question being deemed ‘abusive’ in our legislation. The corresponding claim to be taken before the courts is known as ‘action to render abusive clauses null and void’.
We should take into account that although the claims in question are supported by the aforementioned judgement of the Supreme Court, to date there is no case law in which the doctrine has been applied. Nonetheless, due to the flurry of claims that we foresee to be filed, legal precedents will soon be set on the measures adopted by the courts.
At MSG LEGAL we can advise and assist you from the moment of writing and submitting your initial complaint to the financial entity, as well as throughout the entire process of taking your claim to court if you decide to take further legal action.
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice.