Spanish Supreme Court ruling declares mortgage expense clauses void due to abusive terms of contract

The Spanish Supreme Court Judgement 705/2015 of 23rd December, declares the clause in which the financial entity imposes the payment of all mortgage related expenses, taxes and commissions on the borrower as “abusive”.

Although the Supreme Court’s judgement refers to a concrete type of clause used by a specific bank, it is supposedly applicable to any bank that has used this kind of clause in a generic manner in their mortgage agreements.

The costs in question are AJD tax (mortgage tax/stamp duty), notary and land registry fees. The Supreme Court’s ruling establishes that by making the borrower bear total responsibility for these costs, it creates an imbalance to the detriment of the consumer and thus the clause is “unfair”.

Therefore, if you have signed a mortgage agreement which contains clauses making you liable for payment of all mortgage related expenses, commissions and taxes, you should have a good chance of claiming the money back. There is a process involved with these claims and at the moment the timeframes are uncertain, so if you are interested in hearing more you should speak to a solicitor with expertise in financial law.

To have an idea of what the claimable expenses for a mortgage is, please see below example:
Based on a mortgage of 200,000€, with a legal liability in event of default (“garantia hipotecaria”) amounting to 320,000 (160% of mortgage amount), and an AJD tax rate of 1.2% (in the Balearic region), the tax due is approx. 3,840€. Adding to this around 425€ in notary fees and 125€ in land registry fees, the total amounts to approx. 4,390€ which is to be paid to the mortgage client due to the “abusive” application of the clause imposed by the bank.*

*Disclaimer: Please note that the example provided is to serve as general information and is not generally applicable. For any specific information, bespoke legal advice is needed. Should you have any queries, don’t hesitate to contact us here: Christian Severinsen: M: +34-695289181