Updated 7 November: The latest and final ruling of the Supreme Court over who should pay the Impuesto sobre Actos Jurídicos Documentados, part of the costs associated with buying a property with a mortgage, confirms its decision of February that it should be the mortgagee, not the bank, who is responsible for the charge. There has been much controversy over most of this year about the issue, with an interim verdict agreeing that the banks should pay the AJD, and retroactively so at least for the last four years, but yesterday the Supreme Court ruled that the tax of 1% to register the mortgage escritura must be paid by the mortgagee.
There has been what can legitimately be described as outrage since the ruling was announced, with consumer associations calling for protests outside every bank in Spain on Saturday, as well as the resignation of the president of the Supreme Court, and politicians of every colour calling the ruling “aberrant”. Many had thought the ruling a foregone conclusion in favour of buyers, though increasingly over recent weeks the banks have been accused of putting inordinate pressure on the Court. Now, this morning Spanish PM Pedro Sánchez has said in response to the verdict that the law will be changed because every homebuyer needs juridical security. Sánchez said that since this tax is for the registration of a document that purely protects the bank in case of borrower default, it should be for the banks to pay.
From the point at which the new legislation comes into force, and it will be put in motion tomorrow the PM announced, the banks will have to pay the AJD, but for anyone else who was hoping to reclaim this part of the “gastos” they incurred when buying with a mortgage, sadly it is not going to be possible. Many will be sure that the banks will find some way of clawing back the future cost they themselves will have to incur from the promised amendment of mortgage legislation.
Updated 28 February: As I posted at the start of February, the banks are now repaying the interest they overcharged customers as a result of clausulas suelo in their mortgage deeds. People just need to go to their bank and ask, nothing more complicated. There was a question, however, as to whether they would also repay set-up and notarial costs incurred at purchase: they were refusing, in most cases, point blank to do so, but the case was in the Courts. Today, the Supreme Court has ruled that the document registration tax (AJD – Impuesto sobre Actos Jurídicos Documentados) of 1% is properly the responsibility of the mortgagee, not the lending institution. Other notarial document charges should be shared between bank and borrower, the Court ruled, which will see the banks breathe a huge sigh of relief because the AJD is the main charge involved in the “gastos”, and they will not now have another massive payout to make. The full text of the judgment will be released in coming days.
Updated 4 February 2018: In the past year since my last post below, the situation has changed quite a lot, and after an initial rush of claims to banks which were being instransigent, claims for overpaid interest as a result of clausulas suelo are now routinely being accepted by banks under a via amistosa, i.e. an in-house “friendly process”. I now have experience of Banco Popular and La Caixa repaying in full without quibble and within two to three weeks, and with no charges or fees. It is likely that other banks are doing the same.
The banks are currently saying that they will not repay any set-up and notarial costs incurred at purchase, but that this may change in the future, and of course anyone who gets a clausula suelo repayment still has the option to try future legal action to recoup gastos if the banks don’t change their stance over coming months. I would recommend anyone seeking repayment for illegal abusive mortgage clauses to start with their bank. Ask for a clausula suelo repayment under a via amistosa before seeking legal advice, or joining a class action, or using an agency which will take a cut of any payout.
Updated 16 February 2017: Adeje Ayuntamiento says that more than 100 people attended the talk, and reminded Adeje residents that the council, through the municipal consumers advice office OMIC, can supply them with a standard letter to initiate the reclaim procedure. This might be a great first step before taking it to ADICAE or similar. Adeje’s OMIC offices are in the new building on the corner just beyond the Post Office at the bottom of town.
Updated 14 February: Just a reminder that Adeje’s public meeting about mortgage floor clauses is tomorrow at 6pm in the Cultural Centre. The council says:
Adeje Council, through the local OMIC (municipal citizen’s attention bureau), under the department of health and quality of life (councillor Amada Trujillo Bencomo) and in collaboration with ADICAE (the association for bank and credit union users) will hold a public talk on mortgage floor clauses and additional costs tomorrow, Wednesday February 15th, at 6pm. The meeting is taking place in the town’s Cultural Centre.
“What we are doing, from the Council’s point of view, is giving all the relevant information to our citizens in relation to floor clauses. For that reason, from the offices of the OMIC, we have prepared this information event to let people know what their rights are and how to proceed if they wish to make a reclamation”, commented councillor Trujillo Bencomo.
The meeting will have the information necessary and outlined in the Royal Decree 1/2017 which lists the means by which monies can be returned to clients. Pedro Herrero, of ADICAE will be the main speaker, and include in his talk will be information on time frames for reclamations. He will answer questions from the public on the matter.
This event will be in Spanish, so please do bring a translator if you feel you might be in need of some assistance.
Updated 6 February: Santiago del Teide Ayuntamiento will be holding an information talk this Wednesday, 8 February, at 6pm in Puerto de Santiago. The meeting will be held in the Centro Social La Vigilia II, and there will also be an adviser from the financial services users association ADICAE who is attending at the request of the council. The council says it is hosting the event because of the numbers of enquiries it has received from the public, especially in the Puerto Santiago and Los Gigantes areas.
Adeje has also announced the same, to be held in the Cultural Centre on Wednesday, 15 February, at 6pm, again with expert advice from ADICAE.
Updated 3 February: ADICAE is holding an information meeting at 5pm today in its centre at 28 C/. Juan Rumeu García, Cruz del Señor in Santa Cruz (Cruz del Señor is itself a stop on the tram from Santa Cruz to La Laguna). The meeting is an open one, no registration is required, and it’s free. ADICAE will explain first hand to those affected by clausulas suelo how to proceed in a class action to recover monies that the banks are required to repay under the terms of the ECJ ruling.
As I expected previously, at least one bank has tried to make “offers” in settlement, and there is now at least one legal action against that bank for this because the banks are required to repay their illegally charged interest payments in full. ADICAE says that its legal action will be “to reover the whole of monies taken fraudulently from customers cheated by the banks”.
The meeting will also cover proposals to incorporate action against banks for further attempted abuses like trying to get customers to renounce their legal rights, and in one case, of making an offer for customers to renounce all claims and get “special rates” that were actually worse than the situation the customers were already in.
Anyone who attends should take their mortgage escrituras if at all possible because ADICAE will help people find out if they have any claim, or if there’s a clausula suelo in the document. This is all free, and ADICAE says that it will also be issuing warnings against a new proliferation of “professional offices” which have sprung up to make money out of helping people who have already been ripped off once. There is more information HERE, and the maps below show the general area of Cruz del Señor as well as the location of ADICAE from the tram stop (please click to see full size).
Updated 30 January: The second meeting which was promised after the first was over-subscribed will be held tomorrow afternoon between 5 and 7pm. Again it will be in the Centro Insular de Calidad y Consumo Responsable del Cabildo in La Laguna.
Updated 24 January: ADICAE has provided HERE a form to allow people to calculate the amount they will be able to reclaim. You will need your mortgage details in order to enter the information needed.
Updated 23 January: ADICAE has today said that it is important to be aware that the refunds process will not be immediate and that a little patience is required, both in terms of getting money back, and of becoming aware of the procedures to follow.
Under legislation passed in the last few days (HERE), the Government has given the banks one month to create a department to attend to those affected by a cláusula suelo and then three months to return any claims that they receive. The new decree stipulates that any refunds will only be taxable if the original mortgage payments were themselves subject to tax relief, and that the measures apply not just to existing mortgages but also to those that may already have been paid off, and that legal interest must be added to the amount the banks have to repay.
Meanwhile, ADICAE is setting up an Observation Control to monitor the banks’ offers for returning funds – which suggests that they expect some banks to make settlement suggestions to avoid legal action, and indeed Caixabank has announced that it has set aside €110m as a provisional fund for repayments. ADICAE suggests individuals affected register HERE so that they can be informed personally and directly by the association itself without the need to involve any expense.
Updated 12 January: Nova Howard, ex-Santander employee and now qualifying as an asesora, was at the meeting. Her report is HERE, and reproduced below, and I comment underneath it the points to which I myself would draw particular attention:
This evening I attended a public meeting in La Laguna, held by the Tenerife Cabildo’s Centro Insular de Calidad y Consumo Responsable (Centre for Quality and Responsible consumerism) in collaboration with the consumer protection organisation ADICAE, to provide information about the recent European Court Judgment which ruled that the “clausula suelo” is abusive and that affected mortgagees are entitled to a full refund of costs, regardless of whether this clause was obscured or not.
The meeting began with a brief explanation of the cláusula suelo (floor clause). This is a clause imposed by banks in an estimated three million mortgages throughout Spain, whereby the interest rate paid by the customer, although tied to the Euribor (European base rate) is limited from falling below a minimum rate (the floor) even when the base rate falls. The speaker explained that this became an issue in 2009, when the base rate tumbled following the financial crash. Bank customers who expected their mortgage interest rate to reduce accordingly found that it did not, and as a result ended up paying far more for their mortgage than they should have. This clause has now been determined by the courts to be abusive, as well as costs charged to the customer as part of arranging the mortgage.
The speaker detailed the costs that customers are entitled to have refunded and emphasised that a procedure for obtaining refunds is not yet in place, but that the procedure, when one is found, will be universal (available to all those affected), fast, free of charge (with no unnecessary costs for lawyers and other professionals who would view the claims as a business opportunity) and will not require individuals to pursue their own legal action.
Mortgage-related costs that citizens are entitled to have refunded:
- All extra interest they have paid due to the cláusla suelo;
- Notary and escritura costs;
- Land registry costs;
- Gestoría costs charged by the bank;
- It was noted that the right to refund of document tax related to the mortgage contract is unclear at present as the courts have not been unanimous on this.
It was also clarified that, in the case where the customer has signed a waiver at the request of the bank that renounces their right to any refund in the event of such a court judgment, for which many banks offered incentives, this document itself is considered abusive and will not affect the citizen’s fundamental constitutional right to have their monies returned.
Since there is as yet no procedure in place for claiming refunds, the advice at present is to just wait, as ADICAE will inform the public as and when there is more information. They also invited attendees to join their association which has already represented some 15,000 of those affected in a class action against the cláusla suelo.
Unfortunately, the organisers of the meeting had grossly underestimated the interest it would generate and, instead of the two hour meeting with Q&A session advertised, the presentation was cut short after forty minutes so that it could be repeated twice more for the crowds now gathered in the lobby because the room assigned was far too small. As such, I am sure that many of the points above invite questions and clarification which was not possible this evening. ADICAE urged anyone wanting more personal advice on the matter to visit their office in Santa Cruz at C/ Juan Rumeu García 28, Office nº.12 on the second floor, on Wednesdays and Fridays between 5pm and 8pm. They also promised to hold a second meeting for the Q&A session sometime in the next week or two. I intend to go to this meeting and will gladly ask any questions on behalf of those who request it.
So, despite the (almost certainly deliberate) misinterpretations and attempts to fudge by some banks, it is clear that the mere existence of a clausula suelo in a mortgage is enough to warrant a claim for a refund for illegally overcharged interest. As Nova has said: “it’s the clausula itself that is abusive, not the way it was imposed”.
Also, as I suspected and argued HERE, anyone who was persuaded by their bank to waive their rights in return for some inducement has now been confirmed to have been a victim of yet further abuse. There are rights you just can’t sign away, let alone under duress, or when conned, and anyone who signed a renunciation letter cannot be bound by it.
Finally, despite the incredible rush of offers from all types of professionals to put in claims for refunds, the formal Banking Users Association ADICAE says that there is no procedure yet in place for claiming refunds. The official advice is DO NOTHING, AND WAIT. The association will itself inform the public as and when there is more information. Most importantly, anyone affected and who has a claim has no need whatsoever to pay anyone to help them. Just join ADICAE, and wait to be informed in due course about whatever procedure will be used for claims … but which ADICAE already says will be available to anyone affected, streamlined, and free of charge.
Updated 11 January: There was such interest that the small room booked for the numbers expected was nowhere near the size needed. The meeting was therefore held more than once, and another date will be scheduled for questions and answers … I will have a report in the next day or so, hopefully next few hours.
Updated 9 January 2017: Further to the judgment by the European Court of Justice nullifying mortgage floor clauses (original post below), the Tenerife Cabildo’s Centro Insular de Calidad y Consumo Responsable (Centre for Quality and Responsible consumerism) in La Laguna is holding a free information session for the public this Wednesday, 11 January, from 5 – 7 pm (17.00 -19.00).
This meeting is intended to explain the scope of the ECJ’s judgment of 21 December that sentenced Spanish banks to repay all monies overcharged on account of these clauses. As such, it will offer information so that the public can inform itself as to what, if any, professional help could usefully be engaged, a matter of concern to quite a few right now because many seem to have been approached by a range of “professionals” (even lawyers, notaries and land registries) all seeking to be engaged to try to recover monies which may or may not be due for repayment.
The meeting will be held in collaboration with Adicae, the Association of Users of Banks, insurance and financial services. It’s a major and generous provision by the Cabildo, whose councillor for employment, commerce, industry and economic development, Efraín Medina, said “we at the Cabildo are trying to shed light on the new situation so that all those here in Tenerife who are affected by these judgments can benefit from the advantages of the rulings”.
Obviously this meeting will be in Spanish, and I don’t know that an English translation will be on offer – or even practical to provide. For those who wish to attend, however, the Centre is at C/ San Agustín 15. 38201 La Laguna: I’ve put a map below with a star indicating the end of the tram stop.
Original post 21 December 2016: This morning’s long awaited verdict from the European Court of Justice will see Spanish banks repay up to €7.5 billion in costs now ruled to have been charged illegally due to the “floor clauses”, the clausulas suelo which imposed a lower limit for interest rates on mortgages regardless of the actual Euribor rate to which those mortgages were tied.
The ECJ has ruled that around three million Spanish mortgagees have had their EU rights violated by the banks, and also by the Spanish Supreme Court decision to limit any retroactive repayments. Essentially, all overpayments must be repaid, with the banks having no further appeal against today’s ECJ judgment.
The banks’ concern at this forthcoming judgment has been clear over several recent months, with many mortgagees reporting calls offering them a range of advantages and benefits if they would just sign away any rights to a repayment should the ECJ rule as it now has, something that the banks were stressing was “unlikely”. Well the “unlikely” has happened, and I would suggest that any who’ve signed such an agreement with their bank should now seek legal advice on whether their renunciations of their rights can actually be legally enforced.
The ECJ judgment means that all mortgagees should now check with their banks – and if necessary take legal action – to recover interest payments that the banks have overcharged – and which have now been deemed to be illegal. The banks most involved in this shameless business have been BBVA, Banco Popular, Sabadell and Caixabank, all of whose shares fell some 11% immediately on the ruling being made this morning. HERE is the actual judgment, and HERE is the Spanish version of the ruling.