In December 2015, Spain’s Supreme Court ruled that mortgage clauses introduced by Banco Popular and BBVA that forced borrowers to pay for all fees associated with taking out the home loans were abusive. Instead, the court ruled that the banks should pay for all or at least part of these set-up expenses, because it is the lenders who have an interest in making a formal record of the mortgage deed.
Ever since then, various trial courts and appellate courts have handed down decisions both in favor and against borrowers.
The consumer associations Adicae and OCU – which took the case all the way to the Supreme Court – have launched a campaign to claim these expenses back from the banks.
The fee claims represent an additional headache for Spanish banks, who were recently told by the courts that their widespread practice of setting floors on mortgages – i.e. levels below which monthly repayments cannot fall, regardless of the interest rate – are abusive, and that they may have to return millions of euros to clients who were systematically forced to overpay.
These groups are recommending that customers first try approaching their bank’s ombudsman or claims department, before taking the matter to court. In the last six months, at least six banks – Santander, BBVA, CaixaBank, Bankia, Sabadell and Ibercaja – have changed their clauses and now cover around 30% of these associated fees, in a bid to prevent further lawsuits.
If you are a homeowner in Spain who paid the full amount of the fees that come with taking out a home loan, the following tips may help you determine whether you are entitled to a refund on some of them.
is eligible ?
The Supreme Court’s ruling of December 23, 2015 affects everyone who is currently paying a mortgage or who paid it off up to four years ago. Claimants should try their bank’s ombudsman or claims department first, and later turn to the courts if necessary. The deadline for filing a claim is four years after the Supreme Court ruling, meaning December 24, 2019.
For borrowers who have already paid off their mortgage, they may claim a refund if the full payment was made four years prior to the ruling – that is to say, on or after December 23, 2011. The ruling applies to individuals, not corporate borrowers, and to primary residences and second homes alike.
What fees can be claimed ?
People who have already filed claims are asking for a refund on the fees they paid for the notary, the mortgage land registry and the gestoría, the company that ensures the property and the mortgage are correctly registered in the land registry (but only if the gestoría was imposed by the bank). Claimants have also asked for a refund on the stamp duty (Documented Legal Acts tax or AJD to give it its Spanish acronym).
While there is no hard-and-fast rule that applies to all cases, these mortgage set-up fees typically represent between 2.5% and 3% of the home loan.
How much can I ask for ?
That depends on the amount of the loan. According to OCU’s calculations, if every fee is returned, including the AJD stamp duty, it could be in the range of €3,000 for a €150,000 mortgage.
Is only a portion recoverable ?
Yes. Some judges are ordering a refund on notary, mortgage land registry and gestoría fees, but not the AJD duty, which in fact represents 75% of the associated expenses when taking out a mortgage.
Based on rulings by the Supreme Court and the Provincial Appellate Court of Zaragoza, lawyers consulted by EL PAÍS said it is the banks who should put up with the cost of processing the stamp duty. On the other hand, the provincial appelate courts of Oviedo and Pontevedra have ruled that this fee should be paid by the client.
In any case, there is no refund for the Property Conveyance Tax, which always falls to the home buyer.
What documents are required to file a claim ?
The mortgage deed, the notary’s invoice, the land registrar’s invoice, and the tax form documenting payment of the AJD duty (form 600).
Which banks have changed their fee clauses ?
At least the following six: BBVA, Santander, Bankia, CaixaBank, Sabadell and Ibercaja. The changes seek to prevent future claims on new mortgages. But this does not prevent clients from claiming refunds for loans signed in the past.
Do I have a clear case in court ?
One should never think that it is easy to win, much less against banks with enough resources to appeal any unfavorable decision. But the fact that they have changed their own clauses following the Supreme Court decision (which called them “abusive”) means that lenders are aware these fees were not properly established. There have been rulings for and against individual plaintiffs, and it is too early to know whether borrowers are going to be winning any major victories in court.