Although not as quite as clear cut in legal terms as normal consumer cases; companies, professionals and self-employed can apply for the nullity or non incorporation of floor interest clauses in their mortgage loans, just as “ordinary” consumers are able to.
As most will know already, an interest floor or minimum interest clause, is that by which the bank sets a minimum interest rate payable. This means what when the interest reference rate decreases (usually the Euribor), the debtor will never benefit from this drop, they must continue paying at least the minimum percentage set out as the floor rate.
While recognizing that businesses or professionals acting in the exercise of their professional activity cannot be considered as consumers, we understand that the legal status of a consumer is irrelevant for this purpose, and therefor they should also be able to request the cancellation of the floor clause, if the bank did not explain to them in a sufficiently clear way the economic and financial consequences of this clause, and negative impact it could have.
Such clauses are what is known in Spain as general conditions of business, which are regulated by Law 7/1998. In its Article 2 it states that this law applies when the adherent, (the client) is an individual or legal person ( entity), noting also that the adherent – client for the purposes of this Act, may also be a professional, even if not acting in the course of their business.
In addition its Article 7 states that it will remain unincorporated to the contract those general conditions which the adherent has had no real opportunity to know in full at the time of the contract (which is what has happened in the majority of the mortgage floor clause cases).
Most of the grounds and legal arguments used by the Supreme Court to declare null and void certain mortgage floor clauses apply to cases where the debtor or borrower is a company or a professional, without it being necessary to have the legal status of a consumer.
Indeed, Provincial (or Appeal) Courts, such as Cordoba, Las Palmas, etc have ruled in favour of the possibility of requesting the annulment of the mortgage floor clause by professionals.
So, if you are a professional, director of a company, self-employed, etc., and have signed a mortgage with a Spanish bank but are not benefiting from the fall in the Euribor or your interest rate of reference,
and have been paying the same monthly mortgage receipt for a long period, due to the action of said floor clause that was not explained properly to you, you should know that legally even if you are not a consumer, you can claim to have the contract annulled.
Contact us and we will help you.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
Spanish Law firm solicitor attorney barrister.
Alicante, Denia, Costa Blanca Marina Alta
White & Baos 2016 – All rights reserved
