IN today’s article we want to consider the recent decision made by the Spanish Supreme Court regarding the expenses and costs clauses included in mortgage loans deeds.
Amongst others, it is important to be aware of the court decision 49/2019 of January 23 2019, which states:
ABSOLUTE NULLITY OF THE EXPENSES CLAUSE – The Supreme Court has confirmed, as it should, that this type of clause which banks include in mortgage loans, where it is stated that all expenses and costs, whatever they may be, must be paid by clients, are ABUSIVE and therefore NULL AND VOID.
This has been found because such a clause obliges consumers to pay all expenses even those that by law should be for the account of the bank.
In addition, we conclude that these charges are not transparent, because the bank will not have explained to the consumer the likely amount that such expenses are or could be.
Thus, the Supreme Court not only confirms that they are abusive and null and void, but confirms that the nullification is total which means that the entire clause must be removed from the contract.
Be aware however that even if the clause is totally null and void, it does not imply that all expenses must be paid by the bank and once the clause is removed, each party must pay what is indicated as their responsibility in accordance with existing law.
NOTARY EXPENSES – The Supreme Court basically says that they must be paid on a 50/50 basis since both parties are involved in signing the deed, the client in the loan and the bank in the mortgage.
OUR VIEW – We believe that this reasoning is incorrect, because the client simply wants a loan and does not ask the bank to go to the notary, but it is the wish of banks that the matter should be placed before a notary, which then allows the bank to register the mortgage as a guarantee for the repayment of the loan.
We contest therefore that the entire cost should be paid by the banks as they are the party that requires notarial intervention.
THE EXPENSES OF MANAGEMENT – The Supreme Court says that the use of the agency to process the registration of the mortgage loan deed benefits the two parties, in principle the cost must be split equally.
We however suspect (with all due respect), that the Supreme Court judges must have never signed a mortgage loan, since the agency dealing with the registration of the loan is not chosen by the customer, it is always imposed by the bank, and it is the bank that is interested in the registration of the mortgage in guarantee of the loan against the property.
Therefore, we argue that such costs should be paid for by the banks.
LAND REGISTRY EXPENSES RELATING TO A MORTGAGE LOAN must be paid by the bank according to the Supreme Court.
TIP: If you are going to ask for a mortgage loan, we advise that you put in writing to the bank that you do not want to go to a notary and you prefer to sign a private contract.
If finally the bank demands to go to the notary, say to the bank that as it is their wish to arrange for such registration that they should pay all costs involved.
Undoubtedly your bank will refuse, but if they do so in writing, you can prove that these expenses must be paid by the bank because the bank has forced you to go to the notary and use their agency.
If you have paid all the expenses of your mortgage loan, we encourage you to claim, 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)
White & Baos
Tel: +34 966 426 185
E-mail: info@white-baos.com
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