A NEW Law 5/2019 of March 15 actually came into force on June 16 and as it is more commonly known, the Mortgage Law is a regulator of real estate credit contracts.
This new law has introduced important new elements which will apply when you approach a bank for a mortgage loan.
Amongst these changes, one of the most important is the obligation that banks now have to provide the customer with the necessary information to allow them to compare the mortgage loan conditions being offered with other banks conditions.
In addition, it is required that customers know and understand all of the conditions of the loan and the consequences of signing it in order to allow the client to be able to make an informed decision.
This information must be given by the bank to the client, at least 10 days before the signing of any contract or offer related to the completion of the mortgage loan and must be in accordance with the FEIN model, European Standardised Information Sheet, which can be found in Annex I of the new Law.
Another important change is that the person requesting the mortgage loan must meet with the chosen notary, where the loan deed is to be signed, in order to obtain free advice and review of the loan, before the date of completion.
Amongst other things, the notary will review and confirm in this meeting that the information provided by the bank is in accordance with the Law.
If the notary confirms that the information and documentation comply with the requirements established in the Law, he will draw up a certificate or statement by means of which he will certify compliance with the deadline for delivering the documentation by the bank before signing for the mortgage.
This certificate or statement will also reflect any questions or doubts that the client has presented to the notary as well as the advice that the notary has given to the client.
In addition, the client must answer a series of questions provided by the notary in order to confirm that the client has received all the documentation and information.
If the notary cannot verify that the client has received all of the necessary documentation or the client does not appear to have received this advice, the notary will draw up another statement in which he will confirm this situation and in such cases, the mortgage public deed cannot be granted nor signed.
Also, the new law has clarified the issue of the distribution of mortgage expenses.
As per the actual Law in force, now the client will be responsible for the costs of valuation and survey and copies of the deed that he or she may request from the notary and the expenses related to the lodging of the deed in the Land Registry and the rest of the notary’s fees will be paid by the bank.
As for Stamp Duty Tax, it will be paid (as established recently), in accordance with the legal changes carried out by the Royal Decree 17/2018 in the Stamp Duty Tax Law, article 29 which states that the lender (meaning the bank) is the taxpayer and will be responsible for this cost.
If you are applying for a mortgage to buy a home or for any other need contact us and we will help you to follow the necessary steps to obtain it.
The information provided in this article is not intended to be legal advice, it simply transmits 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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