Legal tip 106. Financial products supervised by Notaries
Wednesday, June 24, 2009 @ 4:06 PM
Provision 18 of Act 2 / 2009 of March 31 which regulates the contracting of consumer loans or mortgages and brokerage services for loan and mortgages states that Notaries will refuse authorization of credits, secured loans or mortgages when they do not satisfy the law, and especially the requirements under this Act.
Similarly, the Land Registrars shall refuse the registration of deeds of loans or mortgage credits which do not comply with this same law.
Notaries will inform consumers of the value and scope of the obligations assumed, and in any event, shall:
a) Check whether there are discrepancies between the information prior to the contract, the financial conditions of the binding offer of the loan / credit, and legal and financial clauses of the contract document, warning consumers of the differences, if any, and of their right to cancel the operation.
b) In case of a credit loan of variable rate, explicitly warn the consumer under any of the following circumstances:
1. The index or benchmark interest rate agreement is not one of the official ones referred at the second additional provision of Order May 5th, 1994 on transparency of the financial terms of the Mortgage Loans.
2. The interest rate applicable during the initial period is less than it would be theoretically applied in the initial period if it was charged the agreed variable interest rest for periods thereafter.
3. There are limits established to the variation of interests’ rates.
c) In the case of loans or credits at a fixed rate, check that the actual cost of the transaction recorded for information in the document corresponds with the financial terms of the loan or credit.
d) In the case that any amount is expected to be paid to the lender in connection with the early repayment of the loan or credit, or that those faculties of consumers were otherwise limited or not expressly mentioned, to specifically express that fact in the deed and warn the consumer regarding this fact.
e) If the loan or credit is denominated in foreign currencies, to warn consumers about the risk of exchange rate fluctuation.
Decision by the Notary or Registrar to refuse authorization of the credit, secured loan or mortgage, or the registration of any of its clauses, will have to be made through writing with full argumentation of facts and law applicable. That decision could be appealed before the General Directorate of Registries and Notaries.
Valencian oranges! By MurielGonzalez at Flickr.com