Law in Spain

The Supreme Court Judgment 705/2015 of December 23rd declared the clause by which BBVA imposed on borrowers the payment of all expenses, taxes and commissions related to mortgage loans to be abusive.

By virtue of this, they will be able to reclaim:

 Notary's and Land Registry’s invoices- The expenses corresponding to the formalisation and registration of notarial deeds, necessary for the constitution of an effective guarantee i.e. of the mortgage

Stamp Duty. The Supreme Court understands that the taxable person is the Bank or Lender, and not the borrower.

The same as what happened with "floor clauses" (cláusulas suelo), the content of the Judgment opens the door to considering similar clauses of other entities as equally abusive and void.

The first step to recover the amounts would be the filing of a claim with the Bank itself. If they do not answer within two months or reject the request, then the case may go to court.

The term of the claim, for those mortgages in force, is four years from the day following the date of the said Judgment. Therefore, the deadline would be the 24th of December 2019.

For those mortgages that have been fully paid, the claim can still be made, if the total payment was made within the four years prior to 23rd of December 2015.

As this is a complex legal issue, we advise you to contact expert lawyers.

The EU Court of Justice ruled on the 21^st December 2016 in respect of floor clauses (Cláusulas suelo): Spanish banks will have to return to customers the total amount of what they received in relation to floor clauses.

The Spanish Supreme Court, in the famous 2013 judgment on floor clauses, ruled against the banks, but limited the compensation to May 2013, due to the country's then financial situation.

However, as of today, all amounts irregularly paid since the signing of the contract can be claimed back The judges of the EU Court of Justice considered that "the judicial declaration of the abusive nature of a clause should have the effect of restoring the situation in which the consumer would be found in the absence of such a clause." Those affected by floor clauses cannot be limited in time.

This is a huge blow for banks, since they must now decide what to do with the claims that they will receive. Although some entities consider that the amount is lower, the Bank of Spain indicated in a report that the financial institutions will have to pay around 4,200 million euros.

In the event that a claim against an entity is unsuccessful, it must be taken to court.

For more information, you can contact “Abad & Asociados”: mortgage@abadabogados.com

The official name for what we sometimes call ‘Council Tax’ in Spain is IBI – Impuesto sobre Bienes Inmuebles, which simply translates as Tax on property/real estate.

By law, the person who owns a property on the date on which the IBI starts to accrue is the one who is responsible for the payment of the tax for that whole year.  In Spain the tax/fiscal year runs from January to December and IBI starts to accrue, although doesn’t need to be paid by, the 1^st of January each year.

When you are buying a property, the Title Deed will usually state that the IBI is all paid up to date by the vendor and it’s quite uncommon for the vendor to demand a proportional part of the tax back from the buyer relating to the part of the year which remains once the sale has taken place. For example: If the sale takes place on the 30^th June, the vendor could  try and negotiate with the buyer that 50% of what he has paid should be borne by them, but this isn’t common.

A RECENT JUDGEMENT TO BEWARE OF!

Be aware that the situation has changed as a result of a recent judgement by the Supreme Court.

Now, when buying a property, buyers need to ensure that in the title deed it states that the vendor be responsible for the entire payment of IBI in the year which the sale takes place. If this isn’t expressly stated, the vendor has the right to demand the proportional part of the tax from the buyer for the remaining days in the year, post-sale.

The Court found that even though the owner on the 1^st of January should pay the tax, this repercussion is possible – that the vendor has the right to demand the proportional part back.

Furthermore, it found that this right exists even if the Title Deed hasn’t made mention of it. In fact, this judgement arose in a case where the Title Deed hadn’t made any specific reference to it and where the sale took place ‘free from liens and charges’.

So our advice if you are buying:  Make sure that the deed expressly states   that the vendor assumes the responsibility for paying the IBI in full that year and that they will not demand any part from you for the remaining part of the year.

 And our advice if you are selling: Why not use your right of demanding the proportional part of the IBI post sale as a negotiating factor when agreeing a selling price?

We at Abad would be happy to assist you in buying or selling your property so please do not hesitate to contact us via our web page shown in the links to the right.