If you took out a mortgage with a Spanish bank when purchasing a property in Spain some years ago, you may have been victim of mis-selling by your Spanish bank through the inclusion of an illegal clause within the Mortgage Deeds.
This clause, known as “cláusula suelo”, or “floor clause” in English, includes a non-agreed limitation to the interest you have to pay in relation to the mortgage. Thus, this clause has been ruled to be “unfair and invalid” by the European Court of Justice and the Spanish Supreme Court.
For most Spanish mortgages, the interest rate payable is calculated by reference to EURIBOR (Euro Interbank Offered Rate) plus a spread. If EURIBOR increases, then the interest on the mortgage also increases, likewise, if EURIBOR decreases, then interest payments will fall. This is also known as a “variable rate mortgage” as the interest payable on the mortgage will vary with EURIBOR.
However, the insertion of the floor clause into the mortgage agreement means that mortgage holders do not fully benefit from the fall in EURIBOR as there will be a minimum rate, or floor, of interest payable on the mortgage. Therefore, if a floor clause has been inserted into your mortgage agreement, then you will be financially disadvantaged as you will be paying a higher rate of interest on your mortgage than is necessary. In short, you are being overcharged by your Spanish bank for your mortgage. Over time, this overcharging can amount to thousands of extra euros being paid for your mortgage.
The way that the floor clause was inserted into the mortgage agreement and how this was explained by the Spanish bank to customers was not always clear or straightforward. The bank should have clearly explained to you that your mortgage contained a floor clause and that the risks of the floor clause were. If they did not do this, then it is likely that your mortgage was mis-sold. If this is the case and you have suffered financially from the floor clause, then you could have a valid claim for compensation against your Spanish bank.
Floor clauses have been ruled to be unfair and invalid by both the Supreme Court of Spain and the European Court of Justice. Moreover, in January 2017, by a Royal Decree, the Spanish government established a scheme to repay mortgage holders that have been overpaying interest as a result of the floor clause. Banks have a maximum of 90 days from the date of complaint in order to agree a return of money to the mortgage holder. After the expiry of the 90 day period, if a settlement with the bank has not been reached, then the mortgage holder can pursue their claim in the Spanish courts.
If you are interested in obtaining legal assistance in Spain from Ireland, you could contact us at our office in Maynooth on 01-554 5711 or email firstname.lastname@example.org and arrange a consultation so that we can confirm if you fit the required criteria in order to proceed with submitting a claim for this matter.
Blasco Solicitors is an Irish/Spanish law firm with more than 20 years’ combined experience with Spanish and Irish legal issues and we have been based in Ireland since 2006. We have already been successful in very similar cases and we are confident we can assist you.
Some other law firms might have already contacted you; however, we are confident that we can assist you without encountering two typical obstacles: the distance (we are an Irish/Spanish local law firm based in Maynooth), and the language barrier (our staff are bilingual) so that the communication will not be an issue.
We look forward to hearing from you.