What Can I Do if I Think My Mortgage is Affected by the Clausula Suelo (Floor Clause)?

On the 21/12/2012 the European Court of Justice ruled the invalidity of the abusive floor clause and demand that the banks return the amounts overcharged retroactively. The ECJ has ruled that the Spanish Supreme Court did not have the ability to establish limits as they did in the ruling of May 9 2013. The ECJ has ruled that the banks must return to their clients the monies paid as a result of the application of the abusive clause. (there are numerous articles about this abusive clause on our website. Basically the clause denied the drop of interest rates in your mortgage payments inline with Euribor plus. Many paying hundreds of euros in excess for the last six seven or eight years on their monthly payments)

Many affected and those who suspect that their mortgages may have the clause, including those that have already embarked on litigation against their banks, are wondering what action to take. The fact that the banks have been told to remove the clause and return the monies owed, does not mean that they have to automatically do so, the same procedure will likely be followed as before and after the Supreme Court ruling of May 2013. The consumer consulted lawyers who in turn made appraisals of individual cases and embarked on litigation. Many of these cases are now settled, the clause removed the monies returned.

Consumer Associations and Citizens Advice Spain in agreement with the advice of some of these associations give some examples below.

!. Clients affected by the clause.

Should seek immediate advise. CAB Spain advisers with expertise in this field will assist, inform and advice as they have for more than three years now. CAB Spain can also bring in lawyers when necessary and these will offer their services on a ‘no win no fee basis’.

The government rushed out a new law in December 2016 telling the banks that they should contact their clients affected by the abusive clause. The law does not say that the bank must return the full monies owed but that they should enter into negotiations. The bank will have three months to do this. You will be asked to sign an agreement which will include a clause stating that you cannot take any legal action until the end of this period. This if you do not agree with the banks response or and offer. There is no surprise that the government rushed through this law which appears to be in favour of the banks who are not likely to offer full repayments and interest.

What you should not do; negotiate with the bank without legal advice or representation.

2. Clients with floor clauses that have negotiated with the bank and have signed an agreement waiving potential claims

CAB Spain will also inform and advice in these cases taking into account that the courts have already overturning these agreement though signed. The banks were aware that they were avoiding compensating their clients for monies lost.

What you should not do; negotiate with the bank without legal advice or representation.

3. Those clients who already have embarked on litigation.

Due to the sentence of he ECJ, these clients should continue with their case and discuss the matter with their lawyer or a CAB Spain adviser as is it expected that the Supreme Court should take into account the ruling from Europe and that the client should be paid the total of the monies owed with no fixed retroactive date.

What you should not do; negotiate with the bank without legal advice or representation.

4. Customers with loans which have been cancelled and there is no longer a mortgage in existence.

They can claim the amounts overpaid as if the ground clauses would never have existed even if the loan is no longer in effect. Contact CAB Spain for advice or instructions. Take up a free consultancy with a recommended lawyer for appraisal of individual cases.

What you should not do; negotiate with the bank without legal advice or representation.

Update: After the recent sentence of the ECJ, Spanish courts have immediately taken up the ruling from Luxembourg. The banks now being ordered to pay their mortgage holders from the date when the clause had the effect of disallowing the drop in interest charges in line with Euribor.

Contact Information: Myra Azzopardi at: myra@citizensadvice.org.es

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.