Spanish Floor Clauses

Almost a month ago, we woke up to the news that both the European Commission and the European Central Bank (ECB) had asked the financial sector to be prepared for a possible ruling of the Court of Justice of the European Union (CJEU) on the clauses land that forced to return all amounts from the signing of the mortgages.

Departamento de Comunicación

Date 19/07/2016

To date, the Supreme Court had settled jurisprudence, concerning to the ground clauses, establishing the doctrine that the amounts charged in excess had to be returned retroactively, but only until May 9, 2013, date of the First conviction against the ground clauses to BBVA, Cajamar and Novagalicia. This argument was also supported by the Bank of Spain, as this argued that total retroactivity would have a negative impact on the solvency of the sector and that it could even force a new bailout with public money.

But after consulting some lower courts to the European Court, the Commission was openly in favour of total retroactivity and the return of all amounts.

Well, all this was a month ago. Now the movie is diametrically opposite. The general lawyer of the Court of Justice of the European Union in charge of informing on this subject, Paolo Mengozi, has made public his conclusions on the ground clauses and their retroactivity. In this report, Paolo Mengozi shares the decision of the Spanish Supreme Court, declaring the mortgage floor clauses abusive, but limiting the retroactivity of the returns to May 2013.

Although the opinions of Paolo Mengozi are not binding on the European Court, it is known that in 90% of the cases the CJEU usually coincides with him, so it leads us to think that the CJEU will finally not support total retroactivity, although this We will not know for sure until next October when presumably the CJEU will issue a final ruling.

Seen from the outside, this looks like a tennis match, where the ball passes from one side to the other, total retroactivity yes, total retroactivity no ..., or a series of suspense, where we have not just guessed the end.

Notwithstanding the foregoing, it is important to keep in mind that what is being discussed is whether the amounts to be returned will be from the date of the signature of the mortgage or from May 2013, but what is no longer allowed for discussion is the abusive of the clauses. The ground clauses are abusive, the judgements will continue to be won by consumers and they will continue recovering the overpaid, at least all the overpaid since May 2013. It is also necessary to take into account that the most important (apart from recover the overpaid) is that said clause soil declared void and, of course, does not continue to apply during the 15 or 20 years that may remain of mortgage.

Our recommendation, as always, is that in case your mortgage has a floor clause, consult a trusted lawyer. At Balms Abogados we will be happy to assist you.

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