What additional costs of a mortgage must the Spanish bank reimburse?

Currently, the Spanish daily press is reporting a lot about the recent court decisions according to which banks have to reimburse their customers at least part of the incidental costs for the mortgage order. Until recently, the general terms and conditions of mortgage loans usually contained a clause stating that the customer, as the borrower, should bear all the ancillary costs. These included in particular the costs of the notary, land register, “gestoría”, and the so-called stamp duty (“actos jurídicos documentados”, abbreviated “AJD”).

The Spanish Supreme Court (“Tribunal Supremo”) has already determined at the end of 2015 that the Spanish consumer protection law prohibits a bank from imposing on the customer additional costs which, by their legal nature, are actually incurred by the bank. In practice, however, this decision does not automatically mean that the banks will be ordered to pay costs. The court merely concludes in the decision that the banks could possibly owe the incidental costs. Therefore, the relevant contractual clause must be examined in each individual case. Only those clauses which pass on the ancillary costs to the borrower in an undifferentiated manner are inadmissible and thus void.

Since then, the banks have been happy to argue that the clause in their specific contract is transparent and unambiguous and thus valid. It is true, however, that the mortgage is only registered in the direct interest of the bank and that the borrower is only indirectly interested. The Spanish Supreme Court expressly justifies the banks’ interest in registering the mortgage by stating that this would give them an enforcement order, a security in rem and special enforcement options. It literally concludes from this that “the person who has the main interest in the documentation and registration of the public deed on the mortgage loan is without doubt the lender” (i.e. the bank).

While the notary and land registry fees, as well as the cost of the “gestoria” for a standard mortgage are around 1,000 euros, the “AJD” tax, which is 1.2% of the amount of the mortgage in the Balearic Islands, quickly amounts to several thousand euros. It is therefore of particular economic interest to the bank client to have the stamp duty refunded. The banks argue in this context that according to the law, the borrower is the tax debtor (“sujeto pasivo”). In October 2018, the Spanish Supreme Court ruled that the banks must pay this stamp duty. This view seemed to be supported by the majority of the court’s judges. However, another controversial decision by the Tribunal Supremo on November 6, 2018 now states that the borrower must pay the stamp tax for the mortgage registration. A few days after this court ruling, the Spanish government has announced a law according to which, in future, it will be the banks and not the customers who will pay the stamp tax when ordering a mortgage.

Every borrower should read his cost clause carefully before he is too early to be happy about a refund of part of the additional costs. Clauses that pass on the bank’s costs to the private customer are inadmissible and therefore void. But there are probably also clauses that differentiate sufficiently between the costs of the banks and the customers. As a first step, the consumer can demand out-of-court reimbursement of all additional costs including stamp duty from his bank. However, in view of the latest case law of November 2018, the bank client must show greater willingness to compromise with regard to stamp duty if it is not already time-barred anyway (limitation period 4 years).

As a result, claiming the incidental costs of a mortgage is more complex than it appears at first glance. The banks like to play for time and court cases are a mixed calculation for them. In particular, the banks will not relieve the customer of the work of properly processing the facts of the case. It is advisable to engage a lawyer for the out-of-court assertion of claims against the bank in order to do exactly this preparatory work.