Initially, the Spanish Supreme Court declared the nullity of the so called “ground clause” (pre-established minimum interest rate) in mortgage loans in its ruling on the 9th of May 2013. However, it also established that not all “ground clauses” were automatically null, but only those which were deemed abusive due to a lack of transparency from insufficient information to the consumer. Furthermore, the sentence, having declared the “ground clause” as abusive, only limited the obligation for the banks to the repayment of the wrongfully charged interests from the date of the ruling onwards, ie 9th of May 2013.
Recently, the Court of Justice of the European Union (CJUE) also issued a ruling on this matter, dated 21st of December 2016, in which it declared the obligation of the financial entities to proceed with the refund of the total excess amount paid by the consumers who had a “ground clause” stipulated in their mortgage. Said obligation, as stated by the Court, cannot be subject to a limited retroactivity, as previously ruled by the Spanish Supreme Court, due to this leading to an incomplete and insufficient protection to the consumers.
Based on this ruling, it would seem reasonable for every person who has a mortgage in Spain to check if his/her mortgage contains a “ground clause” and if so, if they would have sufficient legal basis to claim the reimbursement of the aforementioned excess costs.
But firstly: what is a “ground clause”? A “ground clause” is described as a condition included in some variable-interest rate mortgage loans that limits the lowest amount of the Euribor fluctuations, on which monthly interest payments are calculated. This clause establishes the minimum amount of interest rate to be paid, hence when interest rates fall, it gives way to financial loss to the consumer, who is forced to pay more money in concept of interest each month.
Another factor to take into consideration would be if all these clauses were to be considered as illegal. The short answer is no, however we must take into consideration the aforementioned precedent set by the Spanish Supreme Court, in which it states that for the ““ground clause” to be considered illegal, it must be abusive in nature, due to lack of transparency and insufficient information to the consumer.
IMONT LEGAL SERVICES offers its clients a free analysis of their mortgage agreement, in which our specialist lawyers will examine if their loan contains a “ground clause” and if so, if there is legal basis for it to be deemed abusive, as well as a calculation of the amount of interest that can be claimed back from the lending financial institution.
Once confirmed the existence of an abusive “ground clause” and the claimable amount, we will determine the best possible legal action against your bank, based on each specific situation, both judicially and extra-judicially.
If you believe to be affected by the “ground clause”, please feel free to contact us to study your case.