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Spanish Mortgage Standard Term ruled Unfair and Unreasonable

For the second time the Spanish courts have ruled that so-called ‘cláusulas suelo’ or clauses used in variable rate mortgages that set a minimum below which mortgage rates may not fall are unfair and therefore void. Banks and other financial institutions have traditionally included such clauses in their mortgage agreements to protect themselves from exceptionally low interest rates as currently are being experienced.

This time it was the turn of Caja España and Caja Duero to face an action brought by Ausbanc (Association for bank customers) in the Commercial Court in León. The Association argued that such clauses should be considered null and void as they were unreasonable.

The court agreed citing the fact that the fact that there was no identical clause setting an upper limit which interest rates could not exceed was evidence of it’s unreasonableness. In this respect, a ceiling of 12% would be unrealistic. In this case, the financial institutions had set a 3% minimum level under which their clients could not benefit from any further fall in interest rates.

Previously the commercial court in Seville had ruled similarly against BBVA, Caixa Galicía and Cajamar though that judgment is pending an appeal.  In addition a Madrid court recently accepted an action by another association of bank customers against a total of 45 financial entities against the same types of clauses.

In an effort to lobby the Minister of Finance, the Association of Spanish Banks has sent a letter to Elena Salgado requesting that the clauses be maintained as, according to the association, ‘the protect the banks as well as their clients from excessive variations in interest rates’.

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Clausula Suelo

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1Who is this Service for?

Spanish banks were penalised by the Courts for making their customers sign unfair contracts that allowed the banks to benefit from increased mortgage repayments on variable rate mortgages when the European Central Bank rate increased, but limited the extent of any reduction – and subsequent benefit to customers – when the ECB decreased

2What does this service consist of?

  • Initial discussion with the a English-speaking lawyer specialist in the field to determine if you may make a claim
  • Initial contact with the bank, as per procedure before filing claim
  • Upon failure of bank to make an appropriate offer, filing of the claim with the appropriate Court designated to hear such claims
  • Representation before the courts and processing of damages claim on your behalf
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