Spain Supreme Court Decission on the importance of pre-contractual information for mortgage contracts in Spain


A recent Sentence which gives protection against abusive clauses to all mortgage debtors who subrogated developer’s mortgage contracts during the real estate boom.

This is another sign of the magnificent work the Supreme Court is doing for buyers and mortgage debtors after those crazy years of irresponsible over financing.

This Court Sentence affirms the fact that the mortgage loan is not granted directly to the consumer, but that it is a subrogated loan previously granted to the promoter who is also selling the house.  This does not exempt the bank from the obligation to provide consumers with information that allows them to make their decision to contract with full knowledge of the economic and legal burden that the subrogation would mean.

Both European Court Case Law and Spanish Supreme Court Case have highlighted the importance of transparency in the pre-contractual information when contracting with consumers  It is at that stage when the decision to hire is taken. The CJEU (Court of Justice of the European Union) of 21 March 2013, case C-92/11, case RWE Vertrieb, states when referring to the transparency control: « In fact, it is of fundamental importance for the consumer to have, prior to the conclusion of a contract, information on the contractual conditions and the consequences of said celebration. The consumer decides if he wants to be bound by the conditions written in advance by the professional based mainly on that information ».

This doctrine has been reiterated by the CJEU in several other Court Sentences:

February 26, 2015, case C-143/13, Matei case, paragraph 75;

April 23, 2015, case C-96/14, Van Hove case, paragraph 47;

December 21, 2016, cumulative matters C-154/15, C-307/15 and C-308/15, Gutiérrez Naranjo case;

September 20, 2017, case C-186/16, Andriciuc case.

The pre-contractual information is what allows you to really compare offers and take the decision to hire. The differential with respect to the reference index, and the APR resulting from the addition of one to the other, which is the information that will determine the price of the product and that is necessary for the consumer to make the comparison between the different offers and decide to contract one.  It loses a good part of its transcendence if there is a floor limit below which interest cannot go down.

Therefore, it is necessary that the pre-contractual information contains information on the existence of the floor and its impact on the price of the contract.

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