Spain’s Supreme Court rules against banks in subrogated mortgages and floor clauses

On November 27, Chamber One, Civil, of the Spanish Supreme Court has upheld the appeal filed against the ruling of the Provincial Court of Seville that dismissed the claim filed by a consumer who was claiming the nullity of the ground clause of the developer loan which he had subrogated.

The developer mortgage loan had a floor clause of 3.5%, while in the subrogation deed -of October 2006- it was 4%. In 2009, different loan conditions were renewed – (1)an extension of the term from 30 to 40 years and a(2) lack of capital repayment for four years (3), interest and commissions, as well as (5) a reduction of the floor clause to 3%.

The fact that the mortgage loan was not directly granted to the consumer, but that it was subrogated from the developer does not exempt the bank from the obligation to provide the consumer with information that allows him/her to take the decision to contract the mortgage loan with full knowledge and understanding of the economic and legal burdens that will entail the subrogation as a borrower in the mortgage loan, without the need for a thorough and detailed analysis of the contract.

In a different way, the obligation of pre-contractual information which is of the predisposing party would become an obligation of the adherent, who will be responsible for obtaining such information, which is contrary to the doctrine of the Civil Room of the Supreme Court and of the Court of Justice of the European Union (CJEU).

©2016 CostaLuz Lawyers. All rights reserved. Privacy policy and cookies. Copyright and disclaimer.