Based on new rulings by the European Court of Justice, if you have taken out a Spanish mortgage then you may be entitled to a refund for overpaid interest caused by a hidden floor clause (cláusula suelo) in your mortgage agreement
What is the Cláusula Suelo (Floor Clause)?
The “cláusula suelo” (translating to floor clause) is a limiting clause that can appear in a mortgage title deeds, which sets a base limit on the interest rate paid (typically anywhere from 2.5% to 4.5%).
Is the cláusula suelo illegal?
In principle, these types of clauses are legal as long as the client has full disclosure and is aware of the limitations to the interest rate.
What has happened in a large number of cases is that the cláusula suelo was not communicated correctly to the client, especially with foreign buyers. Due to this lack of transparency when the mortgages were sold, most customers were unaware of the floor clause’s implications and even to this day, many are still unaware of its effect on their interest rate.
How do I know if the cláusula suelo appears in my contract?
So now you are aware of the cláusula suelo and the risk it bears, how do you know if you have it?
Well, the first thing to do is to check your documentation, the clause can be found written down somewhere within your mortgage contract, most likely buried in the small print. You may find text such as “limites a la aplicación del interés variable” (translated to “limits apply to the variable interest”).
Whilst it isn’t an affirmation that the cláusula suelo applies to your contract, it may help by looking at a statement of your repayments. It could be an indication that you’ve been overpaying on your interest if the rate has been fixed for long periods of time.
If you have any difficulties in finding out if the floor clause appears in your mortgage contract then feel free to contact us and a member of our team can walk you through it.
How can I reclaim the overpaid mortgage interest caused by the cláusula suelo?
The good news is that as of December 2016 the Spanish Supreme Court has ruled that all Spanish banks are to refund 100% of the overpaid interest caused by this floor clause for the entirety of its effect. This means that you can reclaim all of your money back, including overpayments that were made on previous mortgages.
It is now also obligatory that your bank informs you of the clause, giving you the information you need to seek legal advice in order to make a just and fitting claim. Once the bank receives the claim they will have 3 months to present an offer and reach a settlement.
For more information see our floor clause infographic guide, which outlines how you should make a claim caused by the floor clause.
Is my bank liable to issue a refund due to the floor clause?
Across all Spanish banks, over €4,000 million is owed to mortgage owners. Below shows how much each bank group is estimated to refund in overpaid interest and the reclaim amount. If your mortgage is with one of the bank groups below then we urge you to get in touch as you could have a valid claim.
As stated by the European Court of Justice, all Spanish banks are required to present a refund offer for the floor clause, including the interest built up during the time they held the money for. This offer could be in cash or it could be a change to the conditions of the mortgage such as reducing further mortgage repayments.
With the new law in place, it is now easier than ever to reclaim the owed money from the bank. Of course, it is expected that banks will claim that many customers knew about the floor clause when signing for the mortgage and they may not offer compensation at all. Moreover, even if the bank recognises that you were unaware of the floor clause, they still may not offer you the full compensation that you are entitled to.
How much could I expect to reclaim from my bank?
Whilst the government has played a huge role to bring justice to those affected by the floor clause, they have now done almost everything they can and the remaining battle rests between the customers and the banks.
We strongly recommend that you are persistent and proactive so that you can reclaim what you deserve. Given that the bank’s offer may be much less than what you are legally entitled to from the floor clause, you should make sure you are in the know on how much interest you have overpaid. Presenting the correct information to the banks will put you in a better position and ensure that you receive the adequate amount of money. Refer to the graph below for an estimate of what you could be entitled to reclaim from your bank (estimated amount vary depending on the size of the mortgage and the date in which it was signed for).
Why have I been overpaying on my interest rate?
In this case, most bank’s interest rates are based on that of the Euribor (Euro Interbank Offered Rate). This is a rate set by a panel of European banks based on the amount that they lend to one another.
Looking at the graph below, we can that the Euribor rate began to plummet during 2008 due to the economic boom. You can see the impact that a floor clause would have on your
What do our clients say?
We work for our clients claiming a refund from the cláusula suelo on a no win no fee basis. Since opening in 1997 we have represented thousands of international clients. To give you a better understanding of our firm we have collected together the testimonials of some of our past clients so that you can learn how we helped them.
“It has taken 10 years to get all our money back and throughout this whole, long process they have been there with us, if it wasn’t for them I’d have no doubt we would still have not received the amount we have.”
“I have to say a special thank you to Fuster & Associates who have been very patient with me as it’s been a stressful and extremely worrying period.”
Thank you so much for all your help with regards to the sale of our apartment last month.We were very pleased with the way you kept us informed at all times about things and replied to our queries so promptly. You helped us when we first moved to Spain and set up our business, which you remembered.
Mr & Mrs Moss