-THE PROPERTY MANAGER'S BLOG-

Mortgagees who signed up before the mortgage law will recover incorporation costs without litigation

Mortgagees who signed up before the mortgage law will recover incorporation costs without litigation

The clauses attributing mortgage costs have been annulled

Some 15 million mortgages will be able to recover about 1,500 euros

Asufin has won a class-action lawsuit that will benefit all mortgage holders who paid incorporation fees and signed their loans before the law on property credit contracts came into force in June 2019, without the need for litigation.

When financing the purchase of a home, there are two types of formalisation costs that must be paid: the purchase and sale costs (associated with the deed of ownership of the property) and the costs of setting up the mortgage. According to the Supreme Court’s ruling, the initial costs would not have to be applied in full to consumers. With the new Mortgage Law, banks are obliged to bear this expense.

Now, the collective action of cessation filed by Asufin has been won in the Commercial Court number 11 of Madrid against Kutxabank, Banco de Caja España de Inversiones Salamanca y Soria (now Unicaja Banco), ING Bank and Deutsche Bank. This allows millions of people to benefit despite having signed their mortgage before the adoption of this law in 2019.

Virtually all mortgage holders who signed their loans before the Real Estate Credit Contract Law (LCCI) came into force in June 2019 had to face the additional bill for mortgage charges. This represents a figure of approximately 15 million mortgages, according to data taken from the INE.

The judges have annulled the clauses attributing mortgage costs, so that the banks will have to return 100% of the property registration costs and 50% of the notary’s fees (constitution, modification or novation), management fees and valuation fees when setting up the mortgage. In addition, institutions must pay statutory interest from the date of payment of each expense.

Administracion De Fincas (8)

A practical example

From the association they give an example to illustrate the process. A client with a mortgage of 200,000 euros set up in 2008 could recover around 1,500 euros of capital from the incorporation costs plus interest:

Expenses Table Constitution

Asufin announced that it would call for the provisional enforcement of the judgment, so that consumers could already benefit from it.

Any consumer who has a citation clause in his mortgage deed may request, in execution of the sentence, that he be returned as the beneficiary of the sentence, pursuant to Article 519 of the Civil Procedure Act.

Administracion De Fincas (7)

No need for demand

Those affected do not need to initiate an individual lawsuit, with the costs and time involved, but can directly benefit from the success of Asufin’s class action.

So, as previously stated, these 15 million mortgages will be able to recover up to an average of 1,500 euros without the need for litigation. The president of Asufin, Patricia Suárez, stressed the pioneering nature of the judgement, as it is the first time that a collective cessation of payments action has been won in the courts, following the recent judgements of the EU Court of Justice and the Supreme Court last July.

Furthermore, the collective lawsuit won in court will save those affected the time of an ordinary procedure, with its different phases of investigation, which only in specialised courts such as the 101bis in Madrid or the 50 in Barcelona amount to a minimum of one and a half years of admission to proceedings and another three years of processing.

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