There are more Spanish bank claims, originated in unfair sector practices, than you might think. A lot of British expats know other Britons living in Spain and, often, their topics of conversation revolve around the challenges they have encountered when settling in Spain. From funny language mistakes to where to find Marmite, there is plenty of advice to be learnt from those “veterans” who moved to Spain some years ago.
Sometimes, informal chats can give us false impressions. The “Floor Clauses” or Cláusulas Suelo in Spanish were topics which offline and online British expats discussed very frequently. Even those in the UK learnt about the issue, by which borrowers had been imposed a “floor” on their interest. This meant that subsequent decreases of the EURIBOR index (the key reference for most mortgages) did not affect their payments. Luckily, Spanish lawyers and legislators reacted against the practice, deeming it illegal. The European Court later established retroactivity, making sure that everyone had the right to get their money back; irrespective of the year in which they signed the mortgage.
Happy ending? No, that is not the end of the story. There is much more. Almost twenty, to be exact.
18 Spanish bank claims and their origin
At Spanish Bank Claims, our team has a long history of dealing with multiple issues that have to do with buying, maintaining and selling properties in Spain. They are one of the few truly multinational teams in the sector, helping expat Brits in the same way they have helped hundreds of Spaniards before. They have an unparalleled knowledge of the malpractice and fraud that have sadly proliferated in Spanish bank activities. This is a general overview:
- Mortgage terms and interest negotiations. This is one of the key issues we have helped our clients with. Whether you are negotiating your mortgage or you have already established it, it is possible that both its terms and interest rates have been deemed unfair by Spanish authorities. Make sure you check with a registered Abogado before you sign your agreement!
- Negative equity agreements with banks. Some of our clients have been affected by sudden downgrades in the value of their property, sometimes due to circumstances outside their control. A Spanish lawyer can help you re-negotiate terms to avoid a trickier situation.
- Stopping auctions and foreclosures. This is particularly important under current conditions, as travel is not permitted or severely limited. We have had to deal with cases to delay or stop unilateral acts by the bank to give our clients more time.
- Unrequested bank services (life insurance, pension plans). This can happen a lot to British expats, as language differences prevent them from fully understanding everything on their contracts. When banks act maliciously, their mortgage can come with non-requested services which add to the total cost.
- IRPH Index. Banks have often picked this index to adjust mortgage interest rates. Like LIBOR, IRPH has been accused of lack of transparency and manipulation. In any case, it tends to favour lenders, which is why it can be renegotiated.
- SWAP Clauses. Swaps belong to the group of complex financial derivatives which are sold as “insurance”, but should actually only be contracted if one is aware of their changing value. Otherwise, clients could end up covering unexpected costs.
- Mortgage costs, such as notary, and other abusive fees and clauses (upward rounding). While you are liable for certain expenses for establishing the mortgage, others must be paid by your bank. A registered lawyer can help you distinguish between both.
- Preferential or preferred shares. These complex shares caused an enormous scandal in Spain, as they were seemingly sold to unsuspecting clients; on occasion, to those with dementia. They can be reclaimed under Spanish law.
- 360 Interest computation clauses. Rather than calculating your interest through a “business year” 360 computation, your bank could be overcharging by five days you through a “calendar year”.
- Delay interest rates. Under current legislation, when you are delayed, you cannot be forced to pay more than a two percentage increase above the set rate.
- Subordinated debentures of convertible bonds. Unsuspectingly, the convertible bond you have contracted with your bank might have been swapped, losing value.
- Swaps or financial exchanges. Banks have sold products like SWAPs without fully informing clients of risks involved, a lack of transparency that is not permitted under current regulations.
- Multi-Currency Mortgages. Unlike other jurisdictions, Spanish law considers mortgages in two or more currencies to be derivative financial instruments. Any agreement including them requires full transparency from your bank on their risks.
- Foreclosure. While they might seem straightforward affairs, foreclosures can involve irregular charges that should be checked with a legal advisor.
- Opposition to evictions. There are exceptions to evictions under recent Spanish law reforms, and can be opposed with effective legal aid.
- Claims of responsibility for the management of investment funds. Banks must always inform customers of the responsibilities involved in investment funds; otherwise, they risk being liable for lack of transparency.
- Claims against Off-Plan Developments. If you had an agreement with a bank to protect your deposit in case of your developer’s bankruptcy, you will need legal advice to enforce it.
- Minority shares
You deserve a safe mortgage and a fair deal on your Spanish property
All in all, there is a wide variety of cases where banks might have infringed on your rights as a non-resident property owner in Spain. Yes, properties are not always safe investments… but they could feel a little bit safer! While there is no airtight guarantee, hiring a Spanish lawyer can help you feel confident that your past, present or future mortgage and other agreements with Spanish firms are free from abuses.
The next best thing to a Spanish lawyer, of course, is a British team that employs Spanish lawyers. That is exactly what Spanish Bank Claims is about. If you believe that your mortgage might include one of these dubious terms, please contact us, and we will assess your case.