MADRID -- The Supreme Court has dismissed eight mortgage contracts that included Ground Clauses -- the controversial Cláusula Suelo that caused much unease last year among property owners on a mortgage loan (See Defining Cláusula Suelo) -- thus rejecting the bank's argument that the contracts were read at the Notary's office on signing the contract. However, the Court decided that the entity (Caja Segovia, now part of Bankia) breached its duty of transparency by not explaining the clauses properly to its customers taking out a mortgage. There are several other legal matters that have yet to be resolved in this case, about which we will be reporting as soon as they are. If you have a cláusula suelo in your mortgage contract, you would be well advised to contact the bank that holds it, or better still, contact your lawyer, who will explain things clearly and tell you what you can do to get it invalidated.
SENT IN BY PHIL MARKHAM, OF JIMENA REAL ESTATE:
ReplyDeleteThe Supreme Court cancels eight Ground Clauses in Mortgages (Cláusula Suelo) for lack of transparency
23 October 2014 @ 17:34
~~The Supreme Court cancels eight Ground Clauses in Mortgages (Cláusula Suelo) for lack of transparency
The First Chamber of the Supreme Court rejects the argument of the bank that the contracts were read by notaries and customers were advised of the possibility of reading, as this does not replace the duty to explain to users.
The Civil Chamber of the Supreme Court has annulled eight Ground Clauses (Cláusula Suelo) in mortgage contracts of the bank Caja Segovia (now part of Bankia) because the entity breached a special duty of transparency regarding these clauses it had with customers who signed mortgage contracts.
The high court rejected the argument of the case that the contracts were read by notaries and customers were advised of the possibility of reading, as this does not replace the duty of explanation and transparency by the Banks to users.
The Supreme Court is unable to examine the consequences of the declaration of nullity of the Ground Clauses relating to whether the amounts charged by the bank under this clause would be returned to consumers, because that question was rejected in the first instance and was not challenged on appeal by the aggrieved party.
The statement reaffirms the criteria established by the Supreme Court in its first judgment on ground clauses, of May 9, 2013 - which annulled ground clauses of three other entities - in a more detailed explanation of Banks special duty of transparency and the real understandability of such clauses to clients.