First case of bank being forced to return all mortgage setup costs

spanish mortgage setup costs reclaim

A court in Seville has ordered a bank to return all mortgage setup costs for the first time, setting a precedent for others to claim back these expenses.

Spanish banks are already on the hook for mortgage floor interest payments they overcharged by not being transparent about abusive floor clauses, and now it looks like they will have to refund some or all of the mortgage set-up costs they passed on to borrowers.

When you take out a mortgage in Spain the bank makes you pay for the property valuation (tasación), the notary fees, the registry fees, and the stamp duty, know locally as Actos Jurídicos Documentados (AJD), which typically represents around 70% of the mortgage setup costs.

But since a Supreme Court ruling in December 2015 established that banks, as beneficiaries of the mortgage deed, should pay the setup costs, regional courts have gone about interpreting that decision to different degrees.

In cases where borrowers have taken their lender to court to claim back setup costs, some courts have awarded partial repayments, mainly forcing lenders to repay some or all the cost of notary and registry fees.

But this new judgement by a court in Seville goes all the way for the first time and requires the lender to reimburse the borrower for all the setup costs, including AJD. If this judgement were to become the norm, lenders will be on the hook for billions more in reimbursements.

About Mark Stücklin

Mark Stücklin is a Barcelona-based Spanish property market analyst, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com. All articles published in good faith as a general guide but no substitute for professional advice. Please read the SPI disclaimer

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