By Laia Fernandez, Lawyer, For and on Behalf of Del Canto Chambers
The Spanish Supreme Court has ruled that borrowers must pay the tax that new mortgages attract. The decision has already aroused the first controversies in the Spanish legal scene and in the Consumers Associations that will undoubtedly take this case to the European Court of Justice (ECJ), which will have the last word to say.
The Supreme Court agreed with the banks to the detriment of consumers by ruling that the AJD Tax (Actos Jurídicos Documentados) on new mortgages should be paid by borrowers.
We explained in our last article Who pays mortgage expenses – lender or borrower? The jury is still out, that clients were hoping for a decision to allow them to recover part of their large mortgage expenses.
Many voices have already been raised against this decision; Patricia Suárez, President of Asufin (Association of Financial Users) who quotes that “the economic impact on banks and the increase in litigation may have weighed on this decision, but Magistrates have been wrong.”
But the battle is not over. The fight will now move to the ECJ, as happened with the question of mortgage floor clauses, when the ECJ overturned a Spanish Supreme Court ruling in favour of banks and against borrowers. So it would not be the first time the ECJ corrects and amends the decision of the Spanish Supreme Court. Although, the complete sentence has not been published yet.
We should not forget that clients can still recover their expenses for notary, agency, appraisal and Land Registry, interest on late payments either for commissions for opening or early termination. Therefore, the Doctrine about the same court in December 2015 ruling remains intact and only the AJD Tax has been modified.