Overview of Mortgage Cost Reclaim in Spain
In December 2015, a pivotal moment occurred in Spain’s mortgage sector. The Organization of Consumers and Users (OCU) and the Supreme Court found that forcing borrowers to cover all costs to formalize a loan was invalid and abusive. This ruling opened a pathway for thousands of homeowners to seek relief for expenses they rightly shouldn’t have borne, a point highlighted by the OCU in its reports.
The Supreme Court clarified that advancing the full suite of expenses to the borrower is an abusive practice. Yet, the decision did not specify how to split the costs between banks and customers. The consumer organization noted that while the prevailing expectation had been that banks should bear most or all formalization costs, the practical response from banks varied across audiences and regions.
By January 2019, a series of Supreme Court rulings and a judgment from the Court of Justice of the European Union (CJEU) pinpointed which costs should be reimbursed to consumers:
- All expenses related to real estate registration, management, and valuation.
- Half of the notary expenses.
From when can claims be made?
OCU stated that a five-year statute of limitations generally applies to such legal claims. However, there is ongoing debate about when this period starts.
A number of banks rejected requests as time-barred, while others awaited guidance from OCU and the ECJ. The prevailing view is that the period begins on January 23, 2019, the date of the Supreme Court’s clear distribution of expenses. If pursued, the window for recovery would run until January 24, 2024.
Claiming mortgage costs through OCU
Consumers seeking reimbursement can pursue this through OCU, but only for loans signed before June 16, 2019, when the Real Estate Loan Act took effect. On its platform, OCU notes that a claim filed through them includes several benefits:
- Legal consultancy from lawyers who specialize in this area.
- Fees cover all judicial and non-judicial proceedings up to final judgment or a definitive extrajudicial agreement.
- Possibility to claim abuse of other provisions, such as IRPH, single-premium life insurance, or floor provisions, in the same procedure.
The Supreme Court and CJEU decisions have created a substantial opportunity for countless consumers to challenge abusive mortgage clauses and reclaim costs.