In recent years, rivers of ink have been written about the soil clauses, a subject that has generated controversy, both in its application and in everything related to its claim. But who can request the return of this clause? Is it possible to get back all the money that has been overpaid? What options do users have?
To begin with, we will try to explain the meaning of the floor clause and its consequences.
What is the floor clause and why does it generate so much controversy?
The floor clause (or mortgage floor) is an interest rate set by the banks in some variable mortgages to ensure minimum profits in the face of market volatility. This means that, regardless of the value of the Euribor, the user must always pay a minimum interest rate for their mortgage.
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The main problem with floor clauses is that some banks included them in their mortgage contracts without the users being aware of it. When from 2009 interest rates plummeted and many mortgaged saw that their monthly installments, instead of getting cheaper, were even more expensive, they denounced the situation when considering that the difference between the floor and ceiling clause (minimum and maximum interest to pay) were excessive.
Thousands of people were affected by this situation and, in May 2013, the Supreme Court decided to annul the floor clauses of the mortgages. However, it did so with maximum retroactivity so that its cancellation would only have effect for the future.
In 2016, the Court of Justice of the European Union (TEU) definitively overturned the floor clauses, considering them not very transparent, abusive and contrary to community regulations, forcing banks to return all overpaid interest.
Since then, many people have filed a claim for the amount corresponding to the floor clause of their mortgage.
How to calculate what they owe you for the floor clause?
To make an exact calculation of the amount that you have overpaid during the inclusion of the floor clause in your mortgage, you must take into account different factors, including the exact date of the signing of the mortgage contract, the installments paid, the types of variable interest applied during the mortgage or the interest rate of the floor clause.
It is a complex operation, since, to the amounts paid in excess from the signing of the mortgage and until the nullity of the clause, you must add a new calculation of the amortization table and the update of pending installments.
That is, you must find out the percentage to apply every 12 months according to Euribor and calculate the difference with respect to your mortgage payments on those same dates. To this should be added default interest.
Ideally, in these cases, you should contact professionals to calculate this amount and help you make a claim for the corresponding amount.
How is the floor clause claimed?
Some entities have reached agreements with their clients eliminating the floor clause of their mortgages and returning the most paid interest as of May 2013.
This position has generated controversy, especially in mortgages signed long before this date. In addition, according to the TUE, banks must return all overcharged money to their customers.
There are two ways to demand a partial or total reimbursement:
- Extrajudicial. Basically, it consists of reaching an agreement with the bank in accordance with the extrajudicial mechanism established by Royal Decree-Law 1/2017. In this case, you must file a formal claim with the Customer Service of the bank where you requested your mortgage. Normally, the bank will offer you a cash refund, reduce the outstanding capital of the mortgage or invest that money in a savings product (pension plan, investments, etc.). If you reach an agreement, you will get your money in three months and the process will conclude.
- Judicial. It consists of reporting the bank to the court specialized in abusive clauses through your lawyer or the consumer association. In this case, the process may take longer and even close once the entire mortgage is paid.
Can you claim the floor clause of a paid mortgage?
Since it is an abusive clause, there is no limitation or expiration period to file a claim for the amount of a floor clause. Furthermore, there is no time limit to start the legal proceedings, regardless of the date on which the loan deed was signed or whether it is fully amortized. So, if you wish, you can claim the floor clause once you have paid your mortgage.
Who is entitled to the return of the floor clause?
The first step to claim is to show that there was no transparency on the part of the bank when including this clause in your mortgage. This means that:
- The minimal interest was included without informing you about its consequences.
- The clause was not in the binding offer, but was in the final contract.
- There is a disproportionate difference between the mortgage floor and ceiling.
On the other hand, and although a new ruling from the Supreme Court in December leaves the door open to companies, freelancers and professionals, until now to file a claim for the amount of land clause it is necessary to have the legal status of consumer.
Even so, in mortgages for commercial purposes it is possible to claim the floor clause if you can demonstrate that the notary did not inform you of its application.
Finally, if you reached a private agreement with your bank before 2016 to eliminate or reduce the percentage of your floor clause in exchange for not claiming, the lowering of the floor is still valid, but you can claim a refund of what you paid before the agreement as long as you did not receive explanations about the content and the consequences of it.
How to declare the land clause return
Many people are also concerned about whether they should declare the land clause return on their Income Tax Return.
Individuals who have deducted interest on the purchase of their home in personal income tax and to whom the bank has later returned these amounts in cash due to the nullity of the floor clause, must reflect this amount in their Income Statement, in Boxes 524 and 526, either as an increase in the fees for loss of right to deductions from previous years or with a supplementary statement.
- See also: Personal income tax from the sale of a home, do I have to pay it?
And what happens if I sign a mortgage today? Do I have to review this clause?
No, banks stopped including floor clauses in their variable mortgages as of 2013. In addition, as established by the Regulatory Law of Real Estate Credit Contracts of 2019, all mortgages have, by default, a minimum interest of 0%.
Do you have questions about your mortgage? Contact Tajarat properties. We are your trusted online real estate agency.