In the old days – when it comes to floor clauses when I say “in the old days” I mean 2013-, floor clause matters were settled in Commercial Courts; one per province, except in large cities such as Madrid, Barcelona, Valencia and Malaga.
These courts were created to take charge of bankruptcy proceedings and industrial and intellectual property matters, among others. This means that in most provinces in Spain all floor clause proceedings were settled in one single court. This court was also in charge of all bankruptcy proceedings in a time of total financial crisis in Spain; hence they were completely overloaded.
Two important facts changed the situation:
- First, it was Royal Decree 1/2017, 20th January, of urgent measures to protect consumers on floor clauses matters, and which, apparently, had a simple proceeding for consumers to be able to claim banks directly to remove the floor clause and for the overpaid money to be reimbursed. We must say that, today, with this procedure 90% of the claims are being refused by the banks.
Included in this Royal Decree there is also a particularity on the legal and court fees; these are the fees to be paid by the losing party, if so decided by the Judge. It meant precisely that banks would only pay such legal costs, if they would not agree, either totally or partially, with the judicial claim of the client.
- The second important fact is the General Council of the Judiciary (CGPJ) Agreement of 25th May 2017 by which since 1st June 2017, it is assigned to one Court by province; to exclusively but not excluding to know about general conditions on mortgages where the mortgagor is a person (floor clauses, among others).
Therefore, I regretfully must say that we have gone back to the same situation as in 2013, when there was only one court per province taking care of many floor clause claims. Notwithstanding, there are some differences:
1st.- The volume of floor clause claims has increased fivefold (at least) compared to 2013.
2nd.- All banks without exception by order of the Central Bank of Spain have provisioned the amounts to be reimbursed for floor clause claims.
3rd.- Banks will not be sentenced to pay any legal and court fees whenever they agree, totally or partially, with the judicial claim placed by the client.
Hence, in practice, once banks provision the amounts to be refund to their clients, they are faced with claims that may take over a year to be resolved, due to the overwhelming amount of work these competent courts are facing. As a result, customers are totally frustrated.
The new judicial year has just started this September; at Del Canto Chambers we see that it is urgently necessary for the Spanish Government to either provide these specialised courts with the necessary means to speed up the floor clause proceedings, or go back to the previous situation for floor clause claims to be resolved in Courts of First Instance.
Del Canto Chambers offers advice within 24 hours; if you send us your mortgage contract we will respond within a reasonable time frame. Contact us and we will check if you have floor clauses in your mortgage contract.
Antonio Gabriel Aguilera
Expert in Banking Law and Money Laundering Prevention.