The First Chamber of the Supreme Court (the Chamber that resolves civil proceedings), in a judgment dated 23-12-15, stated that the clause stating that it was incumbent on the consumer to pay the mortgage expenses related to the tax on property transfers and documented legal acts was null and void and therefore bank entities should bear these expenses.

In an average mortgage, the expenses of the Transfer Tax (ITP) account for between 75% and 80% of all the expenses, with the other 20%-25% corresponding to notary, Registry and others. This ruling was in contradiction with the consistent case law of the Supreme Court itself, in which its Third Chamber (the Chamber that resolves contentious-administrative proceedings) had repeatedly pointed out that the payment of the Transfer Tax (ITP) was the responsibility the borrower. In addition, several legal operators such as the Directorate General of Registries and Notaries' Offices criticised the solution adopted by the judgement, which they considered to be in direct conflict with the rules governing that tax and which imposed payment of that tax on the consumer. With respect to the other costs of a mortgage, there is general consensus that the clause imposing them on the consumer is unfair and therefore it is an established criterion that must be borne in whole or in part by the bank.

Against this backdrop, the various provincial audiences had been applying disparate criteria to the extent that they were almost half divided between those who ruled that the ITP was the bank's responsibility and those who understood that its payment was the consumer's responsibility. It is not surprising that there was expectation of the announced second Supreme Court ruling on mortgage costs, signed by the Plenary of the Chamber, and that it has finally unanimously agreed that it is the client and not the financial institution who must pay the Tax on Documented Legal Acts of mortgages.

It is not really a judgment, but two, whose specific content we do not yet know, although we already have an information note from the Board itself, which has advanced that, in Cassation Appeals 1211/2017 and 1518/2017 (which consisted of two consumer complaints against clauses of their mortgage deeds, which attributed to them the payment of all the expenses and taxes generated by the transaction), the First Chamber finally follows the Court of Appeal.

To understand the judgment's ruling, it is necessary to recall that the consequence of the nullity of an unfair clause is the non-existence of the agreement, which is expelled from the contract with ex tunc effect, which means that this clause has never existed. However, if the clause does not exist, it remains to be clarified who is entitled to the expenses, a circumstance which, since it is not established in the contract, cannot automatically imply the correlation of the expenses to the other party to the contract. According to that note, the Court has based its own case-law on the unfairness of a clause which, without negotiation and indiscriminately, attributes in any event the payment of consumer charges and taxes.

The Supreme Court continues to consider this clause to be unfair, and consumers are still able to recover payments paid for other purposes, such as notary, agency, appraisal, land registry, opening fees, etc.

The final consequence of this long-awaited ruling is that many of those affected, who were waiting to know the path that our Highest Court will finally take on this issue, will desist from reclaiming the mortgage costs because they have declared that those which represent the highest amount, taxes, must continue to be borne by consumers, who in large numbers will not see it proportionate to initiate a procedure to reclaim the expenses that only account for 20% of the sums paid. In any case, it would not be inappropriate to wait until you know the full text of both sentences to see if interpretations different from those made here fit.

For further information, please contact:

Benjamín J. Prieto Clar

benjamin.prieto@AndersenTaxLegal.es