Do you want to know if you are one of those affected by the floor clause? In our guide you have cases where you will be able to claim it and you will learn the steps that you must follow.
What is the floor clause?
The floor clause is a condition which the bank includes in the mortgage document at the time of its signature, and it must be accepted by both parties. The aim of this clause is to set a minimum interest which the customer must pay, even if the Euribor reference for the majority of Spanish mortgages were below that figure.
The negative consequences of this limit in the interest rate on a mortgage start when it does not allow the debtor to benefit from the fall in the Euribor. In addition, these clauses are integrated in the deeds without the knowledge of the customer and sometimes the consumer doesn’t even know the costs that it implies. For these reasons, the courts have declared the floor clauses as abusive, and therefore, you can proceed with its claim.
To make it clear for you, here’s a practical example:
Suppose that we have signed a loan in 2010 worth €120,000 payable in 30 years, which provides a fixed interest of 1.16% percentage of the yearly Euribor. Currently, the annual Euribor is close to 0% (recall that today this reference is in negative values), therefore, the interest rate that we would have to pay would be 1.17% at most.
However, if our contract entails a floor clause of 4%, instead of paying only 1.17% mentioned before, We would have to pay the 4% minimum, i.e., a 2.83% more of annual interest, which translates into an increase of the monthly mortgage, that moves from 395€ to €573, or what is the same, after a year we would have to pay the bank €2,136 more, and therefore to eliminate the floor clause is something that must be done urgently.
You should know that an extrajudicial process has been established to resolve claims of customers quickly and free. The entire procedure will take place within a maximum period of three months, since the submission of the claim of the consumer. The first offer made by the entity must be in cash, but the client and the bank may reach an agreement to agree different compensatory measures.
Who can claim the floor clause?
Out-of-court claim, according to the Royal Decree-Law, can be carried out by all consumers who have been affected at present or in the past by the floor clause. Including all consumers regardless whatever their situation are.
On the other hand, this extra judicial negotiation may not be carried out by small businesses and the self-employed, since this solution only covers physical persons, who do not act with a business purpose. However, their claims can be made by a different route.
Steps to claim your money
If you think you are one of those affected by this abusive clause and want to make a claim, you must:
1º Check your deed: An analysis of the deed of your mortgage must be performed by a professional to check if it was one of those affected by floor clause. In addition, it will be necessary to also review the documentation that accredits the costs of consultancy, valuation and taxes paid to the bank.
2º Extrajudicial claim: Once verified that you’ve been one of those workers affected by this clause, the first step is to proceed with the negotiations with the bank. There will be an extrajudicial claim, without resorting to the courts, but there is the possibility of the entity to reject this request. The bank has the option of accepting these negotiations or either reject them.
To do so, the customer must send a claim to his bank. Once received, the entity must send to the consumer the calculation of the amount to be returned together with the interests. In case that the answer is negative, the reasons for its decline.
The consumer to receive the bank’s response must express if it is in accordance to this calculation. When the answer is affirmative, there shall be a refund. For proper verification and to avoid confusion, it is important that the consumer knows in advance the amount that must be recovered.
3º Lawsuit: In case of refusal to negotiations by the bank or rejection of the offer by the customer, we have the possibility of going to court, where there will be a formal lawsuit against the bank.
What benefits have making the floor clause claim?
- The complaints procedure of the floor clause will be made free of charge.
- It can be made at any time without having to resort to the courts, i.e. starts extrajudicially.
- Time to solve is very brief, not more than three months in general.
- You will be returned the unduly paid amounts since you signed the mortgage, as well as the accrued interest.
- If are not returned the amounts that you estimaste, you can initiate a lawsuit after the claim.
Do you still have doubts about the claim of the floor clause? Contact our specialists and they will advise you in everything you need.