Mortgages: A Madrid Court applies the doctrine of the High Court of Justice of the European Union and condemns the bank to pay 100% of the costs

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The 101 bis Court of Instruction of Madrid has ordered the bank to pay the full amount of the mortgage costs, applying the doctrine of the High Court of Justice of the European Union. The only cost to be paid by the consumer is, therefore, the Stamp Duty Tax (IAJD).

As we already know, the distribution of mortgage expenses was structured as ruled by the Supreme Court in this way: 

  • Expenses related to the valuations of the real estate property carried out prior to Law 5/2019 regulating real estate credit contracts will be paid 100% by the bank.  
  • Administration costs will be assumed 100% by the bank. 
  • The bank will pay 100% of the Land Registry costs. 
  • Notary fees will be paid 50% by the bank. 

According to the doctrine of the High Court, the consumer had to pay 50% of the Notary and Stamp Duty costs, provided that the deed was prior to the entry into force of Law 5/2019.

However, the guidelines of the Court of Justice of the European Union were clear: the amounts paid by consumers should be reimbursed by the entity, except when national law provides otherwise. Therefore, on this basis, the 101 bis Court of Madrid has sentenced the bank to repay 100% of the costs plus legal interest from the date of constitution of the loan and expressly ordered the bank to pay the costs. 

Furthermore, this is the first judgement that goes to the heart of the matter and declares the nullity, and therefore its total expulsion from the contract, of the clause relating to early maturity, by virtue of which the financial entity could terminate the mortgage loan contract signed between the parties in the event of any type of default by the borrowers, however minor or essential the default might be, as well as the late payment interest, which it considers abusive. 

In this way it ”departs” from what has been established by the High Court, benefiting the interests of consumers and opening the door to future claims for the totality of the costs that the consumer has had to bear in the constitution of his mortgage. 

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