The Floor clausealso known as mortgage landdetermines the minimum interest that must be paid in the monthly installment of the variable mortgages. They function as a minimum ‘cap’ used by banks to ensure that the variable interest cannot be less than a certain percentage. In this way, if the interest rate used as a reference, normally the Euribor, falls drastically, they ensure that they continue to charge a beneficial interest.
In fact, it is something that already happened in the years of the pandemic, where such cheap mortgages had never been possible before. With the floor clauses, on the other hand, no matter how much interest plummeted, the bank could continue to charge interest above the Euribor. And, consequently, their clients could not benefit from these reductions.
It is a protection mechanism implemented by financial institutions so as not to lose money. An insurance that affected millions of people and that, from Europe, they have penalized in the last 10 years. A judicial dispute that has recently added a new chapter: the Court of Justice of the European Union has endorsed that consumers affected by “abusive” floor clauses can claim full refund of the extra money paid.
Since when do floor clauses exist?
We must go back to the ‘brick boom’. During its outbreak, around 2007, the crisis in Spain officially began. To safeguard itself, banks introduced floor clauses in mortgages to limit the drop in interest rates in variable-rate mortgage contracts. In this way, no matter how much the Euribor fell, they would ensure that they continue to apply a profitable interest.
According to the Supreme Court, before 2004, 30% of mortgages already had mortgage land. However, it was in 2009, in the midst of the crisis, when they were fully applied. Despite the sharp drop in the Euribor, thousands of people did not see any reduction in their monthly mortgage payments as it should correspond, so a judicial process of sentences and claims began that continues today.
Chronology of floor clauses
The first lawsuits occurred in 2010. Already then, the invalidity of floor clauses, but the courts rejected it at first. It must be taken into account that the mortgage market used them in a generalized way, since they were applied by around 40 banking entities. This same year, the first collective lawsuit took place, which would lead to the famous sentence of May 2013 of the Supreme Court that, finally, declared the mortgage land null.
In addition, it was described as “abusive”. It should be noted that these clauses were incorporated into the mortgage contracts no transparency, where the entities did not explain the effects of their application. Therefore, after the aforementioned sentence, the Court of Justice of the European Union established that those affected could recover everything they had paid in excess with these clauses, which did not fall below 3% interest.
However, his return was limited: they could receive the money from the publication of said sentence. That is, since May 2013 and not since the mortgage was signed. Its retroactive effects were thus limited. This changed again in 2016, when the European Justice ruled that no time limit should be established to return the money: you get the full retroactivity.
Full refund of floor clauses
The Court of Justice of the European Union has once again knocked down the Spanish banking system. Specifically, this week it has announced that those affected by the floor clauses will be able to claim all the money they overpaid, iregardless of the fact that they will already have a final judgment. It is an important point, because until now the ‘principle of res judicata’ was applied. If there was a final judgment, the case could not be reopened. Thus, with this new sentence, those who at the time could only access a partial refund, will be able to claim that the money paid in full be returned to them now, even if the case has to be reopened.
How can I know if I have a floor clause?
The floor clauses do not appear listed by that name in the loan agreement (remember that it was applied to variable mortgages). Within the “interest” or “interest rates” section, or in the breakdown of financial conditions, it is included under other concepts: “Limits to the application of variable interest”, “Limit of variability”, “Interest rate variable”, “minimum interest rate”, “interest rate limitation”, “tunnel”, “minimum bounding” or similar.
Another way to find out is by calculating the interest rate applied by the bank. If it exceeds the value of the Euribor plus the differential, which must be included in the contract, it means that a floor clause has been applied to the mortgage.
How to claim the floor clauses?
For claim the ground clauses You can resort to two ways: extrajudicial and judicial. Starting with the first, a formal claim must be filed with the bank that applied the banking entity. This has a term of three months to accept it and return the money, although it can also offer an alternative such as reducing the outstanding capital of the mortgage or investing the money returned in savings products.
If it is not accepted or an agreement is not reached, you must resort to the judicial way. The bank would have to be reported to the specialized court of the province of residence or to an ordinary court if the mortgage was requested as a legal person, as explained by ‘HelpMyCash’. A claim that can be filed by hiring a lawyer or through the legal services of a consumer association.
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