On Thursday the 16th of July 2020, the European Union’s Court of Justice declared that banks within the EU must return the money related to mortgage expenses that were deemed “abusive” clauses. Here we’ll explain who can reclaim these amounts and how to do so.

The Court of Justice of the European Union has ruled that banks within its jurisdiction have to refund all expenses of terms declared “unfair” retroactively. With this ruling, they directly contradict the decision made by the Spanish Supreme Court which only declared that banks should refund 50% of the amounts accrued through these clauses. The Court of Justice of the European Union had already ruled that specific terms can be examined by a judge and declared abusive.

Who can reclaim the expenses?

All people who signed a mortgage before March 2019 can claim them. According to the estimates of various users’ associations, around eight million people will be affected in Europe.

According to the European Court of Justice’s opinion on mortgage costs, institutions should reimburse clients for appraisal, notary, registration and management fees.

How much money can I claim?

Here we’ll project the amount of expenses related to your mortgage that you can expect to see returned on the average mortgage. For a mortgage of 100,000 euros, for example, the costs to be claimed would amount to about 2% – 2,000 euros.

It’s very important to check how much you can get back if you have a mortgage with personal income tax.

How can I make a claim

After finding out about the decision from the European Union’s Courts of Justice, those seeking to reclaim the expenses in Mallorca, Menorca & Ibiza should visit the financial entity with whom they have the mortgage. They will be contacted and the expenses will be claimed.

If there is no agreement, it will be necessary to go to court according to ASUFIN, the  Spanish Association of Financial Users. The banking employers remind that the sentence known today is only applicable in case the clause has been declared abusive by a court, which requires that each specific case be examined by a qualified person.

The Spanish banks have downplayed the impact of the court’s decision; in a statement, the Spanish Private Banking Association reassures it’s interested parties that since in Spain the Supreme Court has already analyzed how the costs were distributed according to internal regulations, it is not expected that the ruling made on thursday will have a significant impact on the mortgage situation in Mallorca, Menorca & Ibiza.

Should you require any assistance or legal counsel concerning properties, purchases and sales on the islands of Mallorca, Menorca and Ibiza, please contact us at your convenience at info@mallorcasolicitors.co.uk or by phone on the numbers listed on our contact page.