What is the floor clause and how can I recover the interest paid in excess on a mortgage in Spain?

The “floor clause” is a stipulation included in the mortgage loan deed that establishes, in variable interest loans, a minimum interest rate to be charged by the bank regardless of possible drops in Euribor. If you have observed that, despite the Euribor falling, you continue to pay the same interest rate, it is very likely that you have a floor clause.

In what cases is it considered that the “floor clause” is null?

In general terms, we understand that a floor clause is null when it causes a significant imbalance, to the detriment of the consumer, between the rights and duties of the bank and of the client. In the case of floor clauses, this imbalance occurs because, although the Euribor goes down, you are not benefiting from said decreases, in such a way that the floor clause only protects the interests of the financial institution.

It will also be necessary that there has been a lack of transparency and information at the time of contracting the mortgage loan, regarding the existence, content and effects of the floor clause.

The jurisprudence has understood that the financial institution has not provided transparent information on the floor clause in the following cases:

• When there is no evidence that the credit institution has made a prior binding offer to the consumer and that the latter had, sufficiently in advance, a draft of the contract that they were about to sign.

• When the credit institution does not certify that it has informed the consumer of the foreseeable behavior of the reference index. The mere reading by the notary of the mortgage loan does not presume knowledge of the existence of the clause and its content by the consumer.

• If the clause appears “hidden” among others in the contract, in such a way that it is difficult to identify its existence within the loan contract.

What can I do against a floor clause?

Based on Royal Decree 1/2017 on urgent consumer protection measures in terms of floor clauses, it is necessary to first address an out-of-court claim to the bank so that it eliminates the floor clause and returns our interest. If the bank refuses to eliminate the floor clause or we are not satisfied with the interest returned to us, we must sue the bank.

In practice, it is a simple legal procedure and, in the vast majority of cases, the Courts are agreeing with consumers, with the costs of the legal process being borne by the financial institution.

Can I recover all the interest paid in excess?

Yes, you can recover all the interest paid. As of December 21, 2016, the Spanish Courts and Tribunals recognize the total retroactivity of the floor clause, based on the ruling of the Grand Chamber of the Court of Justice of the European Union. Therefore, the banks are obliged to return all the interest collected in excess, from the execution of the mortgage loan contract and until the elimination of the floor clause, and must also return the interest on the interest from the day on which it was improperly charged.

Contact us and we will study your case:

• We will review without any commitment if you have a “floor clause” in your loan contract.

• We will quantify the interests that you have paid in excess and those that can be returned to you.

If you need more information, do not hesitate to contact the Firm using the contact form.