Floor Clauses: Imposition and Non-Free Negotiation
You’ve probably heard about the so-called “floor clauses” through the media. Are you the beneficiary of a variable interest rate mortgage loan?
Well, you might be one of the affected by this abusive clause.
But what exactly are floor clauses, and how do they affect you?
They are commonly known by this name because they prevent consumers from benefiting from interest rate drops resulting from the decrease in the Euribor. The Euribor is added to a spread, which is specified in your mortgage deed, resulting in the interest rate applied for one year, until the next revision. If the sum of the Euribor plus the spread results in a percentage lower than the limit set by your bank, this limit will apply, not the actual calculation.
That is, while the Euribor is currently at historic lows, which you should benefit from since you signed a variable interest mortgage loan, your bank, in order to avoid a decrease in its profits, is imposing a fixed rate below which it will never charge you interest. This is in contrast to the market’s guidelines and shifts the business risk onto the consumer.
Why should this clause be nullified?
There are several reasons to affirm that this clause should be eliminated from mortgage loan contracts:
First, because this clause does not correspond to any actual service provided by the bank. The bank is already benefiting from the spread, which is added to the Euribor to determine the interest to be charged on your loan.
Second, because this clause is an abusive general condition of the contract. This means the clause is:
- Pre-established. You were never given the opportunity to negotiate this clause; it was already included in your mortgage loan.
- Included in a plurality of contracts by one party. This has become clear through a wave of claims nationwide.
- Contrary to good faith, causing a significant and unjustified imbalance of contractual obligations in favor of the bank. This is reflected in the fact that you are obligated to always pay interest above this floor clause, but there is no similar or proportionate clause (such as a “ceiling clause,” which when present, is often set at 12-15%, an excessively high amount) that obliges the bank to charge you interest below a maximum. Given that since the Euribor was introduced as a reference index, it has never exceeded 6%, such a high ceiling clause, or the absence of one, causes this imbalance.
Third, these clauses are considered abusive under the General Law for the Defense of Consumers and Users (LGDCU), as they meet the criteria for abusive clauses:
- They were not negotiated individually.
- Since they were not negotiated individually, article 80 of the LGDCU requires that the clause be drafted in accordance with “good faith and a fair balance between the rights and obligations of the parties.”
- According to article 82 of the LGDCU: “All stipulations not individually negotiated, and any practices not expressly consented to, that, in contradiction to the requirements of good faith, cause, to the detriment of the consumer and user, a significant imbalance in the rights and obligations of the parties derived from the contract, shall be considered abusive.”
What does the nullification of the floor clause in your mortgage loan mean for you?
The nullification of the floor clause in your mortgage loan contract means that the clause has never existed, and you will benefit from a series of consequences:
- The bank will stop applying it from that moment forward for the remainder of the mortgage loan.
- Any amounts that you have been overcharged due to the application of this clause must be refunded to you, along with the corresponding interest.
- The bank will also have to recalculate the amortization schedule of your mortgage loan according to the indices it should have applied during the life of the loan, applying any applicable discounts for contracting certain services, etc., meaning that you will have paid off more capital.
As you can see, there are many reasons why, if you have a mortgage loan with a floor clause, you can claim its nullification, as the clause is illegal and contrary to law. These arguments are supported by extensive case law throughout the country, especially in courts in Málaga, which have ruled in favor of consumers.
The recent Supreme Court ruling has confirmed the protection of consumers.
Don’t hesitate any longer and seek legal advice.