This week has seen an unprecedented action by the Supreme Court that has unleashed all kinds of chaos internally, not to mention the consequences it has had on the financial sector. In recent years we have seen thousands of short cases that revolve around the financial sector and its methods when granting mortgages. The main issue was related to the infamous Land Clause inserted in the mortgage contracts (in many cases without notifying the mortgagee!), but a Supreme Court ruling in favor of the mortgaged forced the banks to liquidate the profits they could be a few thousand euros. by case. The secondary question referred to in this article has to do with the recovery of the Tax on Documented Legal Acts paid in the Mortgage Deed.
In February of this year, the Supreme Court, through its Civil Court, issued a ruling declaring the mortgagee responsible for paying the corresponding Documented Legal Acts Tax, however, this same ruling was ANNULLED by its own Civil Court. the Contentious Administrative in an unprecedented action last Tuesday, October 16, 2018 and registered under Resolution Number 1505/2018. This sentence corrects the existing sentence that was issued just a few months ago and determines that in reality the BANK and not the client/mortgage holder is responsible for the payment of any Tax on Documented Legal Acts owed when a Mortgage Deed is granted before a Notary Public. How has this happened and what was the reasoning given for this surprising turn of events?
Mrs. Lourdes Amasio Díaz, lawyer representing the company called “Empresa Municipal de la Vivienda de Rivas Vaciamadrid SA” filed an appeal to revoke a judgment against her client as stated in Appeal 5350/2017 and thus it was considered in the Contentious Administrative Court. As has been said previously, this appeal made Judge Jesús Cudero reconsider the previous sentence of the Supreme Court and sided with his defendant. The criterion used to reach this decision was the fact that the only one interested in registering a mortgage loan in the Property Registry is the bank, because it is the only way in which it can claim against the mortgage holder in the event of non-payment. the loan, so the bank should be responsible for the resulting tax.
This turn may seem conflicting but it turns out that when the matter was apparently resolved in February 2018 in the Civil Court, the same issue was already on the table in the Contentious-Administrative Court that no longer has the same point of view. . view.
The result of last Tuesday’s ruling is a massive stock market crash that has affected the main Spanish banks, mainly Bankia, Bankinter, BBVA, CaixaBank and Banco de Sabadell. The only important factor that has not been detailed in the ruling is whether the stamp duty on mortgages signed in the last four years can be claimed or if it only applies to new mortgages. Of course, the banks interpret that the ruling applies only to new mortgages, so this point must be clarified.
It would seem that the reign of tyranny of the Spanish banks is over and they are being held accountable for their unilateral dealings with their own clients, however, this ruling has sparked a hornet’s nest and is far from over… Not even 24 hours after it was approved this latest ruling, the Supreme Court has made another surprising decision to review this award. Mr. Luis María Díez-Picazo, President of the Contentious-Administrative Chamber has decided that it is prudent to delay this sentence until other considerations can be examined. With this he refers to the effect it has had on the stock market and what it would mean if the banks had to finance what experts estimate between 6,000 and 24,000 million euros.
Within the next few weeks, a Plenary Session of the Court will be held in which 31 magistrates will have to decide whether or not to accept the latest ruling that determines that the banks are responsible for any Tax on Documented Legal Acts derived from the mortgage deeds. What will happen in the meantime? Well, in theory, a court ruling was issued so that notaries continue reporting that according to the ruling of October 16, 2018 and applicable as of Thursday, October 18, 2018, it is up to the banks to pay the tax. Friday’s surprising attempt to reverse that award is a mere memorandum, but it doesn’t qualify as legislation until the plenary session decides which ruling stands.
Some clients who had to sign mortgage loans at the Notary that Tuesday postponed their appointments until the outcome of the trial was known, but although the sentence is now debatable, the Documented Legal Act in the Canary Islands, for example, is paid within 30 days of signing the deed (in other autonomous communities the term is 60 days) so I hope that the banks do it until the last moment before paying in case they can pass on that expense to the mortgage holder.
What we have here is a split decision within the Supreme Court itself with two very different rulings delivered by two different chambers. My personal opinion? An issue of this magnitude should have been resolved in plenary in the first place instead of allowing two chambers to pass judgment on different cases, which has allowed this gross conflict to take place. We will have to see what the outcome of the Session is and hopefully it will be in favor of the little one to help end what I call the Reign of Tyranny of the Banks.
