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Home > Mortgages, Property > Mortgage loan taxes: Spanish Supreme Court appeals its own ruling

Mortgage loan taxes: Spanish Supreme Court appeals its own ruling

October 26th, 2018

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In an unprecedented decision, the Supreme Court has “frozen” a judgement passed by themselves…48 hours before.

This unusual situation originated in a ruling of the 16th of October that determined that the bank is the only party with an interest in getting the loan certified by a notary, a prerogative that will allow them -as lenders- to initiate foreclosure proceedings if the borrower defaults on payments. The importance of this ruling lies with the fact that hundreds of thousands of borrowers could be eligible for a refund. 

The members of the Third Chamber of the Administrative Section of the Supreme Court added that because the lender is awarded this privilege, they should be paying all associated costs. It makes all the sense in the world, if you think about it. Or not, when the decision directly refers to who will pay approximately 8 billion Euros in mortgage taxes, or an average of 3,000 Euros per loan.

The complication with this is that the same Court, but the Civil Law Section of the Supreme Court this time, had confirmed earlier (28/2/2018) that taxes on loans were to be paid by the borrower and to reach such decision, they quoted the “consistent and constant” Administrative Section jurisprudence on the subject matter in dispute.

Jurisprudence, or case law, we know evolves with society and cultural advances, adjusting to usages, traditions and customs. It can take years, when not tens of years, to change. With the tax on mortgages though it has done a U-turn in 7 months, which is inexplicable unless we accept that most senior judges are backing the banks whilst a minority stand by the consumers, or perhaps the other way around.

Be what may, the Court’s Press Office issued a statement confirming that decision will be reached by 31 senior judges of the Administrative Division of the Supreme Court, on the 5th of November 2018. In the ruling they will decide who is to pay the taxes and if the banks, whether clients should claim the refund from the lender or from their regional tax agency, which could then in turn claim it from the lender.

About Antonio Flores

Antonio Flores is the head lawyer at Lawbird, a Spanish law firm specialised in property and litigation. More on .

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