Abusive Bank Clauses in Spain: Floor Clauses, Mortgage Costs and IRPH, Step-by-Step Claim

# Unfair Banking Clauses in Spain: Current Status and How to Claim

Spanish and European banking law has undergone a radical transformation over the last decade, driven by rulings from the Court of Justice of the European Union (CJEU) and the Spanish Supreme Court (Tribunal Supremo, TS), particularly regarding mortgage loans entered into with consumers. The regulatory framework is based on Directive 93/13/EEC, transposed into Spanish law through the General Law for the Defence of Consumers and Users (TRLGDCU) and Law 5/2019 of 15 March, regulating residential mortgage credit agreements (LCCI).

The Floor Clause: The Origin of the Legal Battle

What Is a Floor Clause?

A floor clause is a contractual provisión whereby the bank sets a minimum interest rate applicable to the mortgage loan (typically between 2.5% and 4.5%), meaning that even if the Euribor falls below that level, the effective rate never decreases. Between 2008 and 2016, with Euribor at historic lows, these clauses prevented millions of mortgage holders from benefiting from low market rates.

The CJEU and Supreme Court Doctrine

• Supreme Court judgment of 9 May 2013: declared floor clauses null and void for lack of transparency, but limited retroactive effects to the date of 9 May 2013.
• CJEU judgment of 21 December 2016: annulled the temporal limitation imposed by the Supreme Court. Nullity must apply retroactively from the date the contract was signed, with repayment of all amounts overpaid.
• Since then, consumers may claim the full amount overpaid from the date the loan was taken out.

Limitation Period for Claims

The action for nullity of unfair clauses is not subject to any limitation period (imprescriptible). The action for restitution of amounts paid is subject to a 5-year limitation period, running from the moment the consumer could have become aware of the unfair nature of the clause (CJEU judgment of 10 June 2021, Banco BPH). The Spanish Supreme Court has applied this standard with certain nuances.

Mortgage Costs: Allocation Under Law 5/2019

The question of who should bear the costs of mortgage formation was resolved in Spain by the Supreme Court (plenary judgment of 23 January 2019) and subsequently by the LCCI (2019), which establishes the following for contracts entered into from 16 June 2019 onwards:

• Property valuation: paid by the borrower.
• Management agency (gestoría): paid by the lender.
• Notary fees (mortgage deed): paid by the lender.
• Land Registry (Registro de la Propiedad): paid by the lender.
• Stamp duty (AJD; Impuesto de Actos Jurídicos Documentados): paid by the lender (Royal Decree-Law 17/2018).

For contracts entered into before 2019, consumers may claim reimbursement of any costs unfairly imposed on them. The Supreme Court (judgment of 23 January 2019) established that, for earlier contracts, the bank must bear the costs of the management agency, notary fees (loan deed), and land registry. Valuation costs remain payable by the borrower.

The IRPH: A Controversial Mortgage Index

The Mortgage Loan Reference Index (IRPH; Índice de Referencia de Préstamos Hipotecarios) is an official index published by the Bank of Spain (Banco de España), historically higher than Euribor. Its inclusión in mortgage contracts has been challenged on grounds of lack of transparency.

• CJEU judgment of 3 March 2020: the IRPH is an official index and is not inherently unfair, but national courts may review whether its incorporation into the contract was transparent and whether the bank adequately informed the consumer of how it operates.
• Supreme Court judgment of 12 November 2020: the Supreme Court recognised the transparency review of IRPH clauses in consumer contracts. If the bank failed to provide information about the IRPH's historical performance and its difference from Euribor, the clause may be declared non-transparent.
• Subsequent CJEU case law (2023) has opened the door to declaring IRPH clauses null and void and replacing them with Euribor, which would result in significant repayments to consumers.

Acceleration Clauses and Mortgage Enforcement

An acceleration clause allows the bank to call in the entire outstanding debt and enforce the mortgage upon default on one or more monthly payments.

• CJEU judgment of 26 March 2019: an acceleration clause permitting enforcement upon default on a single payment is unfair. For such a clause to be valid, the default must be sufficiently serious in relation to the total debt and the duration of the loan.
• The LCCI (2019) provides that the bank may only exercise acceleration rights after default on 12 monthly instalments (or the equivalent of 3% of the principal lent) during the first half of the loan term, or 15 instalments (or 7% of the principal) during the second half.
• In ongoing enforcement proceedings based on acceleration clauses declared null and void, the court (Tribunal de Instancia) may stay and dismiss the enforcement procedure.

How to Make a Claim: Step by Step

1. Out-of-Court Claim

Send a certified letter with acknowledgement of receipt (burofax) to the financial institution claiming repayment of the amounts overpaid, specifying:

• The period being claimed.
• The calculation of the amounts (the difference between what was paid under the unfair clause and what would have been paid without it).
• A 15-day deadline for the institution to respond.

Law 7/2017 on alternative dispute resolution requires financial institutions to maintain a Customer Service Department (Servicio de Atención al Cliente, SAC). If this department does not resolve the matter favourably, the next step is to escalate the complaint to the Bank of Spain (whose decisions are non-binding).

2. Court Proceedings

• Competent court: the court of the consumer's place of domicile (Article 52.2 of the Civil Procedure Act, Ley de Enjuiciamiento Civil, LEC; mandatory jurisdiction).
• Procedure: ordinary proceedings (juicio ordinario) (the amount claimed will typically exceed €6,000).
• Relief sought: nullity of the clause + restitution of amounts paid + statutory interest.
• Legal costs: if the consumer succeeds, the financial institution must pay the legal costs (Article 394 LEC).

Conclusion

Claims for unfair banking clauses remain a viable route to recovering significant sums, particularly in cases involving the IRPH, where the law continues to develop. The limitation period may be the main obstacle, which is why it is essential to act as soon as possible and seek advice from a lawyer specialising in banking law.