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How to claim my mortgage expenses

The Supreme Court has ruled that the banks are the responsible bodies for paying the Legal Documents tax or the AJD tax on mortgages rather than the borrowers. However, it is something that has raised concerns even within the organisation itself and in the end will be the Plenary of the Chamber who must decide on a final vote. 
The argument of the High Court is based on saying that the financial institution is the actual entity that will benefit from the mortgage deal, thus making it clear that the borrowers are entitled to claim what has been charged unduly. 

The latest hearing from the Supreme Court 

The ruling was published on October 16th by the Contentious Chamber of the Supreme Court. According to Article 68.2 of the Regulation, which states the obligation of the borrower to pay the tax, it is illegal to do so. 
This is because any loan, as well as a mortgage, does not need to be granted in a public deed or notarised document. In this way, it will not be taxed by the Act of Legal Acts Documents, because it is the only expense that is paid when formalising a mortgage with a bank. 




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The tax is not subject to the loan but to the notarial document. In fact, the taxable base to be paid to the Treasury is not given by the amount of the requested loan, but by the amount mortgaged, whose interested party is the bank, and whose sum is approximately 30% more than the amount of the loan. 
As a final conclusion, this ruling establishes that the business of the public deeds in which the mortgage loans are documented, is not related to the loan itself but to the mortgage. Thus, the interested party that would be obliged to pay the tax would be the bank, not the borrower. 

What is the procedure to make the claim for mortgage expenses? 


The first thing is to make a formal claim to the corresponding financial institution and wait for the bank's response. Once two months have passed (the deadline that the lender has to respond by), if no reply is given or a refusal is obtained, the mortgagee may file a claim with the Court. 
In the lawsuit, the annulment of the clause established by the bank must be proposed because it is abusive and must be accompanied by all the invoices paid in the constitution of the loan. In these procedures, the presence of a solicitor is mandatory. 

Which expenses can be claimed? 

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The expenses that can be claimed by the mortgage borrower are those referred to the formalisation of the mortgage in a public notary. The purchase and sale expenses would not be included here: 
• Tax on Documented Legal Acts or AJD. An independent tax that is added to the constitution of the loan, something that according to the Supreme Court must be paid by the bank. 
• The tax corresponding to the stamp duty of the notarial documents (the ones used to prepare the contract), to be paid between the borrower and the lender. 
• Expenses related to the agency. 
• The amount of the invoice of the Property Registry where the mortgage is registered. 

Which types of mortgages are included in the new legislation? 

• First charge mortgages. 
• Subrogated mortgages. 
• Those relating to modifications, novations, extensions, etcetera. 

Deadlines for claiming and the corresponding amounts 

• Once the credit agreement has been signed, the borrower can claim at the time he or she deems appropriate. At the time of requesting the nullity of this clause there will be no specific deadline. 
• If the borrower has proceeded to request the nullity without providing the invoices that are required, it is possible to claim the amounts through another procedure. The plaintiff will have 5 years to do so, counting from when the agreement was signed and the nullity was ruled. 
• Once the corresponding claim has been made, if the borrower has not been compensated the payment of the tax after having appealed the judgment, the Provincial Court will be in charge of referring the payment of the tax to the bank. 
• However, those who were not compensated the tax amount through a final court judgment, it will be impossible to make any claim. 
The clause whose nullity is requested by consumers is the one concerning the expenses and the payment that is expected are those amounts that should not have been paid. 

Documentation to make the relevant claim 

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  • A copy of the deed in question, whether the first charge mortgage, novation or subrogation. 
  • Invoice of expenses related to the Land Registry. 
  • Invoicing of administrative expenses. 
  • Bill of notary expenses. 
  • The payment demand letter of the tax or AJD. 

Who is responsible for reclaiming the AJD, the Treasury or the financial institution? According to some solicitors, it is easier to make the corresponding claim to the Treasury than to the bank. This is because the payment of this tax corresponds to the loan applicant, not to the bank, as established by the Civil Chamber of the Supreme Court. However, this criterion has recently been changed by the Contentious Chamber of the Supreme Court and we must wait in order to learn more about the matter. To claim the tax from the Treasury, you must request a rectification regarding the self-assessment of the tax that was presented and the refund of the undue amount. However, there is a claim by the Treasury to make this process easier for consumers, businesses and the self-employed. But there is a deadline to claim it; four years from the date on which the user had to submit this tax. Another thing is if you claim for the civil, requesting the full nullity of mortgage expenses. In that case, consumers may do so at any time, without a written notice. The best way according to the opinion of experts in the subject, is that if the tax was paid less than four years ago, it should be claimed from the Treasury, otherwise you will have to make your claim from the bank. 
To what extent does the judgment of the Supreme Court affect the banks? 
There is no doubt that this new ruling imposed by the Supreme Court has been a strong blow for the banks. However, this situation could harm future borrowers, as it could increase mortgage rates. This impact, as established by the Negotiating Agency, has been estimated at 4 billion euros, a scandalous figure that could have a big impact on the Spanish financial system. On the other hand, it could also be favourable for the borrower, who would be happy to have these amounts refunded to their bank accounts. Many banks, not to mention the vast majority, had already eliminated the opening fees on loans. However, this ruling could cause them to reintroduce these fees again and even increase the costs of new mortgages. However, that remains to be seen, since there is a great competition among banks with the aim of attracting new customers, so these increases could be minimal. This does not mean that the new ruling is a serious obstacle for those who are currently trying to buy a house, since access to loans is more complicated than before.

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