Real estate and business law - Mallorca & Ibiza  


Floor and ceiling clause in loan contracts

Posted by ALEJANDRO GUILLEN VALLS on May 25, 2013 at 4:15 PM Comments comments (1)

On May 9th 2013 the Spanish Supreme Court has issued the first sentence regarding floor and ceiling clauses in loan contracts entered between Banks and individuals. 

Since 2007 most banks added a standard clause in loan contracts setting a minimum interest rate around 3,5% and a máximum around 12%. These minimum and maximum were limits to interest rate fluctuation, usually based on Euribor.

Due to the floor clause many householders have not taken advantadge of the Euribor at its historical mínimum in the last years.  

The Court considers such clause is null and void for several reasons: a) the claimants did not receive complete information from the bank when the contract was executed and b) floor is set around 3,5% while ceiling is set at 12%, which is not proportional.

According to this sentence and considering the certain security principle, banks do not have to correct the interest rate for payments due before May 9th because that would put in risk the whole financial system. 

Some banks such as BBVA or Caixanovagalicia have decided to cancel the floor and ceiling clause immediately. Other banks have decided to keep the controversial clause alleging their clients were correctly informed before excuting the loan. This second group of banks are playing with their reputation and are clearly exposed to numerous claims. It is said that BBVA will lose 35 milion euro per month due to the Supreme Court's decision.


Reduction in air and sea fares for non EU citizens

Posted by ALEJANDRO GUILLEN VALLS on April 13, 2013 at 4:35 PM Comments comments (0)

In 2009 I filed a petition to the European Parliament denouncing possible discrimination to my spouse (non EU citizen), who was resident in Mallorca at that time. The claim was based on two similar cases: Petition 120/2005 and case 32-75 Anita Cristini against Societé nationale des chemins de fer français.

The Comitee on Petitions of the European Parliament studied the case and Spain has finally accepted the need to ensure equal treatment for third country nationals in relation to the transport subsidies in Ceuta, Melilla, the Balearic and Canary Islands.

From April 2013 long- term residents will be able to obtain disccounts in air and sea fares despite not being EU citizens. I am glad to see that our efforts have not been in vain.