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The infamous Spanish “Floor Clause”, also known as Cláusula Suelo, is a clause found in mortgage contracts that puts a cap on the minimum interest of a variable mortgage taken from a bank. A Floor Clause can be identified when the sum of the reference index plus the differential does not reach the total established value.
Before and during the Spanish crisis of the early 2000’s, many of the variable mortgages that were granted had a floor clause incorporated into the contract, meaning the interest rates rarely fell below 3%. As a result, when the Euribor (the most commonly used reference index) began to fall, many mortgaged people were applied a minimum rate that made them pay more money than they would legally have to pay if there was no such “floor” cap.
Many floor clauses were incorporated by the banks into mortgage contracts using a lack of transparency and unclear stipulations, meaning the clients were not informed correctly of the consequences of what they were signing. However, once the general public was made aware of the existence of the cláusula suelo lawsuits began to appear all over the country.
Thus, in May 2013 the Supreme Court declared null and void any Floor Clauses incorporated in mortgage contracts by way of “lack of transparent” information. Subsequently, the Court of Justice of the European Union established that those affected can recover all money that had been overpaid since the floor clause was first applied.
We advise that all clients who know or suspect they signed a floor clause, contact a lawyer specialized in this subject to request advice. At Premier Law we are specialized in banking law, so feel free to contact us to find out if you have a potential claim.