Floor clauses” in mortgages and other unfair terms
In addition, request has been made for the automatic halt to mortgage repossessions in which not only theproperty guarantee is pursued but also the personal guarantees not covered by public auction sale.
The recent judgement by the Court of Luxembourg is an important step as it obliges the Government to urgently reform the current Mortgage law to conform to the communitarian directives which prohibit abusive conduct and contracts of adhesion.
The European Court of Justice (in application of the 1993 Directive which prohibits all abusive clauses imposed in a contract of adhesion) has made clear that the Spanish State has violated that directive in allowing the Civil Procedure Laws not to establish guarantees and defences of objection in the face of abusive conduct by financial bodies and mortgage repossession proceedings.
The application of the European law might mean not only the avoidance of future abusive actions by financial bodies, but might also prevent a flood of lawsuits and claims for damages by people and companies which have been affected by the abusive banking practices.
The banking bodies now face a legal battle that will expose the detrimental and harmful malpractices that have been carried out since the start of the financial crisis.