It is increasingly common to hear the terms “ground clause” and “IRPH” in our daily life, being a topical issue of growing importance as it affects a large percentage of the Spanish population, both national and foreign. That is why we think it would be interesting to once again clarify these terms.
The floor clause, or mortgage floor, is the denomination of the contractual clause, in relation to the mortgage loan and the purchase of a property through a mortgage with variable interest, which establishes a minimum limit to the interest that will be applied in the mortgaged share, even if the interest rate goes down. This clause directly damages the individual who has applied for the mortgage while benefiting the bank; since when the rates fall, or the interest is negative, the clause prevents it from the affection to the monthly quota.
In Spain, the nullity and abusive nature of the same were declared by a judgment of the Supreme Court of May 9th, 2013, rendering it illegal. It is true, that it limited the return of the amounts illegally collected by the banking entities from the date of the sentence. Subsequently, the Court of Justice of the European Union ruled, in a decision unappealable in December 2016, against the limitation of the retroactivity of the nullity of these clauses, which means that banks are obliged to return the full amount of the amounts illegally collected through the ground clauses since the signing of the Mortgage, as long as it is for the purchase of a residency.
On the other hand, the Reference Index of Mortgage Loans, or better known as RIML (IRPH in Spanish), is used in Spain as second reference in an inexhaustible list of mortgages; in addition to being the surrogate index in mortgages references to Euribor to a year, or what is the same, twelve months.
Thus, the last price of 2016 Euribor was 0.080% compared to 1.874% in the same month. This implies that a jurisprudential doctrine that allows the declaration of nullity of this, due to its abusive nature, is gradually being opened.
Daemi Zabalza & Associates is a pioneering firm in claiming these amounts throughout the Costa del Sol, adding new actions every day with favorable results for our clients, either through out-of-court settlements or through legal actions. If you have or have had a mortgage, ask for an absolutely free first appointment with one of our specialized lawyers, and we will inform you of the whole process.