Supreme Court limits evictions to 12 missed installments

The Spanish Supreme Court has limited evictions to 12 missed installments, that is, one year without paying the mortgage. 

 

On Wednesday, it announced a ruling that evictions could only take place in the most “severe” cases of non-payment, meaning only after 12 months failing to fulfill the mortgage obligations. 

 

This way the Supreme Court sets a doctrine on how to apply the ruling of the EU Court of Justice (CJEU), which annulled early maturity clauses of mortgages by Spain, calling them “abusive.”

The ruling of the Supreme Court also stipulates that all evictions for missed installments of mortgages signed prior to the introduction of Law 1/2013 – which has now been annulled by the EU court – must be “stopped without further processing”.

Nevertheless, they advise that in these cases, banks may be able to present a new eviction based on the 2019 ruling, following the non-payment of 12 installments. 

IRPH considered potentially abusive

The Spanish Supreme Court made this declaration after the European Court of Justice advocate deemed that loan agreements tied to Spain’s mortgage price index (called IRPH) possibly misled customers. Although this is non-binding, it may pave the way for customer compensation. 

The IRPH is a reference index with a fixed interest rate, meaning that Spanish customers have not seen their monthly mortgage repayments fall with lower interest rates, unlike those linked to the Euribor European index. 

These conclusions could potentially lead to a ruling in 2020 that lenders charged some of their customers too much for mortgages, obliging them to pay compensation.