As an occasional topic on this blog has been the wave of evictions of mortgage defaulters in Spain brought on by the financial crisis (see here), I wanted to flag this article (in Spanish) by Olatz Alberdi outlining the most important changes made to Spanish eviction law as a result of the crisis and this landmark decision by the European Court of Justice.
These changes have taken the form of two pieces of legislation: Spanish Royal Decree Law 6/2012 on urgent measures for protecting mortgage borrowers without resources and Spanish Law 1/2013 on measures for reinforcing the protection of mortgage borrowers, debt restructuring and social rent.
However, while an effort has been made to enhance the protection offered to borrowers, according to the article, the measures entailed in these statutes won’t be broadly applied for two reasons.
Firstly, most defaulters won’t meet the quite stiff risk-of-exclusion criteria required to qualify for greater protection and some of the new or enhanced measures — including debt restructuring and relief and deed in lieu of foreclosure (dación en pago) and, secondly, the lending entity must have signed up to the (voluntary) Code of Good Practices for financial institutions for defaulters to be able to seek most such measures.
According to the article, in practice, the most effective change, or, effectively, new law, is the European Court of Justice’s ruling as it provides grounds for challenging evictions based on unfair clauses, which have taken many and varied forms (e.g., not duly informing mortgage borrowers of important and often opaque conditions and making them pay inflated and arbitrary interest rates).
This ruling provides a lifeline to defaulting borrowers as it gives them the possibility of reducing the amount the bank is claiming, which can, apparently, greatly exceed the loan principal, on the grounds that some of that amount is the result of an unfair clause.
Have evictions in Spain decreased in recent times? I’m not sure. I see it less in the news these days, but that, of course, means nothing and probably just that I’m just watching the news less.
For further information in English about the new legislation, see:
Royal Decree Law 6/2012 IM Titulazción
