Following the reform of Article 682 of the Spanish Civil Procedure Act (LEC), financial institutions are no longer allowed to directly appraise the mortgaged properties. They must use independent appraisal companies, which ensures a more objective valuation.
Effects of this reform:
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Prevents financial institutions from manipulating property valuations to increase the loan amount.
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Protects mortgage borrowers by ensuring valuations closer to market reality.
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In foreclosures prior to this reform, the borrower had no input on the appraisal, which created the potential for abusive practices.
Challenging a disproportionate appraisal:
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According to Article 695 LEC, the debtor can oppose the foreclosure if it is proven that the clause is abusive.
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The appraisal value directly affects the outcome of the foreclosure and the debtor’s obligations.
Burden of proof:
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One perspective: the debtor must demonstrate that the valuation is disproportionate.
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Another perspective: the creditor (financial institution) must prove that the appraisal was fair, given its stronger position in the contractual relationship.
Outcome if the appraisal is deemed abusive:
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The foreclosure could be dismissed or suspended under Article 695 LEC.
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The reform aims to balance the foreclosure process and better protect the rights of the debtor.
