The mortgage expenses clause is a provision included in loans secured by a mortgage, which establishes that all costs arising from the formalization of the loan will be borne exclusively by the borrower. These costs include preliminary studies, property appraisal, notary fees, registration in the Land Registry, and payment of the Transfer Tax and Stamp Duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados – IAJD).
What does the Supreme Court say about the validity of these clauses?
The Supreme Court, in its ruling of January 23, 2019, established criteria regarding the allocation of these expenses:
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Notary fees: Should be shared between the lender and the borrower, as the notary’s intervention benefits both parties.
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Registration fees: Should be borne by the lender, since the mortgage registration is performed in their favor.
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Management/administration fees: Should be split equally, as the service benefits both parties.
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Stamp Duty (IAJD): The taxpayer is the borrower, according to tax regulations.
Who should pay mortgage expenses?
Jurisprudence has determined that clauses imposing all costs on the borrower are abusive, so courts have required financial institutions to reimburse part of these costs to consumers. However, the allocation depends on the specific type of expense.
Solution adopted by the Law regulating Real Estate Credit Contracts (LCCI)
The LCCI, in force since June 16, 2019, establishes a clear distribution of mortgage expenses:
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Appraisal: Paid by the borrower.
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Management/administration fees: Paid by the lender.
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Notary fees: The lender bears the cost of the mortgage loan deed, while copies are paid by whoever requests them.
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Land Registry: The lender pays the registration costs of the mortgage guarantee.
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Stamp Duty (IAJD): Paid in accordance with tax regulations.
