Since 2019, several Supreme Court rulings have been issued declaring the early maturity clause null and void (see SSTS of 11.09.2019, 12.11.2019, 14.11.2019 and 12.12.2019).
These set the basis for considering when an early termination clause can be declared valid:
- When it provides that the debtor’s non-performance is so serious or essential that it justifies the entire claim for the total outstanding debt.
- When the clause itself, in addition, determines what constitutes a serious breach and offers the consumer the opportunity to fulfil his obligation.
Situation of mortgage loans signed after June 2019
In response to these resolutions, the legislator took note and on 16 June 2019, Law 5/2019 regulating Real Estate Credit Contracts came into force, in which it determines that the non-payment of 3% of the capital granted is a serious breach if the default occurs within the first half of the loan term or, during the second half, if there are 12 unpaid monthly instalments and provided that the lender has been granted one month to pay its debt.
This, of course, applies to all those mortgage loans that were signed after its entry into force, but what happens with the previous ones?
Mortgage loans signed before June 2019
The legislation specifying the cases of serious non-compliance did not exist until 2019, making the Law its effects “ex nunc”, not “ex tunc”, that is to say, effects towards the future, but not towards situations of law produced in the past, which means that it is left to the discretion of the judge to consider whether there is a serious non-compliance or not.
However, on 6 June 2022, the Supreme Court, in its Ruling no. 465/2022, expressly determined that it can be considered as a serious and essential breach of the mortgage loan, thus validating the early maturity clause with termination of the contract via art. 1.124 of the Spanish Civil Code.
Non-fulfilment of 56 mortgage instalments
This is clearly and forcefully determined in the Fourth Legal Basis, when it states:
“It has been accredited in the instance that the parties entered into a thirty-year loan for an amount of 76,000 euros on 9 November 2006 and that, in view of the non-payment by the borrower of the instalments as of 9 July 2012, the lender notified him of the amount owed on 15 March 2017, requiring him to regularise the debt.
When the summons went unheeded, when the debtor had not paid for almost five years, the creditor filed suit on 2 June 2017, by which it requested, principally, the termination of the contract and an order to pay the corresponding amount in accordance with the settlement presented, which has not been disputed.
It is unquestionable that the non-payment produced in view of the number of unpaid instalments must be qualified, as did the court, whose criterion we share, as serious and essential and, consequently, the defendant’s appeal should have been dismissed”.
Therefore, it is established by the Supreme Court that, with respect to those mortgage loans entered into prior to Law 5/2019, of 15 March, regulating real estate credit contracts, the argument of early termination of the contract via resolutory action of art. 1124 of the Civil Code for non-payment of 56 mortgage instalments can be considered valid.
At Bufete Frau, as an expert Real Estate law firm, we offer you the best advice on your mortgage conditions, in order to examine whether they are in line with current legislation.
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