Europe’s Court of Justice rules against Spanish legal repossession system

15 Mar Europe’s Court of Justice rules against Spanish legal repossession system

The Court of Justice of the European Union has ruled on March 14, 2013 in what refers to Spanish legal system, the expected judgment on “the abusive clause against the consumer mortgage contracts” and, therefore, its consequences in the heart of the Executive process (repossession or foreclosure) for mortgaged property.

The case under discussion has origins in the question about whether or not the effective judicial protection of the consumer is breached in view of the limitation of causes for consumer’s legal opposition in the Spanish mortgage foreclosure process.

In the midst of the current Spanish judicial mortgage process the only feasible causes of opposition by the debtor – of execution of real estate— are just these two ones: a) the extinction of warranty or of the secured obligation, and b) the error about the determination of the amount payable.

Therefore, the existence of any abusive clause is not now provided as a cause of opposition even if the debtor is invited to claim about it on an ordinary judicial process, different than the one of foreclosure. This may bring a consequent damage since the final resolution in this ordinary process normally reaches results after the repossession is finished and a possible award of the property to a third party in good faith has taken place. In this case the feasible compensation should be insufficient when a permanent home is being repossessed, for instance.

The CJ recognizes that the Spanish procedure of foreclosure is opposed to the purpose, effectiveness and protection requisites ruled in E.U. Directive 93/13 when it limits the causes of opposition not admitting the existence of any abusive clause amongst them and thus preventing that a precautionary measure suspending the Executive mortgage process takes place within the corresponding ordinary judicial process in order to elucidate in the meantime whether or not is there an abusive clause in question.