Who shall pay the tax for the execution of the mortgage deed in Spain?

After opposing decisions were delivered by the Appellate Courts, on 28th February 2018  the Spanish Highest Court clarified which party shall pay the tax for the execution of a mortgage deed concluded in Spain.

When parties enter into a loan secured by a mortgage, the deed has to be drafted by and signed before a public notary and its execution is subject to a tax named “actos juridicos documentados”. This is something different and must not to be confused with the Land Registry Service Fees.

The loan contracts drafted by the Spanish banks generally impose the payment of tax for the mortgage deed to the customer.   Over the five years these provisions have been challenged before the Spanish courts mainly for the following reasons:

1. Is the provision imposing upon the customer the tax for the execution of mortgage deed compatible with the EU Consumer Protection Law or will it be considered an unfair term and therefore declared null?

2. Do consumers  have the right to obtain a reimbursement of the amount paid for the tax of the execution of the mortgage deed ?

In the 2015  the Spanish Highest Court found that many provisions inserted in loan contracts by the Spanish banks, and related to commissions and expenses, were null and void. Although the Court did not specifically address the issue of the tax for the mortgage deed.

In the latest decision dated 28/02/2018, the Spanish Highest Court clarified that is the borrowing consumer and not the lending bank who has to pay the tax for the mortgage deed in conformity with the Spanish relevant regulation.