The Spanish Supreme Court’s judgement recently published is bringing a somehow renewed and fresh approach in this matter and is based on the idea that the consumer’s defence on a house’s purchase is performed through a set of legal rules not only previous but also following the time of the sales contract. Those rules are about the existence of a guaranty for specific and accurate information regarding the asset to be sold, and such guaranty shall force the vendor to comply with the existing publicity normative and to be truthful and not misleading in specific cases related to the house’s physical and legal characteristics.
The Judgement goes on explaining that the home sales contracts are within the scope of present legal rules of Consumer’s defence and also develop the Spanish Constitution. In such field the buyer’s rights to receive a copy of several documents about the property and the sales contract’s price are determined in a wide sense by the product’s offer, including the one being subject of publicity, and more importantly, by the contract’s documentation. The matter is after all about the buyer having means to reach an accurate picture that allows him to know what he is going to buy and the seller assuming the essential legally binding obligation to deliver the sold asset once this has reached real physical existence and thus fulfilling what has been offered in the qualities’ inventory as well as in the publicity elements included within the contract’s contents.
If, with the aim of attracting buyers, the publicity is not limited to the development of the lands on which the buildings were built but included an informative content and offered a different image of the urban environs within which the buildings were located thus creating a confidence in the buyer about his house individually, as well as the building as a whole, was to be developed in a specific way that later on did not correspond to the publicity existing prior to the sale’s contract, then such publicity is certainly misleading.
Even if the seller had permissions to develop the surrounding and adjacent areas, this did not release the seller whatsoever of his obligations as per the contracts signed with the buyers no matter if somewhere within the publicity there was a paragraph saying “pending approval” since the reality of things is not supplied to a medium purchaser and, contrary to that, he has been offered something pending approval but then it is not that the elements subject to approval were something different than what was offered to him.
The Judgement ends reasoning that the publicity’s importance within the process of taking decisions by an average buyer is getting bigger with time as it is also bigger the possibility to create a fake expectation that deprives him of the possibility of evaluating the convenience about taking a house with a set of given conditions. It is a fact that the selling company the Judgement condemns did not deliver to the buyers all that was announced in its publicity activity and that was promised as the subject of the respective sales contracts, and such thing caused them an evident damage the legal consequences of which have nothing to do with the business expectative the defaulting seller tried to get with such unlawful action.
The Spanish Supreme Court establishes new jurisprudence with two unequivocal verdicts that revolutionize the current legal doctrine: the Tax Office will not enter into a company’s offices to request data if not authorized by the company’s legal representative or the court.
Link to one of the Supreme Court’s sentences (Spanish text)
In a verdict released several days ago, the Chamber of civil matters of the High Court partially admits the appeal filed by the Spanish Organization of consumers and users (OCU) against the decision of the provincial court of Madrid who had declared as valid several reported clauses in the year 2005.
Amongst the clauses now voided by the Supreme Court are the ones that exclusively penalised the owners of credit or debit cards for the damage carried by its fraudulent misuse as long as those circumstances were not communicated to the bank. The verdict establishes that “the existence of a loss or theft must be communicated without undue delay since the disappearance is known”.
However, the verdict declares that “clauses totally exempting the Bank of liability indiscriminately and without nuance or modulation are abusive” and “disproportionate”, since “there are very frequent cases where the bank’s diligence warned about undue uses and even warned users, who were unaware”.
The Court situates on the same line those clauses that exclude “whatever the case” the responsibility of the bank when the PIN or card password is obtained by coercion or force majeure.
Magistrates insist that “is noteworthy that, in certain circumstances, banks can warn undue uses using the diligence which from them is enforceable in harmony with their experience and technical resources”.
Pretext to rescind the contract
In thye paragraph about mortgages, the magistrates declared abusive those clauses prohibiting the leasing of mortgaged estates, even though they admit such deeds can decrease the value of the property. Therefore they argue that these clauses should establish how much rent must the owner demand in order to correct the “decreasing value” the lease may cause the bank in the case of non-payment of the loan and of need to repossess the property.
The Supreme Court also rejects that banks include contract clauses regarding the resignation of customers receiving a mortgage or other loans about being informed of these being transferred to another bank or entity. “Its unfairness is unquestionable” because “it implies a waiver or limitation of the rights of the consumer”, the judgment argues.
Another voided condition in the loans paragraph it the one allowing Banco Santander to compensate receivables from clients with those positive balances held in other products, even if they were not their only holders. The Supreme Court understands that this type of clause is valid only if they are “transparent, clear, concrete and simple”, conditions that the wording of the clause of Banco Santander was not meeting.
The Court also termed as “illicit” the power of a bank to resolve in advance term-granted loans when an embargo of the borrower’s assets occurs or his solvency is diminished by any cause.
In this regard, judges believe that this condition is looking for “any negative impact on the borrower’s heritage, actual or potential, can serve as an excuse” to have the contract early terminated, thus ”giving the financial institution a discretionary and disproportionate power (…)”.
Judge Baltasar Garzón will have to confront the penal process of prevarication in the Spanish Supreme Court. The Tribunal’s second court-room has decided to begin prosecution based on a complaint in which the famous “star judge” is accused of an obvious crime of prevarication “premeditated, conscious and believing to be not blameworthy for them”, because of his actions as a judge in the process he initiated about the disappearance of people during the Spanish civil war and General Franco’s political regime. The surprising decision of the Penal Room of the Supreme Court had been taken by its president, Juan Saavedra and the magistrates Adolph Prego, Joaquin Giménez, Francisco Monterde and Juan Ramon Berdugo. The resolution was unanimous. Subject of multiple accusations, Garzón so far has been cleared of them all and regarding this latest, filed the past 26th January by the so called Clean Hands Union, there was initially a favourable report in Garzon’s favour from the office of the Supreme Court public prosecutor that, as it has been habitual, exonerated Garzon.
The verdict concludes that to include a person “in a registry of bad debtors without credibility is an illegitimate attack against one’s reputation since such an accusation of being a defaulting debtor harms the dignity of the person, injures his reputation and impairs the person’s own estimation”. The courts will from now on be able to force banks and companies to compensate the client harmed in cases where third parties are able to access the “false dilatoriness” as this causes “economic consequences to him”, such as the refusal of credits or mortgages.
The verdict confirms a resolution dictated 3rd April by the full session of the First Room of the Spanish Supreme Court and establishes Jurisprudence on the matter.
The verdict dismisses the appeal filed by the bank BBVA against the verdict dictated on December 13th 2001 by the number three Court of First Instance in Tenerife, which gave reason to one client, whose data was communicated to the registries of bad debtors Badex and Asnef-Equifax, after she refused to pay 1,051 Euros charged illegally to her account. The sentence of Tenerife’s court ordered BBVA to pay the plaintiff an indemnity for moral damages of 18,030 Euros plus the legal costs derived from the procedure and to urge the withdrawal of the data made available to the registries of bad debtors. The bank supposedly debited 1,051Euros from the account of the client through her Visa-Classic card. The client asked the bank for the cancellation of the debit on various occasions via telephone, a branch of the bank and through the defender of the client and later issued a charge to the Bank of Spain through the national police. The court dismissed the allegations made by BBVA who claimed that the client was on the bad debtor’s list for only twelve days during which nobody consulted her records. The judge considered that access to the records of the bank and both registries of patrimonial solvency were sufficient to prove damage to her reputation.