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Confusion on mortgage loan tax ruling causes top court to apologise

Carlos Lesme speaking in the Supreme Court on Thursday
Carlos Lesme speaking in the Supreme Court on Thursday / EFE
  • Judges in the Supreme Court will meet on 5th November to decide if a recent decision forcing banks, not customers, to pay it should stand or not

The president of the Spanish Supreme Court publicly apologised on Thursday for a colleague's decision concerning a crucial ruling over tax payments for paperwork on mortgage loans that could lead to a wave of cases asking for refunds.

In an unprecedented statement, Carlos Lesmes said, "We haven't managed this well. It has caused an unwarranted lack of trust in this highest court and we are all sorry."

Lesme's statement came after a senior judge heading public administration cases at the Supreme Court intervened over a decision announced last week by another judge there to force banks to pay a tax on notarising mortgage loan documents.

Up to now the person taking out the mortgage has been responsible for paying this percentage tax, known as the Impuesto Jurídico de Actos Documentados, which varies depending on the total value of the money to be repaid and the region. A person taking out a typical mortgage pays between 1,000 and 4,000 euros.

However a firm sentence from the Supreme Court has recently decided that as it is the bank that wants the deeds signed, and not the customer, it should be the lender that pays.

When this decision was announced last week, consumer groups celebrated. Banks shares fell sharply amid fears refunds would be due.

However, in an embarrassing and dramatic U-turn, all 31 Supreme Court judges responsible for public administration cases have been summoned on November 5th to decide if the ruling is valid. This has caused derision among consumer groups, accusing the judges of trying to protect banks. There was also confusion on the high street, with banks putting mortgage deals with customers on hold.

The Supreme Court president indicated on Thursday his unhappiness that the meeting of judges to revise the decision had been called.