Who has to pay the stamp duty when applying for a mortgage in Spain: the bank or the consumer?

Who has to pay the stamp duty when applying for a mortgage: the bank or the consumer?
Who pays the Stamp Duty when applying for a mortgage?

The new decision of the Supreme Court questions who should pay the stamp duty (AJD) when applying for a mortgage: the customer or the bank?

A few days ago the new supreme court sentence established that it is the bank who must pay the AJD tax (Documented Legal Acts) in the public mortgage deeds.

This tax is levied on notarial documents. In the case of the mortgage, this tax is applicable to the deed of the mortgage, and the person who acquires the property or the right must proceed to pay it. In addition, each Autonomous Community is responsible for the rate of this tax, which is set at a percentage ranging from 0.5% to 2%.

Until now, the buyer of the property was responsible for the payment of this tax in addition to the expenses of the purchase of the property. The customer had to assume this payment because he was the one who acquired the property (“the good”). However, the new supreme court ruling of October 16, 2018 changes the rules by making the bank granting the mortgage responsible for the payment of the tax.

The court justifies the following: “We have no doubt that the beneficiary of the document that concerns us [the deed of the mortgage loan] is none other than the mortgagee, since he (and only he) is entitled to exercise the (privileged) actions that the legal system offers to the holders of the registered rights”.

This new ruling opens the door to claims; for a property of 100,000 euros, this could mean between 500 and 2000 euros that would have been “overpaid” by the consumer.

However, this new supreme court ruling must still be ratified by the Plenary, who must vote on whether it should be the Bank or the mortgagor who is responsible for this expense. They justify that such a decision would have a high economic and social impact, since the cost that the banks would have to assume would end up translating into an increase in mortgage prices.

In total, according to the Negotiating Agency, a cost of around 4,000 million euros is estimated. Until the Plenary pronounces itself, there is no “free way” to request such a claim and there is no guarantee of obtaining it. Even so, any interested party may consult a lawyer for professional advice on their particular case.

Sources: Idealista and Elpais