The Council of Ministers has analyzed today a report on the Draft Regulatory Law (APL) of Real Estate Credit Contracts whose objective is to strengthen consumer protection and improve transparency in real estate loans. The preliminary draft establishes, among other measures, the obligation to provide the consumer with a standardized form with the characteristics of the contract, the prohibition of related sales and limits the commissions for early cancellation. There will also be an obligation to report certain clauses and associated risks, the possible scenarios in contracts at variable interest rates and the disaggregated expenses associated with the signing of the contract. A standard model contract for voluntary use will be approved in a subsequent regulation. Lastly, the control of legality exercised by notaries and registrars in the contracting phase is reinforced for broader consumer advice.
The APL aims to transpose the Directive 2014/17 / EU of February 14 into the Spanish legal system, which aims to deepen the creation of a European market for retail financial products. For this, harmonized conditions are established with respect to loans and loans with mortgage guarantee or intended for residential use. The Spanish standard extends the level of protection of the Directive to the autonomous.
In a first block, the norm analyzed by the Council of Ministers sets the standards of conduct that must be followed in the process of preparation, promotion, commercialization and contracting of real estate loans. Specifically, it establishes the obligation of the lender to deliver to the borrower a standardized card with all the characteristics of the loan before contracting it (European Standardized Information Sheet or FEIN), which will be of a binding offer for a period of seven days. The staff that evaluates the solvency and markets real estate loans should have a level of training that ensures that the borrower receives adequate information tailored to their needs from the lender.
Related sales are also prohibited although combined sales are allowed; that is, those in which the loan is offered separately or in a package. It also establishes the right of the borrower to reimburse, in general, all or part of the loan without more commissions or compensations to the lender than the financial loss during a period and maximum percentages provided by law.
On the other hand, the right of the consumer to convert the loan denominated in foreign currency to the currency in which the borrower receives his income or that of the Member State in which he resides, as a hedging mechanism, is regulated for the first time in our legal system and protection against exchange risk. And finally the figure of real estate loan intermediaries, who can act on the free provision of services in the EU, or real estate lenders other than financial institutions.
In a second block, the APL introduces transparency measures in the contracting phase. Thus, together with the standardized pre-contractual information sheet (FEIN), a Standardized Warning Card (FiAE) will be delivered to the borrower in which the existence of the relevant clauses or elements (soil clauses, possibility of early maturity, distribution of expenses associated with the granting of the loan and foreign currency loans) and the risks associated with them. In addition, in the case of a variable interest rate loan, it is established by law the obligation of the lender to deliver to the borrower a separate document with a special reference to the periodic installments to be paid by the client in different scenarios of evolution of Interest rates
In the draft contract, the borrower will have disaggregated information on all expenses associated with the signing of the contract and there will be a model of a real estate loan contract, regulated by regulation, that entities and consumers can use voluntarily.
A third block refers to the hiring phase and the role played by notaries and registrars. The legality control carried out by notaries and registrars on the content of the contract is reinforced, so that the deed will not be authorized if the lender does not accredit, in particular, that the pre-contractual information has been delivered seven days before to the borrower. In these seven days, the notary will advise the borrower on the draft real estate loan contract and, in particular, on the contractual clauses contained therein. Such advice, together with the borrower's handwritten expression stating that the pre-contractual documentation has been sent to him and that he understands and accepts its contents, will be documented in a notarial certificate that will have no cost to the borrower.
