I put this blog entry in question marks, because I am not saying anything. I am writing this entry in light of an article that appeared in the Xornal de Galicia, corruption section, and to a certain extent to answer it. According to this newspaper and I quote literally “It is well known that in mortgage operations, Galician financial institutions only work with a certain group of notaries, without ever allowing any transparency in the choice of the notary. When arriving at these notaries, the professional always delays and urges the signer to sign the deed in a hurry, without drawing attention to the essential clauses of the mortgage, such as interest, floor clause, abusive interest, grace periods, insurance, etc. Therefore, the signer leaves completely uninformed. The copy of the deed is delivered much later, and the obligation to deliver a pre-contract or binding offer before this operation where the signers are informed of all the conditions in writing of their future mortgage is breached. The reality is that it goes from a brochure in the bank and a verbal agreement with the director of the bank, to a signing of the deed before a notary that barely lasts a few minutes and for which a very high amount of money is paid. The result of this procedure is total misinformation: unwanted insurance, floor clause, swaps, interest bordering on usury, all of this signed before a notary.”
Ultimately, this article seeks to establish a relationship between the failure to freely choose a notary and the control of abusive clauses, which in my opinion is not entirely correct, but it raises a series of claims that are, in my opinion, entirely legitimate.
There has been a lot of talk about floor clauses in recent times. Personally, I am going to take a stand and I say this without any doubt, that floor clauses are not abusive, since agreeing to a fixed interest rate is not abusive either. Back in 1994, and with the aim of ensuring that people were not trapped in their mortgages and could benefit from interest rate cuts, a cheap procedure was established to change banks and/or improve the economic conditions of mortgage loans. The problem that has occurred in recent years, more or less with the credit shutdown, is that these operations have disappeared from professional practice, and as a consequence of this, the remedy to get out of a floor clause has also disappeared. Personally, I took out a mortgage on my house in 2007, and it had a floor clause. I always wonder how they had tricked me, a Notary. Well, probably, I reason, because that floor, at the time I took out the mortgage, was not disproportionate. I spoke to the bank to remove that floor clause and as they required other considerations, I decided to go to another financial institution and I got a mortgage without a floor clause, after a rigorous examination of my solvency, as this was carried out in 2009.
The rulings issued in relation to the nullity of floor clauses have been based on the argument that the obligation to inform borrowers had not been adequately fulfilled, and I would add that this information must be given at a relevant time, as a prerequisite for deciding whether or not to contract a certain financial product, not at the time of signing the deed. I believe that this obligation to inform has often not been fulfilled. I always think of some operations of a financial institution, which is no longer on the market, where when the existence of a floor clause was raised when reading the documents, the bank staff always answered in the same way: “in the end they did not authorise it, but do not worry, we will sort it out”. In other words, it is very likely that they had not been informed of the existence of the floor clause.
But even if the Notary had been properly informed of the existence of the floor clause, would there be any liability on the part of the Notary for including one of these clauses in the document? Well, in my opinion, there is no liability either, because determining the abusive nature of a given clause is the function of the judge. The Notary may have an opinion, as a legal professional, on the abusive nature of a contractual clause; he may warn of this, but this warning will be no more than an opinion. The Notary's action in this matter is limited to ensuring that those clauses whose abusive nature has been determined by a judgment are not incorporated into the contract, and that this judgment is recorded in the register of general contracting conditions.
So, what is the Notary's purpose in the process of signing a mortgage loan transaction, if according to what has been explained so far he cannot do anything? Well, I believe that the Notary is very useful, as long as he is used correctly. That is to say, if the visit to the Notary takes place prior to the signing of the deed, as advice to make the decision to contract in a certain way, as a means of checking offers or as advice on all the legal and fiscal consequences of a certain operation. To do this, it is essential that the basic element of notarial action is fulfilled, which is, and I will not tire of repeating it, that the Notary is chosen by the person who has the right to do so, that is, in the case of operations with financial entities, by the borrower. With this, all suspicions of professional malpractice, referred to in the article we have transcribed at the beginning of this entry, will be avoided. Because, regardless of the low responsibility of the Notary for the inclusion of abusive clauses, there is in daily practice a responsibility of some Notaries, for the failure to comply with the obligation to abstain from any type of action that prevents the free choice of Notary. This is the great drama of the profession, the notarial competition, in my opinion healthy, if it were developed in legal terms, has become a competition for the capture as clients of those who systematically fail to comply with the free choice of notary. And this competition is carried out in a way that would cause embarrassment to many people. In this respect I completely agree with the article that begins this entry, there is no transparency in the choice of the notary.
