In a judgment handed down on Tuesday 24 June (Case C-351/23), the Court of Justice of the European Union overturned the Slovak law on unfair terms in consumer mortgage contracts.
In Slovakia, a couple who had taken out a mortgage (€63,000 to be repaid until 2030) to purchase their home challenged the legality of the forced execution of the mortgage security, which had been activated by the bank. Under this security, the bank can demand repayment of the outstanding capital in the event of late payment by the borrowers and transfer ownership of the property to a third party. Despite the legal action taken by the couple, who are invoking consumer protection, the bank has sold the family home to a third-party company, which is demanding that the former owners be evicted.
Referred to the Court of Justice for a preliminary ruling, the Court held that the borrowing couple could rely on the protection mechanisms provided for in the Unfair Terms in Consumer Contracts Directive (93/13) because of the circumstances in which the transfer of ownership of the disputed property took place, while an appeal was pending, and the existence of corroborating evidence relating to the possible presence of a potentially unfair term in the mortgage contract.
The Court thus takes the view that Slovak legislation, which allows extrajudicial enforcement of a mortgage security on a family dwelling despite a pending application for suspension and the presence of indications that an unfair contractual clause is at the root of that enforcement, is contrary to EU law.
See the Court’s judgment: https://aeur.eu/f/hjo (Original version in French by Mathieu Bion)