In Spain, all parliamentary groups agreed to accept the people’s legistative initiative by the Stop Evictions association (Plataforma Stop Desahucios PSD). The move was mostly described as a sensible approach to address the country’s growing social unrest, but this has now become a hot potato in the hands of the government of the People’s Party–Partido Popular–that has the majority in the lower chamber. It is expected to draw up a law and approve it, and to do so quickly so it can be included in the pending reform of the mortgage market.
The PSD demands that dation in payment can be more frequently used, and evictions suspended under certain conditions after a reduced monthly rent has been imposed. It also seeks the limitation of actions against mortgage holders.
This would involve a change of the procedural law, not the mortgage act. It would strengthen the dation in payment recourse and the borrower’s right to remain in the property, if it’s the main home, when the mortgage cannot be repaid. Yet, the real problem this initiative presents is its retroactivity, which could set precedent for other types of contracts.
Retroactivity is a very dangerous legal structure because it brings uncertainty, risks and unforeseen consequences, which in many cases are against the spirit of what its proponents intended in the first place. Indeed, members of the socialist opposition have warned against trying to please the most vocal sector of the PSD without a close study of the question.
The debate looks somehow intractable. Those on the association’s side have expressed their position in a firm, clear manner, but the results of introducing such modifications may be against their own interests as taxpayers. It is time banks and government open their doors and engage in a discussion to find real solutions, instead of relaying on immediate plasters like dation in payment and retroactivity, which could trigger even bigger problems.