Find out the answers to the 7 questions most often asked by our customers.
- What can you do with your CHF loan?
- Should I sue the bank?
- Why can a CHF loan agreement be deemed invalid?
- Terms of co-operation with our law office
- How long do you have to wait for the final judgment?
- What does invalidation of a CHF loan mean?
- What does conversion of the loan currency the case of CHF loans imply?
What can you do with your CHF loan?
In the first decade of 20th century and especially in the years 2004-2008, many banks offered their clients mortgage loans denominated in foreign currencies such as e.g. Swiss francs or euros. When offering such loans, banks used their own template agreements and borrowers virtually had no chance to negotiate any terms and conditions proposed by the banks. Recently the courts have started to challenge the validity of such loan agreements by demonstrating that they contain the so-called abusive clauses which do not conform to best practices and visibly impair the borrowers’ interests. Moreover, many courts have also determined that banks have failed to sufficiently advise their clients about the currency exchange risks they may face when entering into such loan agreements.
Currently the borrowers have a chance to avoid the currency exchange risk in the future and relieve themselves from debt by invalidation of their mortgage loan agreement in their entirety, or cancellation of some unfavourable clauses. As a result they can expect to be reimbursed for overpayments already made, and the amounts of their future instalments and debt can be reduced accordingly.
Our lawyers review loan agreements concluded with banks in order to check whether any contractual clauses might be regarded as abusive. We also help to determine whether a given CHF loan agreement may be invalidated in its entirety, or devoid of certain unfavourable clauses. In any such case, the borrower should bring a statement of claim before the court in order to pursue his/her rights.
Should I sue the bank?
Individuals who have contracted loans made out in Swiss francs bear an ongoing risk related to exchange differences. Nobody is capable of predicting how much the value of CHF is likely to increase in future against PLN. As banks do not offer holders of CHF loans any reasonable settlement options, suing your bank is the only solution allowing you protect yourself against unfavourable currency exchange differences and improve your financial standing.
By far common courts have managed to develop an abundant case-law concerning invalidation of CHF loan agreements. Such case-law may be referred to by the borrowers in their disputes with banks. Moreover, following the recent amendment of the binding law, the value of court fees charged in connection with such proceedings has dropped down substantially. Currently, the filing fee is fixed, regardless of the value of the dispute, and amounts to PLN 1000. Meanwhile, in case of invalidation of a CHF mortgage loan, the debtor may be awarded amounts counted in the hundreds of thousands of zlotys.
Why can a CHF loan agreement be deemed invalid?
More and more decisions issued by the courts are favourable to the borrowers, which gives people who contracted CHF mortgage loans a chance to avoid financial predicaments resulting from the appreciation of the Swiss franc. The borrowers can make references to certain clauses regarded by courts as abusive such as e.g. indexation principle assuming that the values of debt and monthly instalments should be determined based on currency exchange rates. The most frequently challenged clauses are the ones which entitle banks to determine the price of CHF at their discretion when converting instalments into PLN. Even if a bank and a borrower have executed an annex in order to authorise the borrower to repay his/her loan by means of Swiss francs purchased outside the bank i.e. at a currency exchange bureau, the court may still declare such loan agreement invalid.
Terms of co-operation with our law office
We offer you legal aid in the case of loans denominated in foreign currencies. Since 2008 when our law office was founded, we have managed to gain a stable position on the legal market. We have won a number of cases in which CHF loan agreements have been held invalid by courts. Apart from offering legal advice and professional reviews of loan agreements, we can also represent borrowers before the courts. After reviewing a loan agreement denominated in Swiss francs or another currency, we inform the borrower about the claims s/he may pursue against the bank. We represent our clients during entire proceedings, starting from pre-trial negotiations with the bank, bringing an action before the court and appearing on trials until the final judgement issued. We also help our clients to gather all the documentation necessary to bring their claims before the court. In order to do so, we ask each client to sign an agreement governing the terms and costs of our legal aid.
How long do you have to wait for the final judgment?
In most cases, in order to recognise the case the first instance courts need to hold 2-4 hearings, depending on the number of witnesses and extensity of evidence submitted by the parties. The majority of courts in Warsaw issue their final judgements within 12-16 months after the statement of claim is filed. However, if the judgment issued by the first instance court has been appealed against, the case must be transferred to the second instance court where it is typically processed at a single session and the ultimate judgement is issued after 10-12 months.
What does invalidation of a CHF loan mean?
Invalidation of a CHF loan is a procedure whose consequences are most far-reaching and, in many cases, most beneficial for the borrower. Even though the definition of ‘invalidation’ is quite imprecise, since in most cases it is the loan agreement, rather than the loan itself, that is held invalid by the court, the consequences of such rulings are basically the same. Invalidation occurs when, according to the court, an agreement devoid of illegal clauses has become unenforceable. In such a case, the loan agreement is held null and void just as if it has never been concluded. The parties thereto will only be obliged to offset their mutual liabilities, if any. For e.g. if in 2007 the borrower concluded a mortgage loan denominated in CHF for the amount of PLN 450 000 and over 12 years has repaid PLN 420 000, s/he will be exempted from any liabilities against the bank if he repays the balance of PLN 30 000, even if his/her debt resulting from the loan agreement exceeds PLN 400 000. Nevertheless, such debt will be cancelled as a result of declaring the CHF loan agreement null and void. As a consequence, the borrower will be exempted from his/her liabilities towards the bank, provided that s/he repays the same amount which s/he has received as a “loan denominated in Swiss francs”.
In the event of cancellation/invalidation of a CHF loan agreement, the real estate will be also exempted from any mortgages established to secure the bank’s claims. To this end, the borrower must apply for cancellation of a relevant entry from the Land and Mortgage Register. In consideration of the above, in the case of mortgage loans, cancelation of the loan agreement authorises the borrower to apply for cancelation of mortgages which secure the bank’s claims.
What does conversion of the loan currency the case of CHF loans imply?
Conversion of the loan currency when the court has revised the contractual relation between the borrower and the bank in such a way as to eventually consider the loan as granted in Polish zlotys. After such conversion is made, it needs be determined whether the debt has been fully repaid or not. If the debt has been repaid and excess payments have been made, the borrower may demand reimbursement thereof from the bank. In most cases, however, such conversion of a CHF loan will be manifested as reduction of the values of the debt and monthly instalments. For many clients, conversion of the loan currency may turn out to be more beneficial than invalidation of their CHF loans. In such a case, the loan agreement would remain in force. However, its terms and conditions would become more fair, and the currency exchange risk would be eliminated. In order to convert the loan currency, the statement of claim should be formulated differently than in the case of applying for invalidation of the agreement. In case of invalidation of the loan agreement, the borrower might be forced to repay the outstanding balance immediately. In some cases, such amount can be quite substantial, and its prompt repayment may be problematic. Therefore, in order to recommend you the most suitable solution, our lawyers will carry out precise calculations taking into account the value of your CHF loan and other aspects.