Rabobank was blamed by a real estate client for unilaterally increasing the business interest rate surcharge in violation of its duty of care. This increase had not been adequately explained by the bank, according to the customer. The district court ruled in favor of the real estate customer, but the court of appeal did not (ECLI:NL:GHSHE:2020:411).
General terms and conditions
The court ruled that there was a professional customer who accepted the general terms and conditions. Those general conditions state that the bank may unilaterally change the interest surcharge. That provision does not oblige the bank to explain to its client how (an increase in) the surcharge was determined. Nor is there any general rule of law that implies that in a contractual relationship between professional parties, the party wishing to make use of a clause that gives it the unilateral right to increase a price can only implement that increase if it is explained how the increase was determined. In practice, there are numerous examples of duration contracts where the provider can unilaterally increase its rate without having to further explain how the increase was determined.
A factor there, according to the court, is that in the face of the bank's unilateral power of amendment, the real estate customer has the right, in the event of an increase in the mark-up, to immediately repay the loan in full and terminate it without penalty. If that new interest rate surcharge would not be in line with the market, the real estate party could seek another lender willing to provide financing on better terms, the thinking goes.
No interest rate increase the customer can afford
The court indicated that the bank's authority to unilaterally change the interest rate does not mean that the bank must take the customer's personal circumstances into account in such a way that it can only ask for an increase in the surcharge that the customer could afford. This would have the undesirable consequence that the bank would have to charge different rates for the same product or service according to the customer's financial circumstances. This, according to the court, cannot be required of a bank.
What is further significant is that prior to the increase, the bank explained in a conversation that it wanted to increase the surcharge and later did so by letter.
So in this case, the bank was allowed to unilaterally increase the interest rate premium for a real estate financing because it had agreed to do so. If the real estate party could raise financing elsewhere on better terms, then the financing could be immediately and penalty-free transferred.
If you have any questions about an interest rate increase by your bank, about canceling real estate financing in times of Corona or about a loan cancellation, please feel free to contact us.
