1. When the disbursement is “contrived” the loan does not qualify as title for enforcement
The transfer of the funds to the borrower is an essential element of the loan contract: nevertheless, case law has always considered that the material transfer is not necessary, being sufficient to the intended scope of the contract that the borrower is granted the legal availability of the sum.
Therefore, the Supreme Court maintained that transfer is equivalent to the creation by the bank of a title of availability for the borrower, according to which the funds are no longer in its disposal and is acquired to the assets of the borrower. The Court of Naples confirmed such stance with its decision no. 5681/2015 (afterwards reiterated by the Supreme Court on 27 October 2017), in a case where the funds granted by the bank under a loan were considered as being available to the borrower even if they were blocked by a cautionary deposit in favour of the lending bank.
A more recent decision, however, expressed a contrary stance, according to which even if the contract states the receipt of the funds, when such funds are subject to a cautionary deposit, then the drawdown is to be considered as “contrived”. Such conclusion is based on the contextuality of the drawdown and the immediate re-delivery of the borrowed sums to the bank in order to create the cautionary deposit, so that there would be no actual availability of the sum for the borrower.
This is the conclusion reached by the Court of Pescara with its decision dated 24 July 2018, according to which in the case of a loan agreement (even if executed through notarial deed) which states that a sum has been drawdown, but at the same time states that such sum is immediately deposited with the lender bank, there is no juridical availability for the borrower. As a consequence, the loan in the form of notarial deed cannot qualify as title for enforcement pursuant to article 474 of Procedural Code, which is required for starting enforcement actions.
Under article 474 of Procedural Code, enforcement actions can be lawfully started only pursuant to a “title for enforcement”, represented, inter alia, by the deeds received by a notary, which typically comprise also the notarial loan agreements, but, in the light of the above case law, when the juridical availability of the sum is not granted to the borrower, such loan agreements would not qualify as title for enforcement.
Therefore, it would be necessary to wait for a specific decision by the Supreme Court to settle the above conflict of interpretations.
2. Nullity of “credito fondiario” loans exceeding the 80% Loan to Value threshold
According to the Italian Banking Law “credito fondiario” loans are loans granted by banks with a duration exceeding 18 months and secured by first ranking mortgage. The maximum amount of such loans is determined by the Bank of Italy and currently it shall not exceed the 80% of value of the mortgaged assets (so called Loan to Value).
Credito fondiario rules under Italian Banking Law provide for undisputed advantages to the lender banks, given that, inter alia
- the mortgages securing the loans are not subject to claw-back actions when they are registered more than ten days before the publication of the decision declaring the insolvency of the borrower;
- the title for enforcement (i.e. the notarised loan agreement) must not be served to the borrower;
- enforcement actions over the mortgaged assets can be started or continued by the bank even following the declaration of insolvency of the debtor, whereby under ordinary rules such initiatives would be void for the lender and following insolvency an enforcement proceeding is automatically stopped/prevented;
- the bank is entitled to receive any income deriving from the mortgaged assets (i.e. rentals) even in case of insolvency of the borrower.
For a long time, case law deemed that exceeding the said 80% LTV threshold did not cause any nullity of credito fondiario loans, as such limit was considered as a mere good conduct rule triggering only administrative sanctions provided under the banking system (such stance was lastly rendered by the Supreme Court’ decision no. 4471/2016).
Those authors maintaining that the violation of such limits should instead amount to nullity of the loan agreement based their stance on the interpretation of article 117 of Italian Banking Law, pursuant to which the Bank of Italy may request that certain contracts have a typical, pre-determined form and content, and that in case of breach, the relevant contracts are to be considered null and void. However, case law so far maintained that rules oncredito fondiario provided for by article 38 of Italian Banking Law were not subject to said article 117, and therefore their breach will not lead to nullity.
Through a revirement started with decision no. 17352 and 19015 of 2017, which has been confirmed by the recent decision no. 6586/2018, the Supreme Court expressed the different principle of law by which “the breach of the limit of 80% for loans pursuant to article 38 of Banking Law causes the nullity of credito fondiario loan, and given that such limit is of essential importance in qualifying the mortgage loan as credito fondiario, its breach leads to the automatic nullity of the whole contract, save for the possibility of its conversion in another type of mortgage loan contract, in case the relevant requirements are met”.
The Supreme Court did not consider the breach of the 80% threshold rule should give raise to nullity pursuant to article 117 Banking Law, but to nullity under ordinary provisions of Italian law, a such rule is aimed at pursuing public national economic interests and that, therefore, qualifies as an essential element of a credito fondiario loan contract.
In the light of the above, loans granted in excess of said 80% limit, although bearing all features of the credito fondiario, could not benefit of the mentioned advantages, but the obligation of the borrower to repay principal and interest will not be affected, as will not be affected the right of the lender to the mortgage privilege (if so provided by law).