Practical Legal Notes - October 2026

1. Reduced ITP for large families. This can be applied when the third child is “on the way.”

Attached (HERE) is a link to Supreme Court Ruling No. 1,060/2026, which resolves a dispute in which the issue is whether the reduced 4% tax rate under the ITPAJD for the purchase of a primary residence by a large family is applicable when, at the time the tax becomes due, the taxpayer does not yet formally hold that status because the third child is still in the womb (nasciturus), even though the child was subsequently born alive.

In the facts giving rise to the case, a married couple purchased a home on June 24, 2020, while the mother was pregnant with their third child, who was born in July. After self-assessing their tax liability at the general rate of 6%, they requested a refund of overpaid taxes. The Community of Madrid denied the claim, but the Madrid Regional Tax Appeals Tribunal (TEAR) and, subsequently, the Madrid High Court of Justice upheld the taxpayers’ claims by applying Article 29 of the Civil Code to consider the unborn child as having been born for favorable purposes.

The Supreme Court dismisses the appeal filed by the Community of Madrid and establishes as legal doctrine that the reduced tax rate applies if the third family member was a conceived but unborn child who subsequently survives after birth. The main arguments are based on a teleological interpretation that protects the family (Article 39 of the Constitution) and on the doctrine of the Constitutional Court. The Chamber concludes that the legal fictionof the nasciturus allows for the fulfillment of the substantive requirement for the immediate accrual of the tax, without altering the declaratory nature of the large family status.

2. The General Directorate accepts ancillary provisions by reference to shareholders’ agreements that are not fully incorporated into the articles of incorporation

Attached (HERE) is a link to the Resolution of June 10, 2026, issued by the General Directorate of Legal Security and Public Trust (DGSJFP), rendered in the appeal filed by a commercial entity against the refusal of the Third Commercial Registrar of Seville to register a deed formalizing corporate resolutions. The crux of the legal dispute lies in determining whether a provision in the articles of incorporation is admissible and registrable that imposes on all shareholders an ancillary obligation to sign and faithfully comply with a shareholders’ agreement or family protocol, the full content of which is not transcribed verbatim in the articles of incorporation but is incorporated by means of an express reference to a duly identified public deed.

The case originated at a general meeting of the company, where it was unanimously agreed to amend the articles of incorporation to include a provision regarding ancillary benefits linked to a shareholders’ agreement formalized in a public deed dated the same day. Upon submission of that deed to the Seville Commercial Registry, the registrar suspended its registration, finding that the clause violated Article 86.1 of the Capital Companies Act (LSC) because the specific and defined content of the contribution was not directly stated in the text of the articles of incorporation, which, in the registrar’s view, violated the principles of legality and public notice in the registry with respect to future purchasers. Disagreeing with this ruling, the company’s legal representatives filed an administrative appeal with the DGSJFP.

Finally, the General Directorate of Legal Security and Public Faith grants the appeal and overturns the registrar’s ruling, declaring the statutory clause to be fully lawful. Among its main legal arguments, the Directorate General reiterates its established doctrine, maintaining that the legal requirement for “specific and definite” content does not demand a literal and exhaustive transcription in the articles of incorporation; rather, it is sufficient that the subject matter of the consideration be objectively determinable through a clear reference to an identified public document. Likewise, it maintains that characterizing compliance with a shareholders’ agreement as an ancillary obligation is a perfectly valid technical means of giving such agreements corporate effect without infringing upon the autonomy of the parties, and that the future shareholders’ awareness of the terms is ensured through the private negotiation itself prior to the acquisition of the shares.

3.- The Supreme Court clarifies that the “joint sale” exception, which excludes the tenant’s right of first refusal, applies only if all of the landlord’s properties within the building or housing development are transferred

Attached (HERE) is a link to Judgment No. 684/2026, dated May 6, issued by the Civil Chamber of the Supreme Court, which resolves a dispute regarding whether the exception to the urban tenant’s right of first refusal provided for in Article 25.7 of the Urban Leases Act (LAU), relating to “joint sale”, applies when an entity acquires, at an insolvency auction, a significant portion of the properties in a housing development (54 out of a total of 65 properties belonging to the insolvent entity within a complex of 71 homes), with a single, lump-sum price set for the transaction.

Regarding the main facts of the case, the plaintiff was the tenant of a single-family home located within a residential complex in Huelva, whose original owner had filed for bankruptcy and entered the liquidation phase. Pursuant to that plan, the defendant acquired a block of 54 properties through a single deed and for a combined total price of €7,749,538.86; the tenant was subsequently notified of the acquisition and the subrogation under the lease agreement. The plaintiff exercised the right of first refusal under Article 25 of the LAU, which was dismissed both at first instance and by the Provincial Court of Huelva on the grounds that the global sale was equivalent to a bulk or joint sale that precluded individual exercise of the right of first refusal.

Finally, the Supreme Court grants the appeal filed by the plaintiff, overturns the Provincial Court’s judgment, and grants the claim in its entirety, recognizing the tenant’s right to lease the property under the same conditions and at the same price as those of the award. The Chamber’s main legal arguments are based on its established doctrine (as set forth in recent plenary rulings) regarding Article 25.7 of the LAU, noting that the exception to the “joint sale” applies strictly only when the subject matter of the transfer comprises all the properties or units owned by the landlord in the building or housing development, or all the apartments in the building. Given that, in the case under review, the purchaser did not acquire all of the properties belonging to the bankrupt party nor the entire residential complex (since there were properties belonging to other owners and third parties), the legal requirements for exclusion are not met; therefore, the general rule on the right of first refusal applies, as this involves a physical and independent unit.

4. Bank of Spain Compendium of Best Banking Practices. New Developments to Keep in Mind Regarding Probate Matters

Attached (HERE) is a link to the 2026 update of the Bank of Spain’s Compendium of Good Practice Criteria. This document serves as a reference guide in which the supervisory authority compiles and updates the conduct guidelines that financial institutions must follow in their dealings with customers. Its purpose is to promote transparency, fairness, and proper regulatory compliance in banking operations, while also serving as a guiding framework for resolving complaints.

This update highlights the following new features and clarifications applicable to the administration of probate cases:

• Disposition of Balances and Related Products: It is not considered good banking practice to make the release of a checking account balance contingent upon the settlement of other products linked to that account (notwithstanding that the account cannot be closed until the processing of such products is complete), nor to require, for that purpose, that the heirs assume the deceased’s loans.
• Blocking of Bills and Proof of Death: When a claim concerns the entity’s obligation to block or prevent the billing of charges not related to the maintenance of the estate, it is essential that the claimant heir provide reliable proof of the date on which he or she notified the entity of the account holder’s death.
• Subrogation in Loans and Assumption of Costs: In cases of subrogation by operation of law of the heirs to the deceased’s debt, if the lender requires that such subrogation be formalized in a new public deed (a practice permitted under its risk policy), the costs associated with the transaction (notary, registry, administrative agency, etc.) must be borne entirely by the lender.

5. The General Directorate confirms that it is not possible to register a change of use based on long-standing use because there is a valid urban planning restriction on record in the Registry.

Attached (HERE) is a link to the Resolution of May 25, 2026, issued by the General Directorate of Legal Security and Public Trust, ruling on the appeal against the decision by the Adeje registrar that suspended the change of use of certain premises to residential units based on long-standing use. The crux of the dispute lies in determining whether a change of use based on urban planning prescription is registrable when a preventive annotation is on record in the Registry due to an urban planning disciplinary proceeding resulting from unlicensed construction work.

In fact, the registered company formalized the change of use through a notarized deed based on the age of the dwellings. The registrar suspended the registration upon verifying that there was an urban planning annotation on the properties regarding construction work carried out without a valid permit. In response, the appellant filed an administrative appeal, arguing that the annotation was of a precautionary nature and that a municipal legalization permit was being processed.

Finally, the General Directorate dismisses the appeal and upholds the registrar’s decision. Its arguments are based on the fact that Article 52 of Royal Decree 1093/1997 expressly requires, as a condition for registration based on seniority, that there be no record in the Registry of any entry related to an urban planning disciplinary proceeding. Furthermore, it notes that documents regarding subsequent proceedings not initially submitted cannot be considered in the appeal process, as legal certainty takes precedence over irregular urban planning actions that have not been legalized.

6. The Supreme Court upholds the view that a discrepancy with the mortgage appraisal, in and of itself, justifies a verification of values without requiring prior evidence of fraud

Attached (HERE) is a link to Supreme Court Decision No. 1,025/2026, dated September 21, which resolves a dispute over whether the government’s use of the method for verifying values based on the appraisal of mortgaged properties (provided for in Article 57.1.g of the General Tax Law —LGT) requires prior justification of additional reasons for the discrepancy with the actual value, or whether the mere finding of a discrepancy between the declared value and the value reflected in the mortgage appraisal constitutes sufficient justification.

According to the main facts of the case, certain taxpayers purchased a home in Boadilla del Monte and declared a price of 437,000 euros on their self-assessment form for the Tax on Property Transfers and Documented Legal Acts (ITPAJD). The tax authority of the Community of Madrid initiated a valuation review and issued a supplemental assessment based on the property’s mortgage appraisal value, which amounted to 661,217.44 euros. After the claim was dismissed by the Madrid Regional Tax Appeals Tribunal (TEAR), the taxpayer filed an administrative-litigious appeal with the Madrid High Court of Justice, which upheld the appeal on the grounds that the mortgage appraisal alone did not determine the market value without specific additional justification demonstrating its correspondence to the actual value.

Finally, the Supreme Court upheld the appeal filed by the Community of Madrid, overturned the lower court’s ruling, and dismissed the administrative appeal, thereby confirming the tax assessment. The Chamber’s main legal arguments establish that the requirement to provide grounds for initiating the audit is deemed to have been met when there is a significant difference between the declared value and the value assigned in the mortgage appraisal contained in the loan deed. Thus, the tax authority may use this method as an appropriate means of verification without first having to establish evidence of concealment or fraud, and it is up to the taxpayer to rebut that value if they consider it incorrect. We should take this circumstance into account when advising our clients.

7. Key changes introduced by Royal Decree 813/2026 regarding the prevention of money laundering: strengthening of formal identification requirements without any amount limit and standardization of mandatory internal controls for notary offices through the OCP

Attached (HERE) is a link to Communication 3/2026, dated March 8, from the Centralized Prevention Body (OCP) of the Notarial Profession, regarding the amendments introduced by Royal Decree 813/2026 to the Regulations on the Prevention of Money Laundering and Terrorist Financing. The new regulation introduces significant changes, among which the following are noteworthy:

• Until now, certain notarial procedures that had no monetary value (documents with no monetary amount) or were not considered important were exempt from anti-money laundering controls. However, under the new regulations, it will now be mandatory to identify and verify the identity of clients in absolutely any transaction or document, regardless of whether it involves a monetary amount (for example, in notarial deeds, witness statements, etc.).
• In addition, when conducting remote transactions via video signature, extreme precautions must be taken and new technical controls must be implemented to ensure the authenticity of the identification documents of the “video signers,” as well as to guarantee the preservation of the recording of the process and the biometric verification of the parties involved (in order to prevent identity theft fraud involving AI, pre-recorded videos, etc.).
• With regard to internal organization, the new Article 31.1 eliminates the possibility that smaller notary offices might circumvent internal control standards. All notary offices, regardless of size, must apply exactly the same prevention policies.
• At the same time, the role of the Centralized Prevention Body (OCP) is being strengthened; it will now be officially responsible for approving the internal control measures required of the entire organization, as well as the protocols for responding to financial sanctions or embargoes imposed by the European Union.

8. The General Directorate regulates the electronic certification of the ten-year insurance policy through certificates bearing a qualified electronic signature and a verification code issued by notaries and registrars.

Attached (HERE) is a link to the Instruction dated September 29, 2026, issued by the General Directorate of Legal Security and Public Trust (DGSJFP), which updates the criteria for certifying the establishment and validity of the ten-year insurance guarantees under the Building Regulations Act (LOE) before notaries and property registrars, adapting the procedure to the use of new technologies and the framework for electronic signatures. These are the main changes or aspects to keep in mind:

• Validity of Qualified Electronic Signatures: Guarantee certificates and supplements to their entry into force that are digitally signed by insurance companies are recognized as fully valid, granting them legal effect equivalent to a handwritten signature in accordance with the European eIDAS Regulation and national legislation.
• Technical Requirements for Authenticity and Format: To ensure that the digital document is not rejected by the notary or registrar, it must meet three security requirements: it must include a Secure Verification Code (CSV) or QR code to verify its authenticity on the insurer’s website, maintain the integrity of the signatures in an appropriate format (such as PAdES/PDF), and be backed by a certificate from a Qualified Trust Service Provider.
• Electronic Submission and Registry Processing: The system enables the direct submission of the electronically signed PDF file to the notary for the authorization of the certificate of completion and its certification in the original record; it also serves to validate the guarantee with the Property Registry through its electronic submission via the electronic portal of the Association of Registrars.

9. Important New Legislation Regarding Housing

Attached (HERE) is a link to Royal Decree-Law 29/2026, which directly affects acquisition, financing, transfer, and lease transactions executed before a notary public. In a nutshell, the following aspects are worth highlighting:

• Purchase Price Limit for Large Property Owners and Vulture Funds (70% Limit): Until December 31, 2030, large property owners and entities engaged in the purchase of real estate or portfolios of delinquent loans are prohibited from acquiring residential properties (whether for free or for a fee) at a price or consideration less than 70% of their market appraisal value as determined by an accredited appraisal firm. An independent appraisal report must be provided at the time of sale, with the sole exceptions being purchases for social housing, assisted living, or by public entities.
• Mandatory registration of “major property owner” status: To determine the threshold for major property owner status (an owner of more than 10 residential properties or more than 1,500 m² of floor area, or 5 properties in high-demand areas), each unit suitable for residential use will be counted even if the property has not been registered as a condominium, and this status must be verified through a property registration certificate.
• Prohibition on Assigning Past-Due Mortgage Loans and Right of First Refusal: It is expressly prohibited to assign past-due mortgage loans whose borrowers are covered by the Code of Good Practices (Royal Decree-Law 6/2012). Furthermore, when assigning any mortgage loan on a primary residence, the borrower must be legally notified; if the borrower meets the vulnerability criteria within the following 6 months, the assignor is obligated to repurchase the loan for the same price as the assignment.
• Non-Waiver of the Right of First Refusal and Joint Sales: Agreements in which the tenant waives the right of first refusal or the right of preemption in lease agreements are prohibited. In the event of a joint sale of multiple dwellings or assets, the deed must itemize and establish the individual price allocated to the leased dwelling based on objective criteria (such as the reference value or appraisal).
• Movable Property Mortgages on Industrialized Construction: The Movable Property Mortgage Act has been amended to allow for the creation of a movable property mortgage on the set of industrialized components manufactured in a controlled environment and intended for construction (prefabricated modules), thereby facilitating secured financing prior to on-site assembly.
• Mortgage Guarantee and Maximum Price Condition of the “TU CASA” Program: First-time home purchases financed with ICO loans under the “TU CASA” program (up to €50,000 at 0% interest) must include, as a mandatory requirement, a provision in the public deed of purchase and in the Land Registry stating that the property is permanently subject to a maximum sale price (purchase price adjusted for the CPI) and a maximum rent if the property is rented out.
• Protection of Public Assets (CASA 47): Deeds of sale for homes owned by the state entity CASA 47 or for residential lots transferred by it must include a binding, lifetime registration clause: the resale price may never exceed the highest subsidized housing rate in the autonomous community.

10. The government is eliminating the requirement for formal registration of a domestic partnership in order to receive a widow's pension when the couple has children together

Attached (HERE) is a link to Royal Decree-Law 31/2026, dated October 20, on improving Social Security protection and other social regulations, which introduces substantial changes to access to the system’s benefits. With regard to common-law couples, the regulation significantly relaxes the requirements for granting a widow’s pension, adapting the protection to the social reality of families who lived together in a stable relationship but had not previously completed the formal registration process.

Specifically, the new regulation amends Article 221 of the General Social Security Law, establishing that, in cases where a domestic partnership has children in common, neither registration in an official domestic partnership registry nor the formalization of the union in a public document will be required. In these cases involving children in common, it will be sufficient to provide reliable proof (usually through a certificate of residence) of a stable and well-known cohabitation for a period of at least two uninterrupted years immediately prior to the death, in addition to meeting the other general eligibility requirements.

With regard to its effective date, this regulation was published in the Official State Gazette (BOE) on October 21, 2026, and took effect the day after its publication—that is, on October 21, 2026—without prejudice to its subsequent parliamentary review for ratification.