Practical Legal Notes - September 2025

1.- Elevation of old documents and taxes to the public. Aspects to take into account

Attached (HERE) link to the Binding Consultation number V0174-25, dated February 14, 2025, of the General Directorate of Taxes, where the same one solves a consultation related to how the operations where an old contract subject to ITP is elevated to public must be taxed.

The specific case deals with the elevation to public deed of a private contract of sale of inheritance rights formalized in 2003 between two brothers (one sells to the other 25% of his rights on an inheritance consisting of a property), where the selling brother dies in 2006. Now, in 2025, there is the possibility of elevating this private sale and purchase contract to public deed, and the doubt is about the taxation of the operation both for what refers to the ITP and the AJD.

• As regards ITP, the computation of the limitation period with respect to taxable events documented in a private document depends on the concurrence of any of the circumstances provided for in art. 1227 of the Civil Code (among others, the date of death of one of the signatories), so that in this case it would be time-barred (since one of the signatories dies in 2006).
• With regard to the gradual quota of AJD, neither will it be appropriate to pay this tax, since one of the requirements demanded by art. 31.2 LITPAJD is not fulfilled, that is, that the act is not subject to ISD or ITP (since it is subject but prescribed as we have seen), so that, as a conclusion, the elevation to public of a private contract subject to ITP, when it is prescribed, does not give rise to taxation by gradual quota of AJD either.

2.- Beware of hiding behind a company to do the wrong things. Liability can also reach your personal assets

Attached (HERE) link to the Judgment of the Provincial Court of Murcia number 983/2025, of April 3, which deals with a case related to a corporate structure created with the purpose of defrauding creditors.

The judgment under analysis, makes an interesting review of the figure of the lifting of the corporate veil, which allows the courts to omit the corporate patrimonial liability, and to attribute the debts of the company also to the administrators or partners when they intend to commit frauds or abuses against third parties and "hide" behind a company so that the consequences of such frauds or abuses do not reach their personal patrimony.

Important reminder for all businessmen and entrepreneurs who create a new company to always do things right, and not to think that, because of the existence of an intermediary company, the consequences of doing things wrong (fraud, malicious actions, etc.) may not have serious economic consequences on their own personal assets.

3.- Manual for managing cadastral rectifications

Attached (HERE) a very interesting manual to manage the rectification of discrepancies between the cadastre and the title deed of a property.

Specifically, the manual details all the steps to follow to solve those cases in which the physical reality does not coincide with the Cadastre, for which it will be appropriate to initiate the notarial procedure of correction of discrepancies (regulated in art. 18 of the Real Estate Cadastre Law).

It also includes a practical guide on how to proceed in the event of a physical alteration of the property (such as segregations, divisions, aggregations, groupings or reparcelling), for the purpose of communicating these operations to the Real Estate Cadastre, and thus adapting the new legal reality of the property in said public registry.

The manual contains very useful information, such as forms for public instruments as well as screenshots of all the steps to follow on the Cadastre's website.

4.- Can the mortgagor delegate the signature of the LCI transparency act to a third party related to the transaction to be signed?

Attached (HERE) interesting question posed to the Consumer Commission of the General Council of Notaries, which consists of the possibility that the mortgagor delegates the signature of the LCI deed to a third party related to the transaction to be signed (i.e., an employee of the agency that prepares the mortgage, of the bank that grants it, of a real estate professional that has mediated in the transaction, etc.).

The answer to this question is categorically negative according to the aforementioned Commission, since, as indicated in this document, the objective of the LCI is that the debtor, before signing his mortgage, has at his disposal the necessary information to be able to adequately understand the operation he wants to sign, and thus, later on, be able to formalize his mortgage loan fully informed of all its legal and economic aspects.

Thus, it is necessary that all the pre-contractual information to be provided by the Notary to the future debtor is carried out in person and directly, as this is the only way to guarantee that it is personalized and adequate for the intended purposes.Likewise, the note answers another interesting question, denying the possibility that the test to be answered by the debtor can be answered by e-mail.

5.- What happens when a house is inherited by several people and one of the co-heirs uses it exclusively, preventing the use of the rest?

Attached (HERE) interesting Sentence of the Supreme Court (STS 1053/2025, of July 1), which solves the usual case that occurs in many inheritances, where a house, which is inherited by several people, in practice is occupied by one of the co-heirs in an exclusive and excluding way, preventing the enjoyment of the property to the rest.

In these cases, the High Court resolves that the condition of co-heir does not grant a right to an exclusive and excluding use of the property that prevents the enjoyment to the rest of the co-owners (regardless of the fact that one has a higher % of the property than the rest of the co-heirs), so that, in these conflicting cases, the rest of co-heirs, if they see their right to the use and enjoyment of the property impeded, will be able to file an action of eviction for precariousness against the co-heir who occupies the property, for the purpose of being able to recover the use and enjoyment of the property.

6.- It is not possible to register a pledge of shares in the Registry of Movable Property.

Attached (HERE) Resolution of July 1, 2025, of the General Directorate of Legal Security and Public Faith, regarding an appeal filed against the refusal of the Registrar of Movable Property I of Madrid to register a deed of pledge of shares.

In this case we are dealing with a case in which, by means of a deed in February 2025, the purchase and sale of certain shares of an SL is formalized, and, in guarantee of the payment of part of the price that is deferred, the purchaser pledges other shares of the same SL of which she was already the owner before the purchase and sale.

This pledge is presented for registration in the Registry of Movable Goods, but it is qualified with an irremediable defect, since in the opinion of the Registrar, a non-possessory pledge constituted on shares of a limited liability company cannot be registered in the Registry of Movable Goods.Upon the corresponding Appeal, the General Directorate confirms the qualification note, thus confirming once again the already known criterion that in effect, the corporate shares have a legitimization regime and a law of circulation that operates outside the Mercantile Registry.

However, to follow up on the issue, as the Government has recently presented legislative initiatives that, in the medium term, may lead to a paradigm shift in this area (i.e., the mandatory registration in the Commercial Registry of the ownership of shares and stockholdings).

Virtual Fiscal Flash 014: 99% reduction in inheritance and leasing as an economic activity.

Attached (HERE) link to Fiscal Flash number 14, of the Fiscal Commission of the Notarial Association of Catalonia, in which Ms. Concha Carballo, lawyer and economist, analyzes the ruling of the Third Chamber of the Supreme Court of July 14, 2025 (HERE you can consult it), regarding the application of the 99% reduction in the Inheritance Tax (art. 20 2c) to shares in a commercial company whose main activity is the leasing of real estate.

In the case in question, there is a debate as to whether it is sufficient to comply with the formal requirements of Article 27 of the Personal Income Tax Law to enjoy this tax benefit or, on the contrary, it is necessary that the hiring of the employee with a full-time employment contract be justified from an economic point of view (i.e., that he/she has a sufficient workload to justify his/her employment contract).

The Supreme Court confirms in its ruling that, in effect, it is sufficient to comply with the formal requirements of the aforementioned precept (without requiring an assessment of the rationality of the hiring of the employee or its economic justification), recalling that, in the event of suspicion of fraud, the simulation procedure must be used.

8.- Unilateral resignation of the administrator. It is necessary to do things well

Attached (HERE) Resolution of July 9, 2025, of the General Directorate of Legal Certainty and Public Faith, regarding a deed of resignation from the position of a director of an SL.

In this case, the company's director (the only one with a current position), unilaterally resigns from his position in a public deed, and chooses to notify the company of this resignation by registered mail to the company's registered office (the letter being returned as it was not picked up by anyone).

Once the document is presented for registration, the Commercial Registrar refuses the registration for two reasons:

• If notification by registered mail is unsuccessful, an attempt must be made to notify the Notary in person and in person (via art. 202 of the Notarial Regulations).
• In addition, the outgoing administrator must prove that he has validly convened a General Meeting, so that a new administrator can be elected.

The Directorate General confirms the qualification note, so that, in these cases of unilateral resignation of the administrator, these particulars must be taken into account so that the decision can be effective and registered in the Commercial Registry.

9.- Update of the Compendium of Good Banking Practices

Attached (HERE) link to the first update of the Compendium of Good Banking Practices of the Bank of Spain, that is, the document where the supervisor collects the main complaints of bank customers regarding their relationship with financial institutions, and the criteria of the supervisor in these cases.

The document presents the following main novelties:

• Bank accounts: When seizing their customers' accounts, banks must act proactively if the customer states that his balance comes from a basic income or minimum living income or from a salary lower than the legal minimum. In such situations, the entity must promptly respond to the requests of its customers and, if after analyzing the situation, it is confirmed that the balance could be unseizable, contact the seizing body to report the situation, although the entity is not responsible for the outcome of this management.
• Communications with the customer: In communications that must be made to the customer with an established notice period (e.g. contractual modifications of conditions), if an electronic banking mailbox with notice (SMS, e-mail, etc.) is used, the notice period begins when the notice has actually been given. The content of the communication cannot be applied until the expiry of the period of notice by the customer's usual means of communication.
• Mortgage loans:New criteria are introduced for the way of calculating the financial loss in early repayment of mortgage loan (art. 23 of Law 5/2019). When calculating the market value of a mortgage loan, it is essential to consider all the remuneration rules at the time of granting to avoid fictitious financial losses. Thus:
• In loans with an initial tranche at a reduced rate of less than 36 months, the contracting rate for calculating the differential is obtained by taking the highest value between the fixed rates or, if it is variable, the highest value between the fixed rates agreed for the initial tranche and the variable rate agreed on the contracting date plus its differential.
• In mixed loans with an initial fixed tranche of at least 36 months, if this tranche is less than 60 months, the highest value between the fixed and variable rates on the contracting date is used; if it is equal to or greater than 60 months, only the fixed rates agreed for the initial tranche are considered.
• In loans with bonus spreads, the bonuses must not generate losses and must be applied consistently, calculating the spread on the date of formalization and including a note in the FEIN on possible future variations.
• Probate: It is not considered good practice to increase account maintenance fees in situations where the heirs -or the surviving account holders and the heirs of the deceased account holder in the case of a multiple ownership account- cannot cancel the account for reasons beyond their control, such as in court cases. The prohibition to modify upwards the commissions also applies if there are linked products that require keeping the account open. In short, increasing fees in these circumstances is considered contrary to good banking practice.

10.- Correction of material errors, omissions and defects of form in the deed by diligence of the Notary Public

Attached (HERE) Resolution of June 4, 2025, of the General Directorate of Legal Security and Public Faith, regarding a deed of reduction and increase of capital stock, which presented for registration in the Commercial Registry, is negatively qualified in the first instance. In view of this, the authorizing Notary presents a diligence of correction (where a certificate of corporate resolutions of the company is incorporated, clarifying and correcting the defects observed).

Once this diligence of rectification was presented, the Mercantile Registrar again qualified it negatively, alleging that it should state who delivered the rectifying certification, elevating said certification to a public document, as well as his powers (art. 108.3 RRM).

Against this second qualification, the corresponding appeal was filed before the Directorate General, which revoked the qualification note, confirming that, in these cases of material errors, as the consent to the notarization of the corporate resolutions was already given by the chairman of the board of directors when formalizing the deed of notarization of the resolutions, with the simple incorporation of the certification by the notary to the deed by means of a diligence (correctly under Article 153 of the Notarial Regulations), the procedure used is a perfectly valid mechanism to obtain such correction.