Royal Decree-Law 8/2011, July 1, on Support for Mortgage Debtors, Public Spending Control, Local Entity Debt Cancellation, Business Promotion, Rehabilitation, and Administrative Simplification (Correction of Errors)

OFFICIAL STATE GAZETTE No. 161 Thursday, July 7, 2011 Sec. I. Page 71548 I. GENERAL PROVISIONS HEAD OF STATE 11641 Royal Decree-Law 8/2011, of July 1, on measures to support mortgage debtors, control public spending and cancel debts with companies and self-employed persons contracted by local entities, promote business activity and boost rehabilitation, and administrative simplification. I The development of the international financial crisis and its consequences in Spain have led the Government, in recent months, to adopt various measures to strengthen the Spanish economy's response capacity, intensify support provisions for those in more difficult situations due to the crisis, and give the maximum possible impetus to initiatives linked to the development of new forms of economic activity and job creation. In this context, the behavior of public debt markets, especially in Eurozone countries, makes it necessary to adopt new initiatives that strengthen international confidence in the Spanish economy and clearly express the commitment of Spanish institutions to the reforms agreed within the European Union regarding the control of public spending evolution and the promotion of economic activity in Spain. Both elements are fundamental to maintain the financing capacity of Spanish administrations and companies in the international market. Therefore, the Government considers it necessary to anticipate the adoption of some of the measures discussed within the framework of the Pact for the Euro plus and to urgently approve other actions linked in all cases to boosting economic activity, either by increasing access to liquidity for small and medium-sized enterprises or new business projects, or by acting specifically on the construction sector with reforms aimed at guaranteeing confidence and security in the real estate market and with measures that promote the development of rehabilitation as a new area of solid and sustainable growth, or, finally, by reducing those administrative obstacles to business and citizen activity that are not fully justified. On the other hand, the specific situation of the real estate market in Spain presents situations of particular difficulty for those who contracted mortgage loans at times of higher property valuation and now find themselves unable to meet their payment obligations. Faced with this situation, the Government considers it necessary to adopt additional protection measures for lower-income families, as well as the necessary reforms to ensure that mortgage foreclosures are carried out without leading to abusive situations or the squandering of affected assets; fully maintaining, however, the fundamental elements of loan guarantees and, with them, the security and solvency of our mortgage system. In both cases, these are particularly urgent actions. Public spending control and economic reactivation measures must take effect in an especially difficult and turbulent international economic context, within the framework of rescue actions adopted by the European Union and directed at States with greater difficulties in the public debt market. For their part, the situation of certain mortgage debtors requires immediate actions to ensure that their rights are adequately protected and, simultaneously, to avoid any element of uncertainty in the regulation of mortgage foreclosure. cve: BOE-A-2011-11641

OFFICIAL STATE GAZETTE No. 161 Thursday, July 7, 2011 Sec. I. Page 71549 Consequently, the Government has agreed to include in this Royal Decree-Law a set of measures linked to the protection of mortgage debtors, public spending control and the guarantee of payment of obligations contracted by public administrations, the promotion of business activity, the development of rehabilitation actions, the increase of legal certainty in real estate transactions and the elimination of unjustified obstacles derived from administrative activity. These also comply with various resolutions adopted by the Congress of Deputies during the general policy debate held on the 28th to 30th of last month. II The economic, social, and legal protection of the family constitutes, especially in a moment of serious difficulties like the present, one of the guiding constitutional principles of social and economic policy. Specifically, those families who have lost their homes as a result of their difficult economic circumstances should not be deprived of a vital minimum that guarantees both their most essential needs and the possibility of overcoming their economic situation in the short term. To this end, this royal decree-law includes two groups of measures with important economic effects for those in such a disadvantaged situation. Firstly, in order to moderate the negative impact of the economic crisis on the most vulnerable citizens, and in particular on those with family responsibilities, the non-seizable threshold is raised when the price obtained from the sale of the mortgaged habitual residence in a mortgage foreclosure procedure is insufficient to cover the guaranteed credit. Although, in general, the non-seizable minimum for any debtor coincides with the interprofessional minimum wage (SMI), from this royal decree-law and exclusively for mortgage debtors who have lost their habitual residence, this minimum is raised to 150% of the SMI and an additional 30% for each family member in their household who does not receive income exceeding said SMI. Secondly, the Civil Procedure Law is amended to ensure that in the event of a mortgage foreclosure due to non-payment, debtors will receive adequate consideration for the property, allowing them to cancel or minimize the remaining debt. To this end, it is provided that the award to the creditor in an auction of a mortgaged property as a result of an execution will be made for a price never lower than 60% of the appraisal value. Therefore, a balanced limit is established, preventing any award to the creditor below 60% of the appraisal value, regardless of the total debt amount, and this in order to prevent the debtor's dispossession. Finally, in order to improve the effectiveness of auctions by allowing greater competition among bids and, therefore, enabling the setting of a fairer price, the deposit required from bidders to participate in an auction is reduced to 20%. In this way, the presence of bidders and the better award of mortgaged assets would be facilitated, the amount of this deposit would be equated with that provided by the law itself for movable property, and the percentage that the Civil Procedure Law already established on this point since 1881 would be recovered. III Within the framework of the current instability in public debt markets, the Government wants to take another step in its commitment to fiscal discipline by introducing a rule that limits the growth of public administration spending, thus complementing the principles defined in the General Budgetary Stability Law. This rule strengthens the preventive aspect of fiscal stability policy, especially avoiding procyclical behaviors. The application of both fiscal rules – balance throughout the economic cycle and the limit on public spending growth – will help moderate possible imbalances generated in processes of excessive economic activity expansion and create the necessary margins to cushion recession phases, without compromising the sustainability of public finances. With this initiative, furthermore, the Government anticipates the requirements included in the recently agreed Pact for the Euro Plus and initiates the adaptation of stability laws to the changes that will be approved regarding economic governance in the European Union. The spending rule will apply directly to the General State Administration and its agencies, and to Local Entities that participate in the transfer of state taxes. The balance or surplus rule provided for in the current budgetary stability regulations will continue to apply to the remaining Local Entities. On the other hand, the reactivation of economic activity and, with it, job creation, currently requires adopting all possible measures to respond to situations of lack of liquidity in companies and, very especially, in small and medium-sized ones, for which the difficulties in collecting obligations contracted with them by public administrations, and especially local administrations, are particularly relevant. In 2009, Royal Decree-Law 5/2009, of April 24, on extraordinary and urgent measures to facilitate the sanitation of outstanding debts with companies and self-employed persons by Local Entities, was approved. This regulation contained the possibility for those entities to arrange a special indebtedness operation to finance negative treasury remnants or to finance overdue and enforceable obligations pending budget application. Given the persistence of the economic situation that motivated that regulation and the consolidation of its impact on delays in the payment of obligations contracted by Local Entities, with the consequent negative effect on the liquidity of companies, especially small and medium-sized ones and the self-employed, as well as the persistence of difficulties in accessing credit that are affecting the aforementioned economic agents above all, it is necessary to adopt urgent, extraordinary measures, so that Local Entities can fulfill their obligations and the companies and self-employed persons that contract with them can recover financial balance. Section two of Chapter two of this Royal Decree-Law regulates in ten provisions the possible arrangement by Local Entities of credit operations to fulfill their commercial obligations, within the framework of a financial line that will be instrumented by the Official Credit Institute, following instructions to be agreed by the Government Delegate Commission for Economic Affairs, and which will allow collaborating financial entities to directly pay suppliers the debts outstanding during 2011. This agreement will develop and specify the execution of that line. In any case, the necessary legal authorization is established so that this financial line can have the guarantee of the participation of Local Entities in State taxes. cve: BOE-A-2011-11641

OFFICIAL STATE GAZETTE No. 161 Thursday, July 7, 2011 Sec. I. Page 71550 Within the framework of the current instability in public debt markets, the Government wants to take another step in its commitment to fiscal discipline by introducing a rule that limits the growth of public administration spending, thus complementing the principles defined in the General Budgetary Stability Law. This rule strengthens the preventive aspect of fiscal stability policy, especially avoiding procyclical behaviors. The application of both fiscal rules – balance throughout the economic cycle and the limit on public spending growth – will help moderate possible imbalances generated in processes of excessive economic activity expansion and create the necessary margins to cushion recession phases, without compromising the sustainability of public finances. With this initiative, furthermore, the Government anticipates the requirements included in the recently agreed Pact for the Euro Plus and initiates the adaptation of stability laws to the changes that will be approved regarding economic governance in the European Union. The spending rule will apply directly to the General State Administration and its agencies, and to Local Entities that participate in the transfer of state taxes. The balance or surplus rule provided for in the current budgetary stability regulations will continue to apply to the remaining Local Entities. On the other hand, the reactivation of economic activity and, with it, job creation, currently requires adopting all possible measures to respond to situations of lack of liquidity in companies and, very especially, in small and medium-sized ones, for which the difficulties in collecting obligations contracted with them by public administrations, and especially local administrations, are particularly relevant. In 2009, Royal Decree-Law 5/2009, of April 24, on extraordinary and urgent measures to facilitate the sanitation of outstanding debts with companies and self-employed persons by Local Entities, was approved. This regulation contained the possibility for those entities to arrange a special indebtedness operation to finance negative treasury remnants or to finance overdue and enforceable obligations pending budget application. Given the persistence of the economic situation that motivated that regulation and the consolidation of its impact on delays in the payment of obligations contracted by Local Entities, with the consequent negative effect on the liquidity of companies, especially small and medium-sized ones and the self-employed, as well as the persistence of difficulties in accessing credit that are affecting the aforementioned economic agents above all, it is necessary to adopt urgent, extraordinary measures, so that Local Entities can fulfill their obligations and the companies and self-employed persons that contract with them can recover financial balance. Section two of Chapter two of this Royal Decree-Law regulates in ten provisions the possible arrangement by Local Entities of credit operations to fulfill their commercial obligations, within the framework of a financial line that will be instrumented by the Official Credit Institute, following instructions to be agreed by the Government Delegate Commission for Economic Affairs, and which will allow collaborating financial entities to directly pay suppliers the debts outstanding during 2011. This agreement will develop and specify the execution of that line. In any case, the necessary legal authorization is established so that this financial line can have the guarantee of the participation of Local Entities in State taxes. IV The stimulus of economic activity, and especially innovative business projects, requires investment incentives that, in the current restrictive context, must be particularly intense and guarantee their maintenance for a sufficient time for the viability of the aforementioned projects. To this end, the Government has decided to adopt an amendment to the Personal Income Tax to declare exempt capital gains obtained from the transfer of shares or participations derived from private investments in projects promoted by entrepreneurs, favoring the creation of companies that allow progress in changing the productive model and generating employment. cve: BOE-A-2011-11641

OFFICIAL STATE GAZETTE No. 161 Thursday, July 7, 2011 Sec. I. Page 71551 Said exemption is subject to a set of requirements: Specifically, the investment must be made directly by the individual through the subscription of shares or participations in newly or recently created entities that carry out an economic activity. And the capital gains exemption will apply to capital gains obtained from the transfer of shares or participations whose acquisition value does not exceed, for all entities in which they invest, 25,000 euros annually, nor 75,000 euros per entity during the three years following its incorporation, and the holding period of the securities in the taxpayer's assets is greater than three and less than ten years. Along with this measure, the Royal Decree-Law extends existing facilities for the production of feature films, whose planned repeal on December 31, 2011, endangered the immediate planning of necessary investments for the maintenance of the film industry's activity in 2012. And, finally, in this set of impulse measures, the regulation provided in this Royal Decree-Law is completed by an additional streamlining of the company creation procedure foreseen in Royal Decree-Law 13/2010, of December 3, through the clear determination of the possibilities of access by electronic means, or otherwise, and by any interested party to the negative denomination certificate issued by the Central Mercantile Registry. V This Royal Decree-Law also introduces new measures aimed at continuing to promote rehabilitation actions, which reinforce and deepen the contents on this matter included in the Sustainable Economy Law, introducing greater clarity in a market considered basic for achieving a more sustainable development model. To this end, the actions included within the global concept of rehabilitation are clearly defined, that is, conservation, improvement, and urban regeneration actions, which allows knowing under what specific conditions they are enforceable. It also clarifies which subjects are obliged to carry them out and which are legitimate to participate in rehabilitation actions, and the powers recognized to communities of owners, their associations, and cooperatives that may be constituted in this regard are made explicit, thus ending the doubts that the action of these subjects in rehabilitation actions generated in practice. Alongside this, also within the framework of policies aimed at achieving a more sustainable urban environment, the Royal Decree-Law generalizes technical building inspection, establishing its mandatory nature and essential requirements. In this way, this instrument, already existing in most urban planning laws in force, is provided with the necessary uniformity to guarantee contents that help achieve the adaptation of the existing housing stock to the minimum quality criteria required. VI Chapter VI introduces specific legal certainty measures in the real estate sector, which basically focus on two types: those related to the impossibility of granting powers of extraordinary relevance and impact on the territory through the technique of positive administrative silence, and those related to registration measures whose purpose is to guarantee and strengthen legal certainty in real estate acts and transactions through the Property Registry. In relation to the former, the rule, already contained in the State Land Law, regarding the impossible acquisition by administrative silence of powers or rights that contravene territorial or urban planning, is confirmed, culminating in the determination of the nullity ipso jure of these acts. The judgment of January 28, 2009, of the Third Chamber of the Supreme Court, has established as legal doctrine that article 8.1,b) of the aforementioned Land Law constitutes a norm with the rank of basic state law, with the mentioned effects. To this end, nothing better than to explicitly state the negative nature of administrative silence in the most relevant procedures for declaration of conformity, approval, or administrative authorization in these areas, which will undoubtedly contribute to greater legal certainty, preventing the mere passivity or absence of timely actions by City Councils from allowing any private individual to understand that urban planning licenses of the most varied types have been granted to them. cve: BOE-A-2011-11641

OFFICIAL STATE GAZETTE No. 161 Thursday, July 7, 2011 Sec. I. Page 71552 In relation to the latter, special emphasis is placed on registration protection measures whose objective is preventive protection and future purification of situations that currently occur and are negatively affecting investment in the real estate sector, both domestically and internationally. Among these, the annulment of previously granted licenses, with the ultimate consequence of demolition, which ends up affecting third-party good-faith purchasers who find themselves unprotected due to actions in which they were not a party, and which have not always been free from corruption at their origin. Among these measures is the incorporation into the Property Registry of information that will allow property purchasers to know in advance the possible litigious situation in which they find themselves, including files that may imply the imposition of fines or future demolition. Currently, access to such absolutely relevant information for potential investors is only optional for City Councils, so it is established that they must provide it to the Registrar, imposing on City Councils that fail to do so the economic damages that may be caused to good-faith purchasers. Furthermore, the requirements for access to the Property Registry for completed new constructions are specified, preventing those that, in addition to having a building permit and technical certification that the work conforms to the project, do not possess a first occupation license from being registered. A new administrative authorization is also established to register the horizontal property regime of real estate complexes to prevent the entry into the Property Registry of acquisitions that do not correspond to urban planning regulations or mandatory licenses and that could therefore be sold to third parties without complying with urban planning legislation. Access to the Property Registry is also allowed for buildings "outside of planning," that is, those for which urban planning legality restoration measures implying their demolition are no longer applicable, due to the expiration of the corresponding limitation periods. In this way, the protection of their owners, in many cases, third-party good-faith purchasers, is achieved, without implying ignorance of their "outside of planning" status and the limitations that this entails. VII Article 40 of Law 2/2011, of March 4, on Sustainable Economy, provides for the modification of administrative silence in procedures not considered covered by imperative reasons of general interest, in accordance with the provisions of article 43 of Law 30/1992, of November 26, on the Legal Regime of Public Administrations and Common Administrative Procedure. The legal mandate rests on the general provision of circumscribing the negative meaning of administrative silence to those procedures where imperative reasons of general interest require it and a law sanctions it as such. cve: BOE-A-2011-11641

OFFICIAL STATE GAZETTE No. 161 Thursday, July 7, 2011 Sec. I. Page 71553 Likewise, the Sustainable Economy Law has introduced a new article 84 bis of Law 7/1985, of April 2, regulating the Bases of Local Regime, which establishes the general rule that the exercise of activities by individuals is not subject to obtaining a prior municipal license or other preventive control means. With this legislative policy option, the Sustainable Economy Law goes a step further than Directive 2006/123/EC of the European Parliament and of the Council, of December 12, 2006, concerning services in the internal market, since it not only abolishes authorization regimes for the exercise of service activities included in its scope of application, but also extends to any type of activity. Notwithstanding the foregoing, the new article 84 bis establishes a series of exceptions to the general rule indicated, as the exercise of activities affecting environmental protection, the protection of historical-artistic heritage, public safety, public health, or those activities that involve the private use and occupation of public domain assets, may be subject to obtaining a prior municipal license, provided it is justified and proportionate. These latter requirements must be connected with the new article 39 bis of Law 30/1992, of November 26, which establishes the principles of intervention of Public Administrations for the development of an activity. Based on both precepts, the Government has proceeded to evaluate, within its scope of competence, the concurrence of the reasons that justify the option for the dismissive meaning of administrative silence, as well as the existence of references to local activity licenses in state legislation. Following the evaluation process carried out by the different Ministerial Departments, this Royal Decree-Law fulfills the mandate by proceeding to modify the precepts of multiple laws, promoting that in more than a hundred procedures the Administration is now subject to the positive administrative silence regime and that mentions of local licenses disappear in the following normative texts: Royal Decree-Law 4/2001, of February 16, on the Administrative Intervention Regime applicable to the energy recovery of animal flours from the transformation of animal by-products and carcasses, the Consolidated Text of the Water Law, approved by Royal Legislative Decree 1/2001, of July 20, Law 37/2003, of November 17, on Noise, Law 16/2002, of July 1, on Integrated Pollution Prevention and Control, Law 26/2007, of October 23, on Environmental Liability, Law 34/2007, of November 15, on Air Quality and Atmosphere Protection, and Law 42/2007, of December 13, on Natural Heritage and Biodiversity. In this way, citizens' activity can be developed in the affected areas, without the eventual delay in administrative action being confi