Exceptionality of direct award

Article 137.4 of Law 33/2003, of November 3, on Public Administration Assets, BOE November 4, 2003 (LAW 1671 /2003) says:

Direct award may be agreed upon in the following cases:

1. When the acquirer is another public administration or, in general, any legal person under public or private law belonging to the public sector.For these purposes, a legal person under private law shall be understood belonging to the public sector, the commercial company in whose capital there is a majority direct or indirect participation of one or more public administrations or legal entities governed by public law.
2. When the acquirer is a non-profit entity, declared of public utility, or a legally recognized church, denomination or religious community.
3. When the property is necessary to fulfill a public service function or to carry out a purpose of general interest by a person other than those provided for in paragraphs a) and b).
4. When the auction or contest promoted for the alienation is declared void or these are unsuccessful as a consequence of the breach of its obligations by the successful bidder, provided that no more than one year has elapsed since the celebration of the same. In this case, the conditions of the sale may not be lower than those previously announced or those in which the award took place.
5. In the case of plots that due to their shape or small extension are unbuildable and the sale is made to an adjoining owner.
6. In the case of rural properties that do not constitute an economically exploitable area or are not capable of providing a utility according to their nature, and the sale is made to an adjoining owner.
7. When the ownership of the asset or right corresponds to two or more owners and the sale is made in favor of one or more co-owners.
8. When the sale is made in favor of the person who holds a preferential acquisition right recognized by legal provision.
9. When for exceptional reasons it is considered convenient to carry out the sale in favor of the occupant of the property.

Art. 80 Revised Local Regime Text (TRRL), approved by Royal Legislative Decree 781/1986, of April 18 (BOE of 22), establishes a general principle that must necessarily be respected «disposals of assets must be carried out by auction public”.

Such a requirement is mandatory , according to the reiterated doctrine of the Supreme Court and can only be waived in the cases exhaustively established in a formal Law.

However, Law 33/2003, of November 3 (EC 4127/2003), on the Assets of Public Administrations (LPAP), in its art. 137 in its section 1, establishes that the disposal of real estate may be carried out through competition, auction or direct award. And, in its section 4, it contemplates the cases in which direct awarding may be agreed.

Art. 137 LPAP does not constitute a basic precept and, therefore, cannot displace art. 80 TRRL. It is evident that the exceptions that allow direct awarding have to fulfill precisely that: exceptionality.

It is not inferred from the wording of the query that there is anything exceptional, neither public interest, nor administrative nature of the cement manufacturing company, nor lack of profit motive, nor deserted contest, neither adjoining, nor several titular owners.

The same can be said of article 109.2 of the Property Regulation, which says:

«Heritage real estate may not be transferred free of charge except to public entities or institutions for purposes that benefit the inhabitants of the municipal area, as well as to private institutions non-profit public interest. The competent authority of the Autonomous Community will also be notified of these assignments.»

In Spanish legislation, competition is essential, so a direct award or a free transfer can only be done exceptionally and for the reasons assessed by the same Law that prohibits the others.