You've agreed a price on a home on the Costa del Sol, or found a buyer for yours, and before anyone books the notary you're handed a document in Spanish called a contrato de arras, with a deposit of around 10% of the price to transfer or accept. The arras contract in Spain is where real money first changes hands.
That document decides what happens to the deposit if somebody changes their mind. One word in it, penitenciales or confirmatorias, is the difference between walking away at a known cost and being asked by a court to complete. Signing from abroad, in a language you may not read well, makes that harder to judge.
The contrato de arras (deposit contract, often called a private purchase contract in English) is a private agreement that buyer and seller sign before the public deed of sale, the escritura. It fixes the price and the completion deadline and records a deposit the buyer pays on account.
In this guide, you'll learn which type of deposit you're agreeing to, how much is normally paid and how, what to check before signing from abroad and in English, and what happens if either side pulls out.
What the contract commits you to
Once it's signed, the property comes off the market, the price and completion date are in writing, and the deposit is later deducted from the price at the deed.
It can bind you more tightly than people expect. The Civil Code, which applies in Andalucía, refers to "arras o señal" (deposit or earnest money). If the document identifies the property, the price and both parties' consent, the sale is agreed, and under article 1279 either side can require the other to sign the public deed.
A reservation contract is a separate, usually smaller payment that holds the home while the arras contract is drafted, and its effect depends entirely on its wording.
The arras contract itself should include:
Every buyer and registered owner, with their DNI (Spanish ID card), NIE (foreigner's identity number) or passport. If it's a married seller's family home, both spouses sign (article 1320 of the Civil Code).
The property's address, land registry details, cadastral reference and any annexes.
The price, the deposit and how the balance will be paid.
The type of deposit, with its consequence written out in words.
The deadline for signing the deed.
Whether it's sold free of mortgages, seizure orders and occupants.
Who pays which costs.
Any conditions, such as the buyer obtaining a mortgage by a set date.
Three types of deposit, and why the wording matters
There are three kinds of arras, and only one lets you walk away.
A confirmatory deposit (arras confirmatorias) is part of the price paid in advance and proof that the contract exists. Neither side can escape the deal by giving it up. If one party fails to perform, the other can enforce the contract or terminate it, claiming damages either way (article 1124 of the Civil Code).
A withdrawable deposit (arras penitenciales) is the one in article 1454: "If a deposit or earnest money has been given in a contract of sale, the contract may be rescinded by the buyer agreeing to lose it, or the seller to return it doubled." Either side can withdraw without giving a reason, and the deposit is the price of doing so.
A penalty deposit (arras penales) is a guarantee. The party in breach loses the deposit, or returns it doubled, but stays bound by the contract. Under the penalty clause rules in articles 1152 and 1153, the injured party chooses between enforcing the sale and taking the penalty, unless the contract allows both.
| Type | Can a party walk away freely? | If the buyer pulls out | If the seller pulls out | Legal basis |
|---|---|---|---|---|
| Confirmatory | No | Seller enforces the sale, or terminates and claims damages | Buyer enforces the sale, or terminates and claims damages | Art. 1124 Civil Code |
| Withdrawable | Yes, at the agreed cost | Buyer loses the deposit | Seller returns double | Art. 1454 Civil Code |
| Penalty | No | Buyer loses the deposit, or the seller enforces the sale | Seller returns double, or the buyer enforces the sale | Arts. 1152 and 1153 Civil Code |
When the contract doesn't say which type it is
Spain's Supreme Court treats withdrawable deposits as the exception and reads them narrowly. In judgment 581/2013 of 26 September it held that, where the parties' intention isn't clearly stated, the deposit is "a simple advance on account of the price", which makes it confirmatory.
Judgment 583/2018 of 17 October added that mentioning article 1454 isn't enough if the contract doesn't spell out what each side loses. If you want a withdrawable deposit, write the consequence in full, along the lines of "if the buyer withdraws, they lose the amount paid; if the seller withdraws, they return double", and in a bilingual contract make sure both languages say exactly that.
How much you pay, and how to pay it
No law sets the amount. Around 10% of the price is usual in Spain, but that's market custom, and buyer and seller can agree more or less.
Under a withdrawable deposit, that amount is also the price of walking away. On a 500,000 euro villa with a 10% deposit, the buyer transfers 50,000 euros, and a seller who then backs out has to return 100,000.
Cash is where non-residents need care. If either party acts as a business or professional, a developer selling a new-build for example, a payment of 1,000 euros or more can't be made in cash. The limit rises to 10,000 euros when the payer is a private individual without tax residence in Spain. The fine is 25% of the amount, and payer and receiver are both liable, according to the Agencia Tributaria, the Spanish tax agency.
Between two private individuals the position is less clear-cut, which is one more reason to pay by bank transfer from your own account to an account in the owners' names, with a reference that identifies the property. That leaves a record of what was paid and when.
Signing an arras contract in Spain from abroad
You don't need a notary for this step. Under article 1278 of the Civil Code, contracts are binding "whatever the form in which they were entered into", so a private document signed by both parties, with every page initialled and a copy each, is valid. No law obliges you to sign one at all.
The contract is valid in a language both parties understand. From abroad, the practical route is a bilingual English and Spanish text with a clause stating which version prevails if they ever differ, and someone you trust should check that the English matches the Spanish.
With no notary involved, you don't usually need to be in Spain on the day, but ask whoever drafts the contract how signatures and signed copies will be exchanged. For the deed itself you'll need an NIE, which I cover in my guide on how to get your NIE number.
Checks before you sign
If nobody is doing the groundwork for you, do these yourself:
Request a nota simple (land registry extract) from Registradores de España to see the owner and any charges; my guide on how to request and read a nota simple explains it.
Check the cadastral reference on the Sede Electrónica del Catastro, the Land Cadastre's online office.
Ask for the latest IBI (council property tax) receipt and a certificate from the community of owners showing no unpaid fees.
Make sure every registered owner signs, and pay by transfer to an account in their name.
If an agency signs for the seller, ask to see the seller's written authority, since article 1259 of the Civil Code says "no one may contract in the name of another without being authorised by them". Ask, too, which account will hold the deposit until completion.
Mortgages and timing
Banks often ask for the arras contract when assessing a mortgage. If you need finance, add a condition so you get the deposit back if the mortgage is refused before a set date.
The law sets no deadline between the arras contract and the deed, so the parties agree one. With a mortgage, Ley 5/2019, the Real Estate Credit Act, requires at least 10 calendar days between the bank handing over the European Standardised Information Sheet (FEIN) and the signing, so build that into the completion date.
What happens if someone pulls out?
If the seller doesn't turn up at the notary, the usual first step is a formal demand by burofax (a certified letter with proof of its content) or through a notary. Under a withdrawable deposit you claim double what you paid. Under a confirmatory one you can sue to force the sale through, or ask for termination, return of the deposit and any damages you can prove.
If the buyer fails to complete, a withdrawable deposit means the seller keeps it and the contract ends, while a confirmatory one lets the seller demand the rest of the price or terminate and claim damages. A seller who keeps a forfeited deposit may have tax to account for, so check with a tax adviser; my guide on capital gains tax when you sell property in Spain covers the wider picture.
A contract can also be set aside if consent was given "through error, violence, intimidation or fraud" (article 1265 of the Civil Code), and hiding a charge the seller knew about can amount to bad faith. Many problems come from simpler gaps, such as no stated deposit type, no deadline, no mortgage condition or a missing owner's signature.
Before you sign, or make a claim, confirm the current position with a lawyer who specialises in Spanish property law.
Before you sign or accept a deposit
An arras contract in Spain sets the price and the timetable, and its wording decides who loses what if the sale collapses. Make sure the deposit type is spelled out, add a mortgage condition if you need one, and check the nota simple before any money moves.
If you're buying, I can give you a second opinion before you buy, ideally before the deposit leaves your account. If you're selling, it helps to know what your home is really worth before you set the price and the deposit. Either way, get in touch and tell me where you are in the process.