The Arras Contract in Spain Explained — Deposits, Rights and Risks

Somewhere between shaking hands on a price and signing the deed at the notary, almost every Spanish property purchase passes through one crucial document: the contrato de arras, or deposit contract. It is usually a few pages long, it is signed privately without a notary, and it commonly involves handing over around 10% of the purchase price. It is also the point at which a casual agreement becomes a binding commitment — and the document most likely to decide who keeps what if the sale later collapses. This guide explains, in plain English, how the arras contract works, why the exact wording matters far more than most buyers realise, and how to sign one with your eyes open.

What is a contrato de arras?

A contrato de arras is a private contract between the buyer and seller of a property, signed before the final deed, in which the buyer pays a deposit — the arras, sometimes called a señal — as a sign of commitment. The contract records the essential terms of the deal: the property, the parties, the agreed price, the deadline for completion, how the deposit is treated, and what happens if either side fails to go through with the sale.

Three features are worth understanding from the start:

• It is a private document. The arras contract does not need a notary, is not registered anywhere, and can be drafted by anyone. That flexibility is convenient, but it also means there is no official checking of the wording. Whatever the parties sign is what governs the deal.
• It is genuinely binding. Despite being informal in appearance, a properly formed arras contract creates real legal obligations. Depending on its type, walking away can cost the buyer the whole deposit, cost the seller double the deposit, or expose either side to a court claim for completion of the sale plus damages.
• The money at stake is significant. By convention the deposit is commonly around 10% of the purchase price. On a typical purchase that can be tens of thousands of euros changing hands on the strength of a private document — which is exactly why the wording deserves careful attention.

Where the arras fits in the buying process

A typical resale purchase in Spain runs through three broad stages, and the arras contract is the middle one.

1. Reservation (optional)

Many purchases begin with a short reservation document and a small holding payment — often a modest fixed sum — to take the property off the market while the paperwork is prepared. A reservation is not the same as an arras contract, although the two are often confused; we compare them later in this guide.

2. The arras contract

Once the outline terms are agreed, the parties sign the contrato de arras and the buyer pays the deposit. From this point both sides are committed on the terms written in the contract. The period between arras and completion is when the buyer's lawyer finishes due diligence and, if needed, the buyer finalises a mortgage. The contract sets a deadline for signing the deed — commonly somewhere between one and three months later, though the parties are free to agree any period.

3. Completion at the notary

The purchase completes when the public deed of sale (escritura pública de compraventa) is signed before a notary, the balance of the price is paid and the keys change hands. The deposit already paid under the arras contract is deducted from the price at this stage. Spain's Consejo General del Notariado explains the notary's role as an impartial public official — which is precisely why the arras stage, where no notary is involved, is the stage where independent advice matters most.

For the wider journey from offer to keys, see our complete guide to buying a house in Spain. This article deliberately zooms in on the deposit contract itself.

The three types of arras: penitenciales, confirmatorias and penales

Spanish law and court practice recognise three different kinds of arras, and they behave very differently when a deal breaks down. The label the contract uses — and, more importantly, the rights the wording actually spells out — decide which regime applies.

Arras penitenciales — the walk-away deposit

This is the form most foreign buyers have heard of, and the only one expressly regulated by Article 1454 of the Spanish Civil Code. With arras penitenciales, either party can lawfully abandon the sale: the buyer by forfeiting the deposit, the seller by returning it doubled. Nobody has to justify their decision and neither side commits a breach by withdrawing — the deposit is, in effect, the pre-agreed price of changing your mind.

Arras confirmatorias — a part payment, not an exit ticket

Confirmatorias are simply an advance on the price that confirms the contract exists. Crucially, they give no right to walk away. If either party refuses to complete, the other can pursue the general remedies for breach of contract under the Civil Code: asking a court to enforce the sale, or to terminate it, with damages in either case. A buyer who signs confirmatorias thinking they can exit for the price of the deposit is mistaken — the seller may instead sue to make them complete the purchase.

Arras penales — a built-in penalty

Penal arras work like a penalty clause: the deposit is the agreed sanction if one side breaches. Unlike penitenciales, they do not create a clean right of withdrawal — depending on how the clause is drafted, the innocent party may keep or claim the penalty and still demand that the sale go ahead. They are less common in ordinary residential deals but appear in professionally drafted contracts.

Article 1454 and the double-return rule

Article 1454 of the Civil Code is the legal foundation of the walk-away deposit, and it is remarkably short. In essence it provides that where arras or a señal have been given in a contract of sale, the contract may be rescinded by the buyer accepting the loss of the deposit, or by the seller returning it in double.

Three practical points flow from that single sentence:

• The double-return rule is real and symmetrical. A seller who accepts a better offer after signing arras penitenciales must hand back twice what they received. On a 10% deposit, that means walking away costs the seller the equivalent of 20% of the agreed price — a genuine deterrent against gazumping, which is one of the main reasons buyers want this protection in writing.
• The exit must happen before completion. The withdrawal right under Article 1454 operates while the contract is at the arras stage. Once the deed is signed, the sale is done and the arras regime is spent.
• The article says nothing about amounts or deadlines. The 10% figure, the completion window, who holds the money — none of that is in the Civil Code. It is all left to the parties, which is why the contract wording carries so much weight.

Why naming the type matters: the trap in the default rule

Here is the point on which more arras disputes turn than any other. Spanish courts interpret the withdrawal right of Article 1454 restrictively. If a contract merely records that a deposit has been paid — without clearly stating that either party may withdraw, the buyer losing the deposit and the seller returning it doubled — the courts have repeatedly treated the sum as arras confirmatorias: a simple part payment, with no exit right attached.

The practical consequence is stark. Two contracts can look almost identical, yet behave completely differently when the deal breaks down:

• A contract that says the payment is made "en concepto de arras penitenciales conforme al artículo 1454 del Código Civil", spelling out the forfeit-or-double consequences, gives both sides a clean, priced exit.
• A contract that just says "the buyer pays €20,000 as arras on account of the price" may well leave both sides locked in — meaning a reluctant party can be sued for completion of the sale itself, not merely the loss of a deposit.

Neither outcome is automatically "better". A buyer who is certain they want the property may prefer confirmatorias, precisely because the seller cannot escape by paying double. A buyer with any uncertainty — financing, surveys, personal circumstances — usually wants the clarity of penitenciales. What you should never do is leave the question to chance: decide which regime you want, and make sure the contract says so unambiguously. This is exactly the kind of wording an independent property lawyer in Spain reviews before you sign, and it is a large part of why signing an arras contract unadvised is one of the classic pitfalls of buying property in Spain.

How much deposit? What 10% means in practice

Ask anyone in Spanish property circles how much an arras deposit is and the answer will be "ten per cent". It is worth unpacking what that figure really is — and is not.

• It is a convention, not a law. No statute fixes the amount of arras. Ten per cent is simply the customary figure the market has settled on. The parties can agree 5%, 15%, a fixed sum, or anything else.
• It sets the price of walking away. Under penitenciales, the deposit is exactly what the buyer risks and half of what the seller risks. A larger deposit makes both sides more committed; a smaller one makes the deal easier to abandon. That cuts both ways: a buyer who negotiates a low deposit has less to lose, but has also made it cheaper for the seller to accept a rival offer and pay double.
• It is real money, at a risky moment. The deposit is usually paid directly to the seller (sometimes to the estate agency or held by a lawyer — the contract should say which). It changes hands on a private document, before a notary is involved. On a €300,000 purchase, the customary deposit is €30,000. That is why the checks described below belong before signature, not after.
• It is deducted at completion. If all goes well, the arras simply becomes the first slice of the price, and you pay the balance at the notary.

If your purchase depends on borrowing, the deposit interacts dangerously with your financing timeline: you will normally be asked to sign the arras before your mortgage is finally approved. Our guide to mortgages in Spain covers the lending process; the section on negotiating terms below explains the clause that protects you.

What a good arras contract should contain

There is no official template, so quality varies enormously — from professionally drafted contracts to a single page produced by an estate agency. As a minimum, a well-drafted arras contract should identify and record:

• The parties, completely. Every legal owner of the property must sign as seller — a signature from one spouse or one heir of several is a classic source of later disputes. The buyer's details, including NIE if already obtained, should be full and accurate (you will need an NIE number to complete in any event).
• The property, precisely. The registered description, the Land Registry details and the cadastral reference should be stated and should match reality. Discrepancies between the registry, the Catastro and the physical property are common and are far easier to resolve before you are contractually committed.
• The price and payment terms. The full price, the deposit paid now, how and when it was paid, and confirmation that it counts towards the price at completion.
• The type of arras, explicitly. As explained above — penitenciales, confirmatorias or penales, ideally naming Article 1454 where a withdrawal right is intended, and spelling out the consequences in words rather than relying on a label alone.
• The completion deadline. A clear final date for signing the deed, and ideally what happens if the notary appointment cannot take place for reasons outside either party's control.
• The state of the property. That it is sold free of occupants and tenants, free of charges and debts (or stating which exist and how they will be cleared at completion), and with community fees and local property tax up to date.
• Who pays which costs. Spanish law allocates certain notary and registration costs by default, but the parties commonly agree their own split — the contract should record it.
• Any agreed conditions. Mortgage conditions, the sale of the buyer's existing home, pending licence checks — whatever the deal genuinely depends on should be written in as a condition, not left as a verbal understanding.

Negotiating terms as a buyer

Everything in an arras contract is negotiable until it is signed. These are the points most worth negotiating from the buyer's side.

The mortgage clause

The single most valuable protection for a financed buyer is a condition stating that if the mortgage is refused, the contract is dissolved and the deposit returned. Without it, a buyer whose loan falls through is simply a buyer who cannot complete — and loses the deposit (penitenciales) or faces a claim (confirmatorias). Sellers resist open-ended financing conditions, so these clauses are usually negotiated with limits: a named deadline for the loan decision, evidence that the application was made promptly and seriously, and sometimes a documented refusal from the lender as the trigger. A well-drafted clause protects the buyer without letting either side game the deal.

The completion window

Make sure the deadline is realistic for your circumstances: mortgage approval times, currency transfers from abroad, obtaining your NIE, travel, and any power of attorney you need to arrange. It is far better to negotiate an extra month at the arras stage than to beg for an extension against a deadline that forfeits your deposit.

Who holds the deposit

Most commonly the deposit is paid straight to the seller. Paying it to be held by a lawyer or, less formally, the estate agency until completion can be negotiated, and reduces the practical difficulty of recovering the money if the sale unravels through the seller's fault. Whoever holds it, the contract should say so in terms.

The deposit amount itself

Ten per cent is customary, not compulsory. On a long completion window a seller may want more commitment; a buyer awaiting a mortgage decision may prefer to reserve with less at stake and increase the deposit once financing is approved. Structuring the arras in stages is perfectly lawful if the contract is drafted clearly.

Conditions that reflect reality

If the deal genuinely depends on something — a clean nota simple, a licence check on an extension, a survey — write it in. A condition that exists only in conversation does not exist at all.

Before you sign: the checks that come first

Because the arras contract is where your money goes at risk, the essential due diligence belongs before signature. At minimum:

• Obtain a nota simple from the Land Registry via the Colegio de Registradores, confirming who owns the property and what mortgages, embargoes or charges are registered against it. It should be recent — days old, not months.
• Check that every registered owner is selling. The sellers named in the contract must match the registry. Inherited properties and divorcing couples need particular care.
• Check the property's legal and physical description against the registry and Catastro, including any extensions or pools.
• Ask about debts that follow the property — community fees and IBI arrears in particular — and deal with them in the contract wording.
• Have the contract reviewed by your own independent lawyer before you sign or pay anything. Not the agent's lawyer, not the seller's — yours. If you would like an introduction, our independent English-speaking legal partner Platinum Legal Spain handles Spanish conveyancing for international clients.

A full breakdown of who checks what — and what a lawyer costs — is in our guide to using a property lawyer in Spain.

When arras goes wrong: scenarios and outcomes

Most arras contracts complete without drama. When they do not, the outcome depends almost entirely on the type of arras and the wording of the contract. These are the recurring scenarios.

The buyer pulls out

Under penitenciales, the buyer simply loses the deposit — painful, but clean and final. Under confirmatorias, the seller can choose instead to go to court demanding that the buyer complete the purchase, or that the contract be terminated with damages, which may amount to more (or less) than the deposit. The reason for pulling out generally does not matter unless it is covered by a condition written into the contract — which is why the mortgage clause above is so important.

The seller pulls out

Under penitenciales, the seller must repay double the deposit. In practice this usually happens when the seller receives a higher offer and calculates that paying double still leaves them ahead. If the seller refuses to pay voluntarily, the buyer's remedy is a court claim. Under confirmatorias, the buyer can instead ask the court to enforce the sale itself — a stronger position for a buyer who truly wants that specific property rather than compensation.

The deadline passes without completion

What happens next depends on the wording: some contracts make the deadline strict, others allow either party to demand completion by formal notice. Disputes often arise where the delay is caused by paperwork rather than unwillingness — a missing certificate, a slow lender, a notary diary. A well-drafted contract anticipates this; a one-page agency template usually does not.

The parties disagree about what the arras were

The classic dispute: the contract took the deposit but never clearly created a withdrawal right, one party walks away believing they are merely forfeiting the deposit, and the other sues for completion. Spanish courts resolve these cases by examining the wording, and the restrictive interpretation described earlier means ambiguous contracts tend to be read as confirmatorias. The lesson is always the same: say what you mean, in the contract, before any money moves.

Arras vs reservation contract vs option to buy

Three documents get confused constantly, and the differences matter.

A frequent trap: a "reservation" form that is actually worded as arras, or arras drafted so loosely they behave like neither. The label at the top of the page counts for little; the operative wording is everything.

Where insurance fits into the arras timeline

The arras stage is also the sensible moment to plan the practical side of ownership, because the completion date is now in the diary. From the moment the deed is signed, the property — and everything that can go wrong with it — is yours. If you are buying with a Spanish mortgage, the lender will normally require buildings insurance to be in place at completion; even without a mortgage, buildings and contents cover from day one is strongly advisable.

Using the weeks between arras and completion to arrange cover means your policy can start on completion day itself, with no uninsured gap between getting the keys and getting protected. Our guide to home insurance when buying property in Spain explains what to look at, and it is also the window in which most buyers budget for purchase taxes and completion costs.

Your quick arras checklist

• Finish the core checks — nota simple, owners, debts, description — before signing anything.
• Have your own independent lawyer review the contract before you sign or pay.
• Confirm the contract states the type of arras explicitly — and that it is the type you actually want.
• If you need a mortgage, insist on a clearly drafted financing condition.
• Negotiate a completion window that is realistic for your paperwork, funds and travel.
• Record who holds the deposit and how it is returned or applied in each scenario.
• Make sure every registered owner signs as seller.
• Line up home insurance to start on completion day.

Frequently asked questions