Contrato de arras: the Spanish deposit contract explained

What it's really for

Weeks almost always pass between agreeing the price and signing at the notary: time for the mortgage, for paperwork, for an up-to-date nota simple, sometimes for a NIE that hasn't arrived yet. The contrato de arras is there to hold the property during those weeks and to put the price, the timing and the conditions in writing. The Consejo General del Notariado describes it as "un documento privado en el que el comprador entrega una cantidad de dinero, que se conoce como arras", a private document in which the buyer hands over a sum of money known as arras, and warns that "este documento no es obligatorio, pero la ley lo considera un contrato válido, por lo que, desde el momento en que lo firme, estará obligado a cumplirlo", it isn't compulsory, but the law treats it as a valid contract, so from the moment you sign it you're bound to honour it.

It's the sentence I repeat to every client arriving from abroad, because the word "deposit" doesn't warn you as much as it should: it sounds like a sum you simply get back. The Código Civil (art. 1450) says a sale is complete once the parties have agreed on the thing and the price, "aunque ni la una ni el otro se hayan entregado", even if neither has yet been handed over: it isn't a form to fill in quickly at the agency, it's the contract. And the scope of what can be written into it is very wide, because art. 1255 leaves the parties free to set "los pactos, cláusulas y condiciones que tengan por conveniente", whatever terms, clauses and conditions they see fit. That's why two arras contracts that look the same can have opposite consequences.

Confirmatorias, penitenciales, penales: the difference

The word arras on its own tells you nothing: you have to look at what the contract says happens if one side doesn't make it to the signing at the notary. In practice you come across three kinds.

• Arras confirmatorias. These are what the Notariado calls "las más comunes", the most common: "se entregan como señal de la perfección del contrato y a cuenta del precio", handed over as a sign the contract is complete and as a payment on account of the price. They simply confirm the contract exists: they give neither side the right to back out. If one party doesn't sign, the other can insist the sale goes ahead, or ask for the contract to be terminated and for damages.
• Arras penitenciales. These are the ones under art. 1454 of the Código Civil: "podrá rescindirse el contrato allanándose el comprador a perderlas, o el vendedor a devolverlas duplicadas", the contract can be cancelled if the buyer agrees to forfeit them, or the seller to return them doubled. They buy the right to change your mind, at a price fixed in advance. The Notariado sums it up like this: "si el acuerdo se rompe por parte del comprador perderá las arras, y si es por culpa del vendedor, este tendrá que devolver el doble de la cantidad acordada", if the buyer breaks the deal they lose the arras, and if it's the seller's fault, they have to return double the amount agreed.
• Arras penales. These are a cláusula penal, a penalty clause, under articles 1152 and 1153 of the Código Civil: the sum is there to fix the damages in advance, and "la pena sustituirá a la indemnización de daños y el abono de intereses en caso de falta de cumplimiento, si otra cosa no se hubiere pactado", the penalty takes the place of damages and interest in the event of non-performance, unless otherwise agreed. Here the point is a delicate one: art. 1153 makes clear that whoever fails to perform can't get out of it just by paying the penalty, "sino en el caso de que expresamente le hubiese sido reservado este derecho", unless that right has been expressly reserved.

The practical difference is exactly this: with penitenciales, a seller who gets a better offer can walk away by giving you back double, and you lose the house. With confirmatorias, they can't. Whenever I'm helping a buyer, I always ask for the contract to state in plain words which type of arras it is, because a court looks at what the parties actually intended, not at the heading someone put at the top of the page.

What I check, line by line, before letting anyone sign

1. Who's signing and what's being sold The owners as they appear on the nota simple, all of them; and the finca, the registered property, as it's described at the Registro, with the cadastral reference, plus the garage and the storage room separately if they're separate fincas.
2. Price and payments The total amount, how much is paid now, how it's paid (a traceable transfer, always) and into which account, and how much is left to pay at the signing.
3. The type of arras Spelled out: confirmatorias, penitenciales or penales, with a reference to art. 1454 if they're penitenciales. Without this line, disputes follow.
4. The deadline for the signing A firm date, not "within a couple of months", and who chooses the notary. The Notariado reminds you that everyone is free to go "al notario que libremente elija", to the notary of their own choice.
5. The condition of the property Free of tenants and occupants on handover, with no mortgages or court attachments at the signing, the fees of the comunidad (the owners' association) and the IBI (the local property tax) paid up to date, and a list of what's staying inside.
6. The conditions the sale depends on If the purchase depends on a mortgage, you write down what happens if the bank says no. It's the one real protection for a buyer coming from abroad.
7. Who pays what Taxes, notary, registry, agency: put it in writing now, not on the day of signing.

What happens if one side pulls out

With arras penitenciales, the law gives the answer: a buyer who backs out loses what they've paid, a seller who backs out returns double. It's a choice, not a breach, and that's the end of it. With arras confirmatorias, the disappointed party can ask for the contract to be carried out, meaning they can insist the sale goes ahead, or terminate it and claim damages: a longer road, but one that keeps open the chance of actually getting that house.

The case I see most often isn't bad faith, it's time: the signing slips because a document is missing, and nobody wrote down what happens if it slips. My advice is to always build in a short automatic extension, agreed in writing, for a delay that's nobody's fault. It costs one line and avoids almost every argument.

Before signing: the nota simple and the paperwork

I never let anyone sign arras without reading a recent nota simple first, and I go into that at length in the dedicated guide: that's where you see the real owners, the mortgages, the court attachments, the registered surface area. Along with the nota, I ask the seller for the energy performance certificate, the latest IBI receipt, the certificate of comunidad fees and, if the building is run by a comunidad de propietarios, the minutes of its last meeting. These are documents that are hard to get after signing; beforehand, they're easy.

And there's a piece of advice from the Notariado that I make my own: "antes de realizar ningún trámite, firmar cualquier documento o hacer alguna entrega de dinero, le aconsejamos que acuda al notario que libremente elija", before doing any paperwork, signing any document or handing over any money, they recommend going to the notary you freely choose. For arras penitenciales, the same notaries add that "la importancia de este documento aconseja contar con la asesoría imparcial de un notario y elevarlo a escritura pública", the document matters enough to warrant impartial advice from a notary and turning it into a public deed. Taking the contract to a notary before handing over any money isn't distrust of the seller: it's the cheapest way to buy with peace of mind.

This is a general explanation of how the contrato de arras works in Spain, not legal advice. Every sale has its own clauses and exceptions: before signing or paying anything, get help from a qualified notary or lawyer.