The arras contract explained — what binds you, and what does not?

The arras contract is the first binding legal step in a Spanish property purchase — the one you sign before the notary appointment. Here is what it involves, and when you can withdraw.

What is an arras contract?

An arras contract (contrato de arras) is a preliminary agreement between buyer and seller to complete a property purchase on agreed terms. The buyer pays a deposit (typically 10% of the purchase price) and both parties commit to the transaction. It does not replace the notary appointment — it is a preliminary step towards it.

The three types of arras contract

It is essential to know which type of arras contract you are signing:

Arras penitenciales (art. 1454 CC): The most common type. If the buyer withdraws, they lose the deposit. If the seller withdraws, they must repay double. Both parties therefore have an "exit" — at a price.
Arras confirmatorias: The deposit confirms the deal but does not give an automatic exit. If a party defaults, the other can demand performance of the contract through the courts — or compensation. More binding than penitenciales.
Arras penales: A hybrid type that can include both a right of withdrawal and a claim for compensation. The contract wording determines the precise effect.

Most important to remember: Make sure your contract explicitly states the type of arras. If it is not specified, it can give rise to disputes about your rights if you withdraw. Your lawyer should review the contract before signing.

What should the arras contract contain?

A precise description of the property (address, land registry number, sqm)
The agreed purchase price
The deposit amount and payment date
The deadline for completing the notary appointment (typically 30-90 days)
The condition of the property at handover (cleared, possibly with furniture)
Who pays which costs
The type of arras (penitenciales is recommended for the buyer)
Any conditions relating to financing or legal due diligence

What happens to the deposit at completion?

The deposit (typically 10%) is offset against the final purchase price at the notary appointment. It is not an extra fee — it is part of the price you have already agreed. At the notary appointment you pay the remaining 90% (minus any mortgage financing).

Financing conditions

Many lawyers recommend including a clause stating that the deal is conditional on financing being approved within a certain deadline. Without such a clause you can in principle lose your deposit if your loan is not approved — which can happen even to serious applicants.

Frequently asked questions about the arras contract

Does the arras contract need to be signed at a notary?

No — the arras contract is a private agreement and does not require a notary. It is an ordinary private-law contract that can be signed by the parties and their lawyers. The notary appointment (escritura pública) is a separate, later step.

Can the deposit amount be negotiated?

Yes — 10% is the standard but not a legal requirement. In certain situations (limited liquidity, uncertainty about financing) a lower deposit can be negotiated, but the seller will typically require a minimum amount that creates a real commitment.

What happens if the seller cannot complete the sale?

Under arras penitenciales, the seller is obliged to repay double the deposit received. The seller can, however, choose to complete the sale instead of paying double the deposit, depending on whether your contract explicitly rules out this option.