Buying guides
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Last updated:
By
Harrison Downes
*Researched and regularly updated to reflect current data.*
The contrato de arras is the binding preliminary contract that commits both buyer and seller to a property transaction in Spain. It's signed after your offer has been accepted and typically involves paying 10% of the purchase price as a deposit. If you pull out, you lose that deposit. If the seller pulls out, they owe you double.
For international buyers, the arras is often the first legally binding step in a Spanish property purchase, and it's the point where real money is at risk. Understanding the different types of arras contracts, what should be included, and how to protect yourself if you're financing with a mortgage is essential before you sign anything.
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At a glance
The contrato de arras is a binding preliminary contract between buyer and seller
It locks in the price, sets a completion deadline, and involves a deposit (typically 10%)
Three types exist: penitenciales (most common), confirmatorias, and penales
Under arras penitenciales: buyer withdraws = loses deposit; seller withdraws = pays double
A mortgage condition clause is critical if you're financing the purchase
Your lawyer should review or draft the contract before you sign
The arras deposit forms part of the final purchase price (it's not an additional cost)
The period between arras and completion is typically 4-8 weeks
What is a contrato de arras?
The contrato de arras (also called contrato de arras or earnest money contract) is a private agreement between buyer and seller that precedes the final purchase deed (escritura de compraventa) signed at the notary. It serves three purposes: it confirms both parties' commitment to the transaction, it locks in the agreed purchase price and terms, and it sets a deadline for completion.
The arras is not the same as the initial reservation deposit that some agents collect (typically 3,000-6,000 euros to hold a property for a few weeks). The reservation deposit, where used, is a preliminary step that precedes the arras. In some transactions the agent combines these into a single step, which can create confusion. Make sure you understand whether you're signing a reservation agreement or a full contrato de arras, because the financial consequences are different.
The deposit paid with the arras - typically 10% of the purchase price - is not an additional cost. It forms part of the final purchase price and is deducted from the amount due at completion. On a 500,000 euro property, you pay 50,000 euros at the arras stage and the remaining 450,000 euros (minus your mortgage) at the notary.
The three types of arras contracts
Spanish law recognises three types of arras, each with different consequences for withdrawal. The type must be clearly stated in the contract - if it isn't, courts may interpret the agreement as confirmatorias by default, which has different implications than most buyers expect.
Arras penitenciales (the standard for property transactions)
This is the type used in the vast majority of residential property transactions in Spain, and the one your lawyer will almost certainly recommend.
Under arras penitenciales, either party can withdraw from the transaction, but at a defined financial cost:
If the buyer withdraws: You lose your deposit. The seller keeps the 10% (or whatever percentage was agreed) as compensation.
If the seller withdraws: They must return your deposit plus pay you an additional amount equal to the deposit. In other words, you receive double your deposit back.
This symmetrical penalty structure protects both parties and creates a financial incentive for the transaction to complete. It also means that either party has a defined exit route if circumstances change - it's not a prison, but leaving has a clear price.
The penalties under arras penitenciales are the full extent of either party's liability. The buyer can't sue the seller for additional damages beyond the double deposit, and the seller can't pursue the buyer for more than the forfeited deposit. This certainty is one reason it's the preferred form for property transactions.
Arras confirmatorias
Under arras confirmatorias, the deposit confirms the buyer's commitment to complete the purchase. Neither party has a penalty-based exit route. If either side wants to withdraw, the other party can seek a court order to enforce the contract and/or claim damages for breach.
This form carries more legal risk for both parties. If a seller refuses to complete under a confirmatorias contract, you'd potentially need to go to court to enforce the sale or claim damages - a costly and time-consuming process, especially for an international buyer. Similarly, if you as the buyer can't complete (mortgage declined, for example), the seller could pursue you for damages beyond just keeping the deposit.
Confirmatorias contracts are less common in residential transactions but do appear. If a contract doesn't specify the type, Spanish courts may default to interpreting the arras as confirmatorias, which is another reason to ensure the contract explicitly states "arras penitenciales."
Arras penales
Under arras penales, a penalty clause applies on top of the deposit retention. The penalty amount is specified in the contract and can exceed the deposit value. This form is rarely used in standard residential transactions and is more common in commercial property deals.
If you encounter an arras penales contract, have your lawyer review it carefully. The financial exposure can be significantly higher than under the standard penitenciales form.
What should be included in the contract
Your lawyer should review (or ideally draft) the contrato de arras before you sign. The contract should contain all of the following:
Identification of both parties. Full legal names, passport/NIE numbers, and addresses for both buyer and seller. If either party is represented by a legal representative, the power of attorney details should be referenced.
Property description. The full address, Land Registry reference (referencia registral), and cadastral reference (referencia catastral). This ensures there's no ambiguity about which property is being sold.
Purchase price. The agreed price in euros, clearly stated. If furniture or other moveable items are included in the sale, these should be itemised and valued separately (as they attract different tax treatment).
Deposit amount and payment method. The amount being paid, when it's due, and how it will be paid (bank transfer, banker's draft, etc.). Specify the bank account the deposit will be paid into.
Completion deadline. The date by which the purchase deed (escritura) must be signed at the notary. This is typically 4-8 weeks after the arras, though it can be longer if needed for mortgage processing or other reasons. The deadline should be realistic given your mortgage timeline.
Type of arras. The contract should explicitly state "arras penitenciales" to avoid any ambiguity about which withdrawal rules apply.
Conditions. Any conditions that must be met for the transaction to proceed. This is where the mortgage condition (see below) and any other contingencies are documented.
What's included. A clear statement of what is and isn't included in the sale - built-in appliances, air conditioning units, furniture, garden equipment, etc. Disputes over fixtures and fittings are common and entirely avoidable with clear documentation.
Charges and debts. Confirmation that the property will be delivered free of debts, charges, and encumbrances at completion. Any existing mortgage on the property should be referenced and confirmed as being cancelled at or before completion.
Distribution of costs. Confirmation of who pays which costs (ITP, notary, registry, etc.). Standard practice is that the buyer pays all transfer taxes and the purchase deed costs, while the seller pays any costs related to cancelling their existing mortgage.
The mortgage condition: critical if you're financing
If you're buying with a mortgage, the most important clause in your contrato de arras is the mortgage condition (condicion suspensiva de financiacion). Without it, you risk losing your 10% deposit if your mortgage application is declined.
The mortgage condition states that the contract is conditional on you obtaining mortgage financing on defined terms (loan amount, maximum interest rate, minimum term) within a specified timeframe. If you don't secure a mortgage meeting those terms by the deadline, the contract is voided and your deposit is returned in full.
The exact wording matters. A vague condition like "subject to obtaining a mortgage" may not protect you if the bank offers a mortgage but on worse terms than you expected (lower LTV, higher rate). The condition should specify the minimum terms you need:
Minimum loan amount (e.g., "financing of at least 325,000 euros")
Maximum interest rate (e.g., "at a fixed rate not exceeding 4.0%")
Minimum term (e.g., "for a term of at least 20 years")
Deadline for mortgage approval (e.g., "mortgage offer to be obtained by [date]")
If the bank offers a mortgage that doesn't meet these specified terms, the condition isn't met and you can withdraw with your deposit returned.
Not all sellers will accept a mortgage condition. In competitive markets, sellers may prefer buyers who can commit without financing contingencies. In these situations, getting pre-qualified before making an offer becomes even more important - it gives you confidence that the mortgage will come through and may give the seller enough assurance to accept a conditional offer.
Getting pre-qualified before you reach the arras stage is the single best way to protect yourself. If you already know what you can borrow and which bank will lend to you, the mortgage condition becomes a safety net rather than a lifeline.
What happens between signing the arras and completion
The arras triggers several parallel processes:
Due diligence. Your lawyer conducts thorough checks on the property - nota simple from the Land Registry, planning and building verification with the town hall, community fee status, and tax situation. If any serious issues emerge (undisclosed debts, illegal construction, ownership disputes), your lawyer advises on whether to proceed, renegotiate, or withdraw.
Mortgage processing. Your mortgage application moves into active assessment. The bank reviews your financial documents, commissions the property valuation (tasacion), and works towards a binding offer. This typically takes 2-4 weeks with complete documentation.
Preparation for completion. Your lawyer coordinates with the notary, the seller's representatives, and (if applicable) the bank to schedule the signing date. Powers of attorney are prepared if needed. Funds are arranged for the balance due at completion.
The 4-8 week period between arras and completion can feel like a lot of waiting, but there's substantial activity happening behind the scenes. Staying in close contact with your lawyer and broker during this period ensures problems are caught early and the completion date is met.
For a detailed week-by-week breakdown of the full buying timeline, see our property buying timeline guide.
Common mistakes to avoid
Signing without your lawyer reviewing the contract. The arras is a legally binding document with significant financial consequences. Every clause should be reviewed by your independent lawyer before you sign. Never rely on the agent or the seller's lawyer to protect your interests.
Not including a mortgage condition. If you're financing the purchase and the arras doesn't contain a properly worded mortgage condition, a declined mortgage means losing your 10% deposit. This is one of the most expensive mistakes international buyers make in Spain.
Paying the deposit directly to the seller. The deposit should ideally be paid into your lawyer's client account or an escrow account, not directly to the seller. If you pay the seller directly and something goes wrong, recovering the money becomes significantly more difficult. Some sellers and agents insist on direct payment - discuss this with your lawyer and understand the risk before agreeing.
Not verifying the seller's identity and ownership. Before paying any deposit, your lawyer should confirm that the person signing the arras is actually the legal owner (or their authorised representative) and has the right to sell. This is verified through the nota simple from the Land Registry.
Agreeing to an unrealistically short completion deadline. If the deadline is too tight for your mortgage to be processed, you may find yourself unable to complete on time. Non-resident mortgage applications typically need 4-8 weeks from document submission. The arras deadline should accommodate this, with a reasonable buffer.
Not understanding the type of arras. If the contract doesn't explicitly state "arras penitenciales," you may be signing a confirmatorias contract with different (and potentially more onerous) withdrawal consequences. Always confirm the type before signing.
Frequently asked questions
How much is the arras deposit?
Typically 10% of the purchase price, though this is negotiable. Some transactions use 5%, particularly if the buyer has already paid a separate reservation deposit. The percentage should be agreed between the parties and clearly stated in the contract.
Is the arras deposit refundable?
Under arras penitenciales, the deposit is refundable only if the seller withdraws (in which case you receive double) or if a condition in the contract (such as the mortgage condition) isn't met. If you withdraw voluntarily without a contractual reason, you lose the deposit.
Can I negotiate the terms of the arras?
Everything in the arras is negotiable between buyer and seller - the deposit amount, the completion deadline, the conditions, and what's included in the sale. Your lawyer negotiates on your behalf to ensure your interests are protected.
What if due diligence reveals a problem after I've signed the arras?
If your lawyer discovers a material issue (undisclosed debts, illegal construction, ownership problems) that wasn't disclosed before the arras was signed, you may have grounds to withdraw and recover your deposit, depending on the specific circumstances and contract wording. This is one reason thorough due diligence runs in parallel with the arras period rather than before it.
Do I need to be in Spain to sign the arras?
You can sign remotely using a power of attorney granted to your lawyer. You can also sign a scanned/digital copy and follow up with the original by courier, depending on the seller's requirements. Discuss the options with your lawyer.
Next steps
The best way to approach the arras stage with confidence is to know your mortgage position before you get there. If you're already pre-qualified, you know what you can borrow, and the mortgage condition in your arras becomes a safety net rather than a critical unknown.
Our free pre-check gives you a clear borrowing estimate within 48 hours, so you can make offers and sign contracts knowing your financing is realistic.
For the full buying process, see our guide to buying property in Spain as a foreigner. For the mortgage process, see our complete non-resident mortgage guide.
Questions? WhatsApp us or get in touch.
This content is for informational purposes only and does not constitute legal advice. Zerodown is a mortgage introducer, not a law firm or legal advisor. Always have your independent lawyer review any contract before signing.
