The arras contract in Spain —
what to do before you sign

What is an arras contract?

An arras contract — formally called a contrato de arras or contrato de señal — is the private agreement between buyer and seller that precedes the public deed (escritura) at the notary. It's signed weeks or months before the notary appointment, and its job is to commit both parties to the eventual sale.

The structure is always similar. Buyer pays a deposit, typically 10% of the agreed sale price. Seller acknowledges receipt, agrees to sell the property on specified terms, and undertakes to sign the public deed by a fixed date. Both parties sign. The arras is not registered publicly — it's a private contract between the two sides.

It is also the moment where the transaction is effectively committed. Before the arras, either party can withdraw freely. After the arras, withdrawal has consequences that depend entirely on which of three legal forms you've signed.

The three types of arras

1. Arras confirmatorias

The deposit simply confirms the agreement; it's a down payment. If either party pulls out, the other can sue for specific performance — force them to go through with the sale — or sue for damages. In practice, suing a Spanish seller for specific performance is a lengthy court battle most foreign buyers won't pursue, but the deposit itself stays with whoever rightfully holds it pending the outcome.

This is the default under Spanish Civil Code (Art. 1124). If your contract doesn't specify which type, this is what you have.

2. Arras penales (penal arras)

A pre-liquidated damages clause. If one party breaks the contract, they pay the fixed penalty specified. The other can also insist on specific performance. Less common in residential transactions; more common in commercial ones.

3. Arras penitenciales (penitentiary arras)

The most common form in Spanish residential property sales, and the form most foreign buyers will encounter. The name comes from Article 1454 of the Civil Code. The rule is simple and brutal:

• If the buyer pulls out, they lose the deposit.
• If the seller pulls out, they must pay back the deposit plus an equivalent amount — usually described as "duplicating" the arras (el doble de las arras).

In other words, walking away has a fixed, known cost: you lose 10%, or the seller pays you 10% penalty. Neither side can be forced to go to the notary, but walking away has teeth.

Arras penitenciales in detail

Because this is the form you're most likely to face, here's what to look for:

• The contract must explicitly say "arras penitenciales" and cite Article 1454 of the Civil Code. If it doesn't, a court may later interpret it as arras confirmatorias.
• The deposit amount is typically 10% of sale price. Lower deposits (5%, 3%) are possible by agreement; higher deposits are rare.
• The contract sets a deadline for signing at the notary — usually 60 to 90 days. If the notary signing doesn't happen by that date, one side or the other is in breach (depending on why).
• The contract identifies the property with precision: address, finca registral number, cadastral reference.
• It identifies the buyer and seller with full name, NIE/DNI, marital regime where relevant.
• It sets the total purchase price, how much is paid as deposit, how much is paid at the notary, and how any existing mortgage is handled.

Five things to verify before signing an arras

The arras is the moment of maximum commitment. Everything you can verify should be verified before.

1. Ownership

The person signing must be the same person registered on the Nota Simple, with capacity to sell. If the property is in joint marital ownership, both spouses must sign the arras (or sign a power of attorney authorising the other). If the registered owner died and the inheritance is unsettled, nobody has capacity to sell you anything yet.

2. No embargos or unresolved charges

The Nota Simple tells you whether anything is registered against the property. Mortgages can be resolved at signing — but embargos, afecciones, and pendiente-de-inscripción entries need a plan before you commit. If you sign an arras on a property with an embargo and the embargo isn't lifted by the notary date, the deal falls through and you're fighting over whose fault it is.

3. Legality of the construction

Does the property have a licencia de primera ocupación (LPO), a cédula de habitabilidad, or equivalent regional document proving it's legally occupiable? Are there any irregularities — unauthorised additions, obra nueva not fully declared, enclosed terraces that don't appear in the Registry? These issues can prevent mortgage approval, block utility connections, or trigger municipal enforcement action.

4. Debts and community fees

IBI arrears, community fees, pending derramas. These need to be cleared by the seller or accounted for in writing in the arras. See our guide to checking property debts for specifics.

5. Catastro coordination and surface area

Make sure the Registry and Catastro describe the same property. If they disagree significantly, the property is no coordinada and the seller may need to coordinate before notary signing — which can take months.

How the deposit is held

Spain has no formal escrow system like the UK or US. The arras deposit is typically transferred directly from the buyer to the seller (or the selling agent who holds it on the seller's behalf). This is a point of risk foreign buyers should understand.

Three common arrangements:

• Direct to the seller's bank account. Most common, highest risk for the buyer. If anything goes wrong and the seller won't return it, you're suing in Spanish courts.
• Held by the real-estate agency. Some agencies hold the deposit in a trust-style client account. Check whether the agency is regulated and what happens if the agency fails.
• Held by a lawyer or notary. Less common, but possible. A Spanish notary or solicitor can hold the deposit in a client account until a defined trigger. This is the safest arrangement.

If you're uncomfortable transferring to the seller directly, negotiate the third option. It's not unusual, just not default.

What if someone walks away?

Under arras penitenciales:

• Buyer walks: seller keeps the deposit. Buyer has no further obligations. Property goes back on the market.
• Seller walks: seller returns the deposit to the buyer plus the same amount again. Both parties are free.

Common triggers for buyer withdrawal: mortgage not approved, serious due diligence finding after signing (someone didn't check thoroughly enough beforehand), change in personal circumstances. Common triggers for seller withdrawal: a higher offer (legally a breach, but it happens), inheritance dispute among the owning family, second thoughts.

Failure to appear at the notary on the agreed date, by either party, is withdrawal. The arras contract should set out a process — a few days' grace, written notification, a right to a single rescheduling — so that a minor delay isn't weaponised as a walk-away.

Don't sign a generic template

Many agents present a standard arras template and treat it as a form — fill in the price, sign, done. It isn't a form. Every transaction has specifics the standard template won't cover: the handling of an existing mortgage, the treatment of specific afecciones, deposit arrangements, handling of the current year's IBI, what happens if the mortgage valuation comes in low, handling of specific declared or undeclared works.

A generic arras template that you sign without review is a contract you've committed to without understanding. This is the stage where a Spanish lawyer earns their fee — typically 1% of sale price, sometimes less — and the single most useful thing they do is review the arras. If a seller or agent is pressuring you to sign a fast-track arras "today, or we lose the property", that's a sign to slow down, not speed up.

Good Spanish lawyers will also handle the Nota Simple review, the debt checks, the planning verification, and the notary coordination. Before any arras, get one.