Almost every home sale between private parties in Spain goes through a deposit contract (contrato de arras) before it reaches the notary. It fixes the price, reserves the property and buys time: for the buyer to arrange a mortgage, for the seller to gather paperwork or pay off their own loan. The trouble is that it gets signed in a hurry, often on a template someone had saved, and the word "arras" does not always mean the same thing.
In this article
Three types of deposit
| Type | What it is for | If one party does not complete |
|---|---|---|
| Withdrawal deposit (arras penitenciales) | Lets either side pull out at a price | The buyer loses what was paid. The seller pays back double. And that is the end of it. |
| Confirmatory deposit (arras confirmatorias) | A part payment that proves there is a contract | The other party can demand completion or terminate, with damages. |
| Penalty deposit (arras penales) | Fixes the compensation in advance | Whoever defaults pays the agreed penalty and, in principle, still has to complete. |
The withdrawal deposit: article 1454
This is the best-known type and the only one the Civil Code regulates under the name arras. Article 1454 says that, where a deposit has been paid, the contract may be cancelled by the buyer agreeing to lose it or the seller agreeing to pay it back twice over.
In plain terms: either party can back out without giving reasons. If you change your mind, you lose the deposit. If the seller changes theirs, you get double. Neither can force the other to the notary or claim any further damages.
It is a comfortable way out, and that is exactly why the courts look at it closely. For a deposit to count as a withdrawal deposit, it must be clear that the parties intended to keep the right to pull out. The sensible thing is for the contract to say so in as many words and cite the article.
The confirmatory deposit: no way back
If the contract only says that a sum is handed over "as arras" or "as a deposit and part of the price", it will normally be read as confirmatory. It is an advance on the price and proof that the sale is agreed.
The consequence is serious. If one party does not complete, the other can choose between demanding performance or terminating the contract, with damages and interest either way (article 1124 of the Civil Code). So the seller can go to court to make you buy, and you can do the same to make them sell. Losing the deposit does not release you.
"The word arras decides nothing. What decides is the sentence that follows it: whether you can walk away by losing the deposit or whether you are bound to buy."
The penalty deposit
It works as a penalty clause. The agreed sum replaces damages if someone defaults, unless otherwise agreed (article 1152). But paying the penalty does not excuse you from completing, unless that right was expressly reserved (article 1153). And the court may reduce it where the obligation was performed in part or irregularly (article 1154).
What happens if the buyer pulls out
- With a withdrawal deposit, they lose what they paid and owe nothing more.
- With a confirmatory or penalty deposit, the seller can demand that they buy, or terminate and claim damages.
The case that comes up most is the refused mortgage. The bank turning you down does not cancel the contract by itself. If you want the deposit back in that situation, it has to be in writing: a condition stating that, if finance is not granted within a set period and you prove it with the bank's letter, the deposit is refunded.
What happens if the seller pulls out
- With a withdrawal deposit, they pay you back double what you handed over. If a better offer arrives, they can do the sums and leave.
- With a confirmatory deposit, you can demand that they sell at the agreed price, or terminate and claim the losses you can prove.
None of the three is better in the abstract. If what you want is to secure that flat, you want the seller unable to withdraw. If you still depend on the bank, you want to be able to get out.
What to check before signing
- A Land Registry extract from that day. The nota simple tells you who the registered owner is and what charges sit on the property: mortgages, attachments, life interests. We explain how to read one in charges and the Land Registry extract.
- Who signs. Every owner has to sign. If the flat comes from an inheritance, the heirs must have accepted and registered it, or undertake to do so before completion (see selling an inherited house in Valencia). If it is a married couple's main home, both spouses must consent even when only one appears as owner (article 1320 of the Civil Code). And if an attorney signs, ask to see the power of attorney.
- The charges and who clears them. If there is a live mortgage, the contract should say it will be cancelled before or at completion, at the seller's expense.
- The deadline. A specific final date for signing before the notary, and what happens if it passes.
- The state of the property. Free of tenants and occupants, up to date with community fees and local property tax (IBI), and which furniture stays.
- The costs. Unless agreed otherwise, the Civil Code puts the cost of the deed on the seller and that of the first copy and later costs on the buyer (article 1455). Better to write it down.
- How the deposit is paid. By bank transfer to the seller's account, with a clear reference. Never in cash without a receipt.
How much the deposit should be
Whatever you agree. No law sets a percentage or a minimum. Bear in mind that, with a withdrawal deposit, that figure is what you lose if you leave and what the seller pays on top if they do. A very small deposit binds nobody, and a very large one leaves you exposed if something goes wrong with the bank.
And do not mistake it for the total cost. When you buy a resale home in the Valencia region you also pay transfer tax (ITP), which is 9% as a general rule (11% if the value exceeds one million euros). You can estimate it with our ITP calculator.
Frequently asked questions
What happens if I sign a deposit contract and then do not buy?
It depends on the type. With a withdrawal deposit you lose the deposit and nothing else. With a confirmatory or penalty deposit, the seller can demand that you buy or terminate the contract and claim damages.
And if it is the seller who pulls out?
With a withdrawal deposit they must pay you back double what you handed over (article 1454 of the Civil Code). With a confirmatory deposit you can demand that they sell or seek termination with damages.
Do I get the deposit back if the bank refuses my mortgage?
Only if the contract provides for it. Without a clause making the purchase conditional on finance, a refused loan does not release you.
How much deposit do I have to pay?
Whatever buyer and seller agree. There is no legal figure.