The Arras Contract in Spain: The 10% Deposit Stage Explained (2026 Guide)

What Is the Arras Contract in Spain?

The contrato de arras — often translated as the "earnest money" or "deposit contract" — is the private agreement you sign in Spain after a verbal offer is accepted but before you go to the notary to complete the purchase. It is the moment the deal becomes serious: a property is taken off the market, you pay roughly 10% of the agreed purchase price to the seller, and both parties commit in writing to closing on specific terms.

If you are buying from abroad, the arras stage is where most of the real legal risk lives. The notarial deed (escritura pública) at the end is largely a formality compared with what you sign — and what you fail to negotiate — in the arras contract. This guide walks you through the three legal types of arras under Spanish law, what the 10% actually buys you, and the pitfalls foreign buyers most often regret.

Spanish property laws, taxes and notarial practices change. Confirm anything that affects your money with an independent Spanish abogado (not the seller's or agent's lawyer) and, for tax questions, a gestor or tax advisor before signing.

The Three Types of Arras Under Spanish Law

This is the single most important thing to understand: not all arras contracts are the same. Spanish Civil Code (Article 1454) recognizes one specific type, and case law has shaped two others. The wording of your contract determines which applies.

1. Arras Penitenciales (Penalty Deposit) — the most common

This is the version most foreign buyers think of when they hear "arras." Either side can walk away, but at a cost:

• If you (the buyer) back out, you lose the deposit.
• If the seller backs out, they must return the deposit doubled.

It gives both parties an exit, but a painful one. Crucially, the contract must explicitly invoke Article 1454 of the Código Civil for this regime to apply. If it doesn't, a court may treat the deposit as something quite different.

2. Arras Confirmatorias (Confirmation Deposit)

Here the deposit is simply a down payment on the price and proof the deal is binding. Neither party has the right to walk away. If one tries, the other can sue for specific performance (force the sale) or full damages. There is no "buy your way out" option.

If your contract is silent on which type applies, Spanish courts have a strong tendency to interpret it as confirmatorias — meaning you may not be free to walk away by simply forfeiting the 10%.

3. Arras Penales (Penal Deposit)

A hybrid: the deposit acts as pre-agreed damages if a party breaches, but the non-breaching party can still demand the contract be enforced. It is less common in residential resale and more typical in commercial or developer contracts.

Practical takeaway: ask your abogado to confirm in writing which type your draft contract creates. A single sentence referencing Article 1454 can be the difference between a €30,000 lesson and a lawsuit.

What the 10% Really Commits You To

The 10% figure is customary, not legally required. It can be 5%, 15%, or any amount the parties agree on. What matters is what the contract says about:

• The closing deadline — usually 30 to 90 days. Be realistic about how long your mortgage, NIE, and funds transfer will take.
• Conditions precedent — e.g. mortgage approval, clean nota simple from the Registro de la Propiedad, no undisclosed tenants, community-fee certificate showing no debts.
• Furniture and inclusions — list them. "As seen" is not enough.
• Penalty for late completion by either side.
• Who pays what at the notary.

A well-drafted arras contract should also reference the property's referencia catastral, the seller's title, any existing mortgage to be cancelled, and the agreed price in euros.

Before You Sign: Due Diligence Checklist

Never wire deposit money before your lawyer has reviewed at least the following:

• Nota simple from the Land Registry (Registro de la Propiedad), dated within the last few days, confirming the seller is the registered owner and listing any charges, mortgages, or embargoes.
• Certificado de deudas de la comunidad — proof the seller owes nothing to the homeowners' association.
• IBI receipt (municipal property tax) for the most recent year, paid.
• Energy performance certificate (Certificado de Eficiencia Energética) — legally required to sell.
• Cédula de habitabilidad or licence of first occupation, depending on the region.
• Catastral certificate matching the registered description (square meters, boundaries).
• For off-plan: bank guarantee (aval bancario) protecting your deposit under Law 20/2015 — verify with your abogado that it is in place before paying.

If anything is missing, the arras contract should make closing conditional on its delivery, with the deposit refundable if the seller cannot produce it.

Who Signs, Who Pays, and How

Signing remotely

You do not need to be in Spain to sign arras. You can grant a Power of Attorney (*poder*) — either at a Spanish consulate abroad or in front of a local notary with an apostille — authorizing your lawyer to sign on your behalf. Build this in early; consulate appointments can take weeks.

Paying the deposit

Deposits are normally paid by bank transfer to the seller, to the seller's lawyer's client account, or held in escrow by a notary. Never hand cash to an agent. Spanish anti-money-laundering rules require traceable transfers, and your funds will need to be documented again at the notary stage.

Currency

The contract will be in euros. If you are sending pounds, dollars or Canadian dollars, lock in your FX in advance — a 3% swing on a €500,000 purchase is €15,000.

Common Mistakes Foreign Buyers Make

• Signing a reservation document before the arras. Some agencies ask for a €3,000–€6,000 "reservation fee" with a short contract. Treat this as legally binding — have your lawyer review it. People have lost reservation money because they assumed it was refundable.
• Assuming the 10% is always your "exit price." As explained above, only arras penitenciales give you that right.
• No NIE yet. You need a Número de Identificación de Extranjero to sign the escritura and open a Spanish bank account. Apply before, not after, the arras.
• No mortgage clause. If financing falls through and your contract doesn't make closing conditional on mortgage approval, you lose the deposit.
• Trusting the seller's lawyer. Spanish notaries are neutral public officials, but they do not represent you. Hire your own independent abogado registered with a local Colegio de Abogados.
• Ignoring community debts. Unpaid HOA fees from the previous owner can, in some cases, follow the property.

Short FAQ

Is the arras contract legally binding? Yes. Once signed and the deposit paid, it creates enforceable obligations on both sides. It is a private contract — not a public deed — but Spanish courts fully enforce it.

Can I negotiate less than 10%? Yes. The percentage is a custom, not a rule. On higher-value properties, 5% is often accepted.

What happens if the seller finds a higher offer? Under arras penitenciales, they must return your deposit doubled. Under confirmatorias, you can sue to force the sale.

Do I have to pay tax on the arras deposit? The deposit itself is part of the purchase price. Transfer tax (ITP) or VAT (IVA) is calculated on the full price at the escritura stage, not separately on the arras. Confirm the current rate for your comunidad autónoma with your gestor — regional rates vary and change.

Can I back out for a 'cooling-off' period? No. Spain has no statutory cooling-off period for private resale property. Once you sign, you are committed under whichever arras regime the contract creates.

The Bottom Line

The arras contract is the moment of truth in a Spanish property purchase. Spend money on a good independent lawyer before you sign, not after. Get the type of arras right, get the conditions precedent right, and the escritura day will be the easy part.

Laws, regional taxes and notarial practice continue to evolve in 2026 — always confirm the latest details with a licensed Spanish professional before transferring funds.