The contrato de arras in Spain — what it is, how it works and what to know before you sign
What the contrato de arras is
The contrato de arras is the binding purchase agreement between buyer and seller in a Spanish property transaction. It is the document that commits both sides to the sale. Once signed, the buyer pays a deposit — typically 10% of the agreed purchase price — and both parties are legally bound to complete the transaction within the terms set out in the contract.
This is not a letter of intent. It is not a soft commitment. The contrato de arras carries financial penalties for either side that fails to follow through. It is the most consequential document you sign before the final deed at the notary — and for that reason, it should never be signed without your lawyer having reviewed it first.
The reservation deposit — what comes before the arras
In most Costa Blanca transactions, the contrato de arras is not the first financial step. Before it comes the reservation deposit.
Once you agree on a price with the seller — usually through the agency — you pay a smaller deposit to take the property off the market. This is typically between €3,000 and €6,000, though it varies depending on the property price and the agency involved. The purpose is straightforward: it signals genuine intent and stops the seller accepting other offers while the contrato de arras is being prepared.
The reservation deposit is usually deducted from the arras deposit when the contract is signed. Your lawyer should confirm the terms of the reservation — including under what conditions it is refundable — before you pay it.
This short period between reservation and arras is when your lawyer carries out the initial due diligence checks: requesting the nota simple, verifying the referencia catastral, confirming there are no outstanding debts, and checking the licencia de segunda ocupación. The reservation holds the property while this work happens. Do not allow the arras to be signed before your lawyer has completed these checks.
What the contrato de arras contains
A properly drafted contrato de arras includes all the essential terms of the sale. There is no standard template — contracts vary between lawyers and transactions — but the following elements should always be present.
Identification of the parties
Full legal names, passport or NIE numbers, and addresses of both buyer and seller. If either party is represented by a lawyer acting under power of attorney, this is stated here.
Property description
The full legal description of the property as it appears on the nota simple and the referencia catastral. This includes the registered location, boundaries, built area, plot size and the Land Registry reference number. What is written in this section is what you are legally agreeing to buy — not what the listing said, not what the agency showed you.
The agreed price
The total purchase price in euros and the payment structure: how much has already been paid as a reservation deposit, how much is paid now as the arras deposit, and how much remains to be paid at completion.
The deposit amount
On the Costa Blanca, the standard arras deposit is 10% of the purchase price. In some cases it can be higher — up to 20% — though this is less common and usually depends on the specific negotiation between buyer and seller. The reservation deposit already paid is typically deducted from this amount, so the net transfer at the time of signing the arras is the 10% minus whatever was paid at reservation.
The completion deadline
The contract sets a deadline by which the sale must be completed at the notary. On the Costa Blanca, this is typically 30 to 90 days from the date the arras is signed. The exact timeframe depends on circumstances — whether the buyer needs a mortgage, whether the seller needs time to obtain documentation, whether there are administrative processes still in progress.
Conditions and clauses
This is where the contract becomes specific to your transaction. Common clauses include:
Mortgage clause. If you are financing the purchase with a mortgage, a clause can be included stating that if the mortgage is not approved, the contract is cancelled and the deposit is returned. Without this clause, a rejected mortgage does not automatically entitle you to your deposit back.
Documentation clause. A clause requiring the seller to provide specific documents — such as the licencia de segunda ocupación — before completion. If the seller fails to provide what is stipulated, the buyer is protected.
Defect clause. A clause addressing the condition of the property — what state it must be delivered in, whether existing defects have been disclosed, and what happens if undisclosed problems are found before completion.
Your lawyer drafts or reviews these clauses on your behalf. Do not sign a contrato de arras that was prepared by the seller's lawyer or the agency without your own lawyer reviewing every clause.
What happens if the buyer pulls out
If you sign the contrato de arras and then decide not to proceed — for a reason not covered by a protective clause in the contract — you lose the deposit. The full 10% (or whatever amount was agreed) is forfeited to the seller. This is not negotiable. It is the contractual penalty for the buyer failing to complete.
This is why the due diligence phase before signing the arras matters so much. Once the arras is signed, walking away costs you real money — unless the contract includes a specific clause that covers your reason for withdrawing.
What happens if the seller pulls out
If the seller signs the contrato de arras and then decides not to sell — for a reason not covered by a clause in the contract — the seller must pay the buyer double the deposit amount. If you paid €50,000 as a deposit, the seller owes you €100,000.
This is the arras penitenciales structure — the most common type of arras contract used in Spain. The penalty is symmetrical in principle: the buyer risks losing the deposit, the seller risks paying double. In practice, seller withdrawal is less common than buyer withdrawal, but it does happen — particularly in a rising market where a seller receives a higher offer after signing.
The three types of arras in Spanish law
Spanish law recognises three different types of arras contract. The type matters because it determines what happens if either side does not follow through.
Arras penitenciales
The most common type on the Costa Blanca and across Spain. Both parties have the right to withdraw from the contract — but with financial consequences. Buyer pulls out: loses the deposit. Seller pulls out: pays double. This is the type described throughout this article and the type you will encounter in the vast majority of transactions.
Arras confirmatorias
A deposit that confirms the agreement but does not give either party the right to withdraw by simply forfeiting money. If either side fails to complete, the other can demand completion through the courts or claim damages beyond the deposit amount. This type is less common in standard residential transactions but offers stronger protection if you want to ensure the sale goes through.
Arras penales
A hybrid. The deposit acts as a penalty for non-completion, but the injured party can also demand that the sale is completed through legal action. The penalty is paid on top of any court-ordered completion, not instead of it.
Your lawyer should clearly state which type of arras the contract uses. If the contract does not specify, it is assumed under Spanish case law to be arras confirmatorias — which may not be what either party intended. Always confirm this explicitly.
When the arras is automatically cancelled
The contrato de arras can include clauses that allow the contract to be cancelled and the deposit returned in full — without penalty to either side. These protective clauses are your safety net.
Due diligence failure. If your lawyer discovers a legal problem with the property after the arras is signed — undeclared debts, planning infractions, disputed ownership — a properly drafted contract allows cancellation and full refund of the deposit.
Mortgage rejection. If the contract includes a mortgage clause and your financing is not approved, the contract is cancelled and the deposit is returned.
Missing documentation. If the seller is contractually required to provide specific documents — such as the licencia de segunda ocupación — and fails to do so by the deadline, the buyer can cancel and recover the deposit.
The key word in all of this is "if the contract includes the clause." These protections exist only when they are written into the contract. Your lawyer's job is to ensure they are.
Common mistakes buyers make with the contrato de arras
Signing without independent legal advice. The most expensive mistake. An arras contract prepared by the seller's lawyer or the agency may not include the protective clauses that safeguard the buyer. Always have your own lawyer review or draft the contract.
Signing before due diligence is complete. The reservation deposit exists to hold the property while your lawyer works. If you sign the arras before due diligence is finished, you are committing 10% of the purchase price to a property that has not been fully checked.
Not understanding which type of arras you are signing. If the contract uses arras confirmatorias instead of arras penitenciales, the seller can pursue you through the courts for the full purchase price — not just keep your deposit. Know what you are signing.
Not including a mortgage clause when financing. If you need a mortgage and the contract does not include a clause covering rejection, you risk losing your deposit if the bank says no. This clause should be standard in any arras where the buyer is not paying cash.
Assuming the reservation deposit is automatically refundable. It is not always. The terms of the reservation vary by agency and by transaction. Confirm in writing before you pay it.
The honest summary
The contrato de arras is where the purchase becomes real. It is the moment your money is committed and both sides are legally bound. For that reason, it deserves more attention than most buyers give it.
The mechanics are straightforward: you pay a deposit, the seller takes the property off the market, and both sides agree to complete within a set timeframe. If you pull out without a valid contractual reason, you lose the deposit. If the seller pulls out, they pay you double. Protective clauses can cover specific scenarios — mortgage rejection, legal issues, missing documentation — but only if your lawyer puts them in.
Do not sign a contrato de arras that you have not read. Do not sign one that your lawyer has not reviewed. And do not assume that because the agency prepared it, your interests are protected. The agency represents the sale. Your lawyer represents you.
If you are looking for independent legal professionals on the Costa Blanca, the professionals directory lists verified lawyers who work with foreign buyers in this region.
Frequently asked questions about the contrato de arras
What is a contrato de arras?
It is the binding purchase agreement in a Spanish property transaction. Both buyer and seller sign it, the buyer pays a deposit — typically 10% of the purchase price — and both parties commit to completing the sale within an agreed timeframe.
How much is the arras deposit in Spain?
On the Costa Blanca, the standard is 10% of the agreed purchase price. In some cases it can be up to 20%, though this is less common. The reservation deposit already paid is usually deducted from this amount.
What happens if I pull out after signing the arras?
If your reason for withdrawing is not covered by a protective clause in the contract, you lose the deposit. The full amount is forfeited to the seller.
What happens if the seller pulls out?
Under an arras penitenciales contract — the most common type — the seller must pay the buyer double the deposit amount.
Can the arras be cancelled without penalty?
Yes, if the contract includes specific protective clauses — such as a mortgage clause, a due diligence clause or a documentation clause. These must be written into the contract by your lawyer. They do not exist by default.
Should I sign a contrato de arras without a lawyer?
No. The contrato de arras is legally binding and carries significant financial consequences. Having your own independent lawyer review or draft the contract is essential — not optional.
