When you agree to buy a property in Spain, the first document you usually sign is not the deed but a private deposit contract, the contrato de arras. You pay a deposit, often around 10% of the price, and both sides commit to completing the sale before a notary by a set date. What happens to that money if the deal falls through depends entirely on which type of arras the contract creates.

What is a contrato de arras?

It is a binding private agreement that reserves the property for the buyer and fixes the essential terms of the sale: the parties, the property, the price, the deposit, the deadline for signing the escritura and who pays which costs. Spanish law recognises three types of arras, and each one has very different consequences.

1. Arras penitenciales: the right to walk away at a price

This is the type most people have in mind, and it is the one regulated in Article 1454 of the Spanish Civil Code. It gives both parties the right to withdraw from the sale:

  • If the buyer walks away, they lose the deposit.
  • If the seller walks away, they must return the deposit doubled.

Once that price is paid, the matter is closed. Neither side can force the other to complete the sale or claim further damages.

2. Arras confirmatorias: a down payment on a firm commitment

Here the deposit is simply part payment of the price and proof that the contract exists. Nobody has a right to withdraw. If one party fails to complete, the other can go to court and either demand completion of the sale or terminate the contract and claim damages under the general rules on breach of contract.

3. Arras penales: a penalty for breach

In this case the deposit works as a penalty. The party who breaches loses it (or pays its equivalent), but that does not release them from the contract. Depending on the wording, the innocent party may still be able to demand that the sale goes ahead.

Why the wording matters so much

The Spanish Supreme Court interprets arras penitenciales restrictively. They are not presumed: the contract must show clearly that the parties intended to give each other the right to withdraw. The Court has held that simply mentioning Article 1454 is not always enough if the rest of the contract points the other way. If the intention is unclear, the deposit is usually treated as confirmatory.

This has real consequences. A buyer who thinks they can walk away and lose only the deposit may find themselves facing a claim to complete the purchase. A seller who receives a better offer may discover that paying back double is not an option at all.

Common pitfalls

  • Signing a template from an agency without reading which type of arras it creates.
  • No clear deadline for completion, or no clause on what happens if it passes.
  • No condition covering mortgage approval, when the buyer needs finance.
  • Paying the deposit before checking the Land Registry, debts, community fees and the licence status of the property.
  • Contract drafted only in Spanish when the buyer does not read Spanish.

Quick answers

Is 10% mandatory? No. It is common practice, but the amount is whatever the parties agree.

Can I get my deposit back if my mortgage is refused? Only if the contract says so. Without a specific condition, a refused mortgage does not by itself entitle you to a refund.

Does the seller really pay double? Under arras penitenciales, yes: they return your deposit plus the same amount again.

In short

The arras contract is where most of the risk in a Spanish property purchase is decided. Before you sign, make sure you know which type of arras you are agreeing to, what happens to your money in each scenario, and that the conditions you need are written into the contract, not just promised.