If you are thinking about buying a property in Spain you might have heard of the “contrato de arras”. But, what is it? In this post, we will explain in detail what an arras contract is, and what you need to know in order to safely use it to secure the purchase or sale of a property. Let’s get started!
What is an Arras Contract?
An arras contract (or “contrato de arras” in Spanish) is a private agreement between a buyer and a seller in which a deposit is paid by the buyer to the seller to secure the future purchase of a property. This deposit, known as arras, gives the contract its name. In essence, it is a reservation agreement.
What types of arras exist in Spanish law?
Contrary to what many people believe, there isn’t just one type of arras under Spanish law. In fact, legal practice has established three main types of arras that are commonly used. Let’s take a look at them:
Arras penitenciales
This is the most commonly used type of arras. Its key feature is that they allow either party to withdraw from the purchase agreement: the buyer forfeits the deposit, while the seller must return it and pay an equal amount as compensation.
It’s important to note that, among the three commonly used types of arras, this is the only one that allows either party to withdraw from the agreement without needing to provide legal justification.
The other unique characteristic of this type of arras is that these are the only ones that are expressively regulated in the law, specifically by the Spanish Civil Code, which in its article 1454 says: “If earnest money or a deposit had been given under the purchase agreement, the contract may be rescinded, with the buyer forfeiting the amount paid, or the seller returning it in double“.
Arras penales
Not to be confused with the previous type, this kind of arras involve a deposit meant to penalise the party that breaches the agreement. However, unlike the “arras penitenciales”, they do not allow either party to withdraw from the contract. This means that, in case of breach, the buyer would forfeit the deposit in favour of the seller, while the seller would have to return the deposit and pay an equal amount in compensation ,but the contract would still remain valid and binding for both parties.
Arras confirmatorias
The last type of arras is the simplest of the three, as they merely serve to confirm the buyer’s intention to proceed with the purchase. That’s why they are called arras “confirmatorias”, meaning “confirmatory deposit.” So, unlike the other types, they are not intended as a penalty or a withdrawal fee.
How much is the Arras Deposit?
When defining the amount of the arras deposit, it really comes down to the free will of the parties. There is no legally stablished amount whatsoever. But it is also true that in practice most arras contracts usually set the amount to a 10% of the sale price of the property.
When deciding the amount of the arras, it is important to have a clear idea of the purpose of the arras that are being used, as this will be key to setting an amount that is both fair and useful for both parties. We often assume that the worst-case scenario won’t happen, but it’s good practice to plan for it in every transaction.
Is the Arras Contract Legally Binding?
Yes. Agreements made between parties acting with full legal capacity are binding, whether they are verbal, written, or signed before a Notary Public. For this reason, it’s important to carefully consider any agreement before committing, and to seek proper legal advice to avoid future complications.
What Should Be Included in an Arras Contract?
A proper arras agreement should include, at least, the following:
- Full identification of buyer and seller
- Property details and legal description
- Purchase price
- Amount of the arras deposit and definition of its type
- Timeline for signing the public deed (escritura pública)
- Distribution of costs (who pays what)
It’s worth noting that a well-drafted arras contract can be complex, as it must protect each party against potential bad faith from the other side.
Why You Should Always Hire a Lawyer
Buying or selling a property in Spain involves more than just signing papers and paying deposits. It’s a legal transaction that carries serious financial and legal implications. That’s why having an independent Spanish lawyer by your side is not just advisable, it’s essential.
Your lawyer will ensure that the entire process is safe, compliant, and in your best interest. From reviewing the terms of the arras contract to conducting legal due diligence, verifying ownership, debts, and permits, and advising you on tax obligations, your lawyer will take care of every detail. They will identify red flags before they become problems and help you avoid costly mistakes that can arise from incomplete or misleading information.
Unlike estate agents or developers, who may have an interest in the sale going through, your lawyer represents you, and only you. They work exclusively for your protection and peace of mind.
Whether you’re buying your dream home, investing in a rental property, or selling a family estate, working with a qualified legal professional can make the difference between a smooth, successful transaction and a long, stressful legal headache.
At OTEIZA & ZAMUDIO, we are specialists in Spanish real estate law and assist international clients with property transactions in Spain every day. We offer a free initial consultation to assess your case with no obligation — helping you understand your options and make informed decisions from the very start.
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