How does a deposit contract (arras) work when buying property in Spain?

You have found the property you were looking for in Nerja. The price works, the location feels right and the seller is ready to move forward. Then comes a moment that catches many buyers — especially international ones — off guard: before going to the notary, you need to sign a contrato de arras.

What exactly is it? What happens if something goes wrong? How much money do you need to hand over? This guide answers all of those questions clearly, so that when the moment comes you know exactly what you are signing.

What Is a Contrato de Arras?

A contrato de arras is a private agreement made prior to the official sale, in which the buyer hands over a sum of money to the seller as a deposit or reservation. In return, the seller commits not to sell the property to anyone else during the agreed period — the time both parties need to formalise the transaction before a notary.

In practical terms, the arras contract is the definitive step between a verbal agreement and the signature at the notary's office. From that point on, both buyer and seller are legally bound by the agreed terms.

The Three Types of Arras in Spain

Not all arras work in the same way. Spanish law recognises three types, and choosing the right one matters because it determines what happens if either party pulls out.

Penitential Arras (Article 1454 of the Civil Code)

These are the most common type in the Spanish property market and the ones most recommended by professionals. They allow either party to withdraw from the contract, but with clear financial consequences:

• If the buyer pulls out, they forfeit the full amount handed over.
• If the seller pulls out, they are legally obliged to return double the amount received.

A practical example: on a purchase of 300,000€ with a 10% deposit (30,000€), if the seller withdraws they must return 60,000€. If the buyer withdraws, they lose the 30,000€ paid.

For this mechanism to work correctly, the contract must explicitly reference Article 1454 of the Civil Code. Without that reference, courts may interpret the agreement differently.

Confirmatory Arras

In this case the deposit acts as a payment on account of the final price, without establishing an agreed exit route. If either party fails to comply, the other may demand forced performance of the contract or claim damages through the courts. There is no option to simply "lose the deposit" or "return double" — legal action is required.

These are less common in private sales, but they do appear in certain transactions. It is always worth reading the contract carefully before signing.

Penal Arras

These set a specific financial penalty agreed in advance by both parties in the event of a breach. Unlike penitential arras, they do not prevent the aggrieved party from also claiming performance of the contract or additional damages. The exact effect depends entirely on how the clause has been drafted.

How Much Money Is Paid as a Deposit?

Spanish law does not set any mandatory amount. In practice, however, the most common figure in the current property market is 10% of the agreed purchase price, which is subsequently deducted from the final price at the point of signing the public deed before a notary. In some cases, particularly for higher-value properties, the percentage can be negotiated anywhere between 5% and 15%.

What Should a Deposit Contract Include?

For the contract to be solid and avoid future disputes, it should contain at least the following elements:

• Full identification of both buyer and seller (name, passport or NIE number, address).
• Detailed description of the property (address, cadastral reference, surface area, encumbrances).
• Total agreed purchase price.
• Amount of the deposit paid and method of payment.
• Type of arras agreed, with an explicit reference to the corresponding article of the Civil Code if penitential.
• Maximum deadline for signing the public deed before a notary.
• Financing clause, if the buyer requires a mortgage (protects the buyer if the bank ultimately refuses the loan).
• Distribution of conveyancing costs.

Common Mistakes to Avoid

In our experience accompanying buyers in Nerja and La Axarquía, these are the most frequent mistakes made when signing a deposit contract:

• Not specifying the type of arras. If the contract does not explicitly mention Article 1454, courts will default to treating them as confirmatory arras, which removes the option to withdraw freely.
• Setting an unrealistically short deadline. Banks need time to process a mortgage application. In 2026, a minimum of 45 to 60 days between signing the arras and completing at the notary is advisable.
• Not including a financing clause. If the bank refuses the mortgage and no such clause exists, the buyer may lose the deposit through no fault of their own.
• Signing without requesting a Nota Simple. Before handing over any money, it is important to verify through the Land Registry that the property is free of debts, charges or pending mortgages. Our article on the Nota Simple explains how to read and interpret it.
• Not seeking professional advice. In transactions involving mortgage financing, existing charges, inheritance situations or foreign buyers, having the contract reviewed by a professional is essential.

Deposit Contracts When the Buyer Needs a Mortgage

This is one of the most sensitive scenarios. If the buyer depends on mortgage approval to complete the purchase, it is essential to include a suspensive condition clause for financing in the contract. This clause allows the buyer to recover the deposit in full if the bank ultimately refuses the loan, without any penalty.

Without this protection, a mortgage refusal can mean losing the entire deposit. If you are planning to finance your purchase in Nerja, our article on mortgages in Spain for international buyers covers everything you need to know.

Tax Implications of the Arras Contract

Penitential arras that do not lead to a completed sale have specific tax treatment. If the buyer forfeits the deposit, no tax deduction applies. If the seller returns double the amount, the excess over the original sum may be treated as a capital gain. When the transaction does complete, the deposit is absorbed into the final price and settled as part of the corresponding property purchase taxes (Transfer Tax for resale properties, or VAT for new builds). Always consult a tax adviser for your specific situation.

Frequently Asked Questions About the Arras Contract in Spain

Is signing a deposit contract compulsory when buying property in Spain?

It is not a legal requirement, but it is standard practice and strongly recommended. It protects both buyer and seller during the period between agreement and the notary appointment, which can span several weeks or months.

Can I negotiate the amount of the deposit?

Yes. The law sets no minimum or maximum. The 10% figure is the standard reference, but the amount can be freely negotiated between buyer and seller depending on the circumstances of each transaction.

What happens if the seller cannot complete because of outstanding charges on the property?

If the seller fails to meet their obligations — including being unable to transfer the property free of encumbrances within the agreed timeframe — the buyer is entitled to claim double the deposit paid if penitential arras were agreed, or to demand performance of the contract if confirmatory arras apply.

Do I need a lawyer to sign a deposit contract in Spain?

It is not a legal requirement, but for complex transactions — those involving mortgage financing, foreign buyers, existing charges or any complicating factor — having the contract reviewed by a qualified professional is an investment that can prevent much larger problems down the line.

Buy Your Property in Nerja With Complete Peace of Mind

At Narixa Villas we accompany buyers through every stage of the property purchase process in Nerja and La Axarquía: from finding the right property to signing at the notary. If you are thinking about buying a villa or apartment in the area and want to understand every step before committing to anything, get in touch with us — no commitment needed.

You may also find it useful to read our guide on the 7 key questions to ask your estate agent before buying in Nerja, or our property price comparison across the Costa del Sol to get a clearer picture of the market.

Legal notice: This article is for informational purposes only and does not constitute legal or tax advice. For any property transaction, always consult a qualified professional.