Arras Contract Spain: When a Deposit Is Lost or Doubled

An arras contract in Spain is the private deposit agreement you sign after reserving a home and before the notary. It sets out what happens if someone pulls out. Under arras penitenciales, the type often used in home sales, a buyer who walks away loses the deposit and a seller who walks away pays it back double.

Is an arras contract binding? How Spain differs from England and Ireland

Yes. The arras contract does the job that exchange of contracts does in England and Wales: from that point, pulling out has a price. What catches British and Irish buyers out is the stage before it. In England an offer binds no one and in Ireland the booking deposit is refundable until exchange, while in Spain even the reservation fee is refundable only if the reservation contract says so.

In England and Wales, GOV.UK says that after exchange neither side can usually pull out without paying compensation. Spain's Civil Code says a contract binds whatever form it takes, as long as its essentials are there (article 1278). So a private arras contract is a real contract, and the deed at the notary completes it.

The practical lesson: treat the reservation as a contract, and get your lawyer's checks done before you sign the arras, because the notary only completes a deal that already binds you. The overall route from viewing to keys is in our guide to buying property in Spain from the UK.

What is a reservation contract in Spain, and is the fee refundable?

A reservation contract (contrato de reserva) usually comes with the first payment. The seller takes the home off the market for an agreed number of days, while your lawyer checks the Land Registry and both sides prepare the arras contract. The fee later counts towards the price.

A good reservation contract states four things:

• the amount and the account it is paid into;
• how many days you have to sign the arras contract;
• when you get the money back, for example if the land registry extract (nota simple) shows a mortgage or an embargo the seller did not mention;
• the final price and what stays in the home, such as furniture and appliances.

A reservation is not yet the arras contract, but whether the fee comes back if you change your mind depends only on its wording. Make sure the refund terms are written in plainly, and read what the document says, not what it is called.

What are the three types of arras?

"Arras" means a deposit, close to earnest money in English. Spanish law and the courts recognise three kinds, and each one deals with a party who backs out in a different way. In home sales you will often see arras penitenciales, under article 1454 of the Civil Code.

Which type applies if the contract is unclear?

In case of doubt, Spanish courts treat arras as confirmatory. In ruling 583/2018 of 17 October 2018 it held that simply quoting article 1454 was not enough to make them penitenciales. The clause has to say clearly that each side may withdraw, the buyer by losing the deposit and the seller by returning it double. Ask your lawyer to word it that way.

How much is the deposit and when do you pay it?

The law sets no amount. You agree it with the seller, write it into the arras contract and pay it when you sign. The reservation fee is deducted from it, and the rest of the price is paid at the notary.

Here is how the payments line up on a resale flat on the Costa Blanca at €200,000 (about £167,100):

On a resale home you pay transfer tax (ITP), which in the Valencian region is 9 per cent since 1 June 2026, or 11 per cent above €1 million. Legal and official costs (notary, Land Registry, lawyer and paperwork) come to up to 4 per cent. On a new build you pay VAT (IVA) at 10 per cent and stamp duty instead of ITP. Our guide to buying costs in Spain breaks this down.

Two things matter more for a UK buyer than for a local one. The completion date goes into the arras contract, so leave time if you need a mortgage, because the bank needs time to value the home and decide. And the deposit and the price are fixed in euros, so if you are paying in pounds, the amount you need can move between signing and the notary.

Pound figures use the European Central Bank reference rate of 13 November 2026 (€1 = £0.83559). Your bank or currency provider will quote its own rate.

When do you lose the deposit, and when do you get it back?

Under arras penitenciales you lose the deposit if you pull out without a reason the contract allows. You get it back double if the seller pulls out. Any other refund depends on the conditions written into the contract.

Typical situations under arras penitenciales:

• You change your mind: you lose the deposit.
• The bank turns down your mortgage: you get the deposit back only if the contract has a finance condition. Without one, the deposit is gone.
• The land registry shows undisclosed debts or embargoes: this lets you withdraw and get your money back if the contract required the home to be free of charges.
• The seller pulls out: they pay you back double the deposit.

A real case shows how far this goes. In ruling 538/2026 of 9 April 2026, reported by idealista, the Tribunal Supremo looked at off-plan buyers who had each paid €6,000 (about £5,000) expressly as arras penitenciales. More than two years after getting the building licence, the developer dropped the project and paid each buyer €12,000 (about £10,000). The buyers claimed €120,000 to €232,000 (about £100,300 to £193,900) in damages. The court held that withdrawing for double the deposit was allowed by the contract, and the clause was not unfair.

The lesson: arras penitenciales spare you a long court case, but they also cap compensation at the deposit, and that works both ways. If you are buying from a developer, understand this before you sign. How later stage payments to a developer are protected is covered in our guide to off plan property in Spain.

What should you check before signing an arras contract?

Check the legal state of the home, the finance condition, the completion date and the account the deposit goes into. Each of these decides whether your money comes back if the purchase falls through. GOV.UK's advice for Spain is blunt: do not sign any papers or hand over any money until you have taken independent legal advice, and check that your lawyer is registered with the local bar association (Colegio de Abogados).

Checklist before you sign:

• A recent land registry extract (nota simple): the owner, any mortgage, any embargo. Our guide on how to check a property in Spain explains how to read it.
• The type of arras named in full, with a clause that says plainly how each side may withdraw if they are to be penitenciales.
• A finance condition if you need a mortgage, with a deadline for the bank's answer. Ideally get the bank's approval in principle before you sign. Our guide to Spanish mortgages for foreigners explains the steps.
• The completion date, and who chooses the notary.
• The account for the deposit: a lawyer's or agency's client account, not the seller's private account.
• Unpaid community fees and IBI (council tax): the seller should clear them before the deed.
• The language: a Spanish contract with a translation, or a bilingual one. Do not sign anything you do not understand.

You will also need an NIE, the tax identification number for foreigners, before the notary, and the lawyers we work with can help you get it.

Can you sign an arras contract from the UK?

Yes. The arras is a private contract, and Spanish law requires no notary or set form for it (article 1278), so you do not have to travel to sign it. The deed is different: it is signed before a Spanish notary, by you or by someone holding your power of attorney.

We advise coming once in person to see the property, because photos never show a place properly. During that visit you can sign a power of attorney at a Spanish notary, and the rest can go ahead without another trip.

If you would rather sign a power of attorney at home, it is possible. GOV.UK says a document certified by a UK notary or solicitor, such as a power of attorney, can be legalised with an apostille by the FCDO Legalisation Office. The standard paper service costs £45 per document plus postage, and an e-Apostille £35. Ask the Spanish notary in advance what wording and translation they need.

Frequently asked questions

Is a reservation deposit refundable in Spain? It depends entirely on the reservation contract. The money comes back in the situations the contract lists, for example if the land registry extract shows charges the seller did not disclose. Without a clause like that, a buyer who changes their mind usually loses the reservation fee. Unlike Ireland's booking deposit, there is no general right to a refund.

Can a seller pull out of a property sale in Spain? Yes, but it costs them. Under arras penitenciales a seller who withdraws must pay the buyer back double the deposit. Under confirmatory arras the buyer can go to court to enforce the sale or end it, with damages. Before arras are signed, a reservation contract binds the seller only as far as its wording goes.

What happens if my Spanish mortgage is refused after signing arras? You get the deposit back only if the arras contract has a finance condition with a deadline for the bank's decision. Without that clause, a refused mortgage does not release you, and under arras penitenciales the deposit is lost. Get the bank's approval in principle before you sign if you can.

Does an arras contract need a notary? No. An arras contract is a private agreement, and Spanish law makes a contract binding whatever form it takes. The notary comes in only at the deed, when the rest of the price is paid. Even so, have an independent lawyer read the arras contract before you sign it.

What does arras mean in English? Arras means a deposit, similar to earnest money. Arras penitenciales are a withdrawal deposit: the buyer can walk away by losing it, the seller by paying it back double. Arras confirmatorias are a part payment with no right to walk away, and arras penales are a penalty for not completing.

Found a home and have questions about the contract?

Tell us which home you are looking at, or browse property for sale in Torrevieja. We will guide you through the reservation and the arras contract before you pay anything, and keep an eye on the deadlines until the notary. We work with lawyers and banks. Tripinvest ES is a licensed agency (RAICV 4221) with offices in Torrevieja and Calpe and a head office in London, and we have been on the Spanish market for over 12 years. Service is in English from the first call to the notary. Our clients don't pay us commission.

General information as of 13 November 2026, not legal or tax advice.

Or call us on +44 20 3888 0008.

Sources

Last checked: November 2026

1. BOE, Civil Code (Real Decreto of 24 July 1889), consolidated text, articles 1124, 1152, 1153, 1278 and 1454: boe.es (official)
2. Iustel, Diario del Derecho, Tribunal Supremo ruling 583/2018 of 17 October 2018 on arras penitenciales: iustel.com
3. idealista news, 5 May 2026, Tribunal Supremo ruling 538/2026 of 9 April 2026 on arras penitenciales: idealista.com
4. Agència Tributària Valenciana, buying a property (ITP 9 per cent from 1 June 2026, 11 per cent above €1 million, one month to file): atv.gva.es (official)
5. GOV.UK, selling a home: offers and negotiations: gov.uk (official)
6. GOV.UK, selling a home: transferring ownership (exchanging contracts): gov.uk (official)
7. gov.ie, after sale agreed (booking deposit): gov.ie (official)
8. GOV.UK, Spain: buying and renting property (last updated 13 May 2021, under review): gov.uk (official)
9. GOV.UK, get your document legalised (what it costs): gov.uk (official)
10. European Central Bank, euro foreign exchange reference rates, 13 November 2026: ecb.europa.eu (official)
11. Tripinvest ES, buying costs in Spain (up to 13 to 14 per cent): tripinvest-es.com
12. Photo: Ximonic (Simo Räsänen), "Residential of Torrevieja Centro, Alicante, Spain, 2022 January", Wikimedia Commons, CC BY-SA 4.0: commons.wikimedia.org