Contrato de Arras in Spain: What Every Buyer Should Know
Buying a place in Spain usually comes with a little paper dance before the big notary day. The star of the pre-closing show? The contrato de arras — a private agreement where buyer and seller shake hands (formally), set a timeline, and the buyer puts down a deposit to reserve the property. It’s simple in spirit, serious in effect, and absolutely worth understanding before you sign anything.
This guide explains, in plain English, what an arras contract is, what goes in it, the different legal “flavours”, timelines, extensions, and how taxes work — with helpful notes for the Canary Islands (hello, Adeje 👋).
1) What is a “Contrato de Arras”?
The contrato de arras is a private agreement between buyer and seller that locks in a commitment to buy/sell a property at an agreed price and within an agreed timeframe. On signing, the buyer usually pays a deposit (often ~10% of the purchase price). The contract reserves the home, sets the notary deadline (for the public deed, the escritura), and spells out what happens if someone changes their mind or fails to perform.
Think of it as: “We both mean it, here are the rules, here’s the money, and here’s the date.”
2) Why do people sign one? (What it’s for)
- Reserves the property: the seller stops showing/accepting other offers.
- Shows buyer commitment: there’s skin in the game.
- Creates clear consequences if someone backs out (more below).
- Fixes the basics (price, timing, who pays which costs, etc.) in writing.
Most buyers sign an arras contract once they’re set on the property and want it off the market while they sort financing, gather documents, or simply queue their notary appointment.
3) What should an arras contract include?
Use this as your practical checklist:
- Who: Full identification of buyer and seller (name, passport/NIE, address).
- What: Accurate description of the property (address, registry details).
- Price & payment terms: Total price, how and when it will be paid.
- Deposit (arras): Amount paid now (often ~10%) and a clear note that it’s deducted from the final price at completion.
- Deadline: Specific date (day/hour) by which the public deed (escritura pública) will be signed before a notary.
- Who sets/communicates the notary date: Usually the buyer proposes the date within the agreed window.
- How to notify: Allow email, but for anything serious (delays/defaults) use burofax (certified post) to avoid disputes.
- Cost split: Notary, Registry, plusvalía municipal (seller, unless agreed otherwise), and buyer’s taxes/fees.
- Type of arras: Confirmatory, Penitential, or Penal (explained next).
- Expiry: Clear date of expiry of the arras contract.
- Signatures of both parties.
Pro tip: Make the notification method crystal clear (e.g., “Notary date notification by burofax at least X days in advance”). Vague notifications cause very real headaches.
4) The three legal “flavours” of arras
Spanish law recognises three common structures. Choosing the right one matters because consequences differ:
- Confirmatory Arras (arras confirmatorias)
- Essentially a down payment confirming the sale.
- If someone breaches, the other may demand performance or termination with damages (Civil Code art. 1124).
- Use when you want strong emphasis on completing the deal.
- Penitential Arras (arras penitenciales) — the most common
- Creates an “exit with a price”.
- If the buyer withdraws: loses the deposit.
- If the seller withdraws: returns double the deposit (Civil Code art. 1454).
- Use when both parties want a simple, predefined walk-away consequence.
- Penal Arras (arras penales)
- Adds a penalty if someone fails to comply, and (unless agreed otherwise) allows the injured party to still demand performance.
- Use when you want a deterrent and leverage to force completion.
Plain-English summary:
– Penitential = “You can pull out, but it’ll cost you.”
– Confirmatory = “We’re doing this. If you don’t, I’m claiming damages.”
– Penal = “There’s a penalty, and I can still push you to complete.”
5) How much is the deposit?
Typically ~10% of the purchase price — but it’s not fixed by law. Parties can agree more or less depending on the deal (prime villas often command higher). Whatever you agree, spell it out and say it reduces the price payable at completion.
Example
- Price: €350,000
- Arras: 10% = €35,000 (paid on signing the arras)
- At completion: Buyer pays €315,000 (+ taxes/fees)
6) How long does an arras contract last?
Commonly up to 6 months from signing (your Spanish source is spot on), but most transactions in resort areas close much sooner. The key is the deadline you write in the contract. If financing or paperwork needs more time, don’t guess — build it in or agree a formal extension.
7) Can you extend (prorrogar) an arras contract?
Yes — if both parties agree. Use a short written annex (anexo) referencing the original contract, stating:
- New completion deadline
- Reason(s) for the extension (e.g., mortgage approval timing)
- Any changed conditions (if any)
- Both parties sign
Do not rely on “we’ll sort it by WhatsApp.” Extensions should be formal, dated and signed.
8) What happens if someone backs out?
It depends on the type of arras you chose:
- Penitential:
- Buyer walks away → loses the deposit.
- Seller walks away → returns double the deposit.
- Confirmatory: Injured party can demand completion or terminate with damages.
- Penal: Penalty applies, and (unless waived) the injured party can still demand completion.
Common pitfall: Buyers assuming “I can always get my deposit back if the bank says no.” Not automatically true. If your mortgage is critical, make the arras conditional on obtaining financing by a given date, with a clear outcome if it’s refused.
9) Who pays what? (costs & the plusvalía)
A fair and very common distribution (and one many lawyers recommend) is:
- Seller: costs of granting the public deed (otorgamiento), and plusvalía municipal (local capital gains on land value).
- Buyer: Registry, copies, and purchase taxes (see below).
You can agree something different, but write it clearly to avoid disputes at the notary.
10) Taxes: how do arras and the purchase get taxed?
If the sale goes ahead
- The deposit becomes part of the price.
- The buyer pays purchase taxes:
- Canary Islands (Adeje)
- New-build: IGIC instead of VAT (standard 7%) + AJD (stamp duty, % varies by region).
- Resale: ITP (Canaries standard 6.5% is common).
- Canary Islands (Adeje)
- The seller declares the gain in IRPF (personal income tax) and pays plusvalía municipal (as per local rules).
If the sale does NOT go ahead and someone keeps the deposit as a penalty
- The party receiving the money must declare it as taxable income (typically in the general base).
- The party losing the deposit may declare a capital loss (also typically in the general base).
- For the buyer, paying the deposit itself has no IRPF impact if the sale later completes; it simply forms part of the price for IGIC/ITP purposes.
Note: Rates and thresholds can change over time or by specific Canary allowances. Your notary/gestoría will confirm your exact case.
11) Is it mandatory to sign an arras contract?
No — it’s not compulsory. But it’s the safest practical way to reserve a property and lock in the deal terms while you prepare the notary signing. It doesn’t have to be notarised, but notarial intervention adds extra legal certainty(identity checks, date certainty, etc.).
12) Practical example: a tidy timeline
- Week 0: Offer accepted → due diligence begins (ownership check, debts, community fees).
- Week 1: Arras contract signed → buyer pays 10%.
- Week 1–6: Buyer finalises mortgage (if any); both sides prepare documents.
- By Day X (per arras): Notary signing (escritura pública) → keys, price balance paid, taxes/fees triggered.
If any risk of delay (bank slow, overseas funds, POA setup), plan the extension early — don’t wait until the week before.
13) Simple clauses people are glad they included
- Financing condition (if relevant):
“This contract is conditional upon Buyer obtaining mortgage approval of at least €___ by //____. If not granted, either party may rescind with the return of the deposit to Buyer.” - Notary date & notice:
“Buyer shall set the notary date within the period –. Buyer will notify Seller of the date by burofax at least __ days in advance.” - Default rule (penitential/confirmatory/penal):
State the type of arras and exact consequence clearly (e.g., “If Seller withdraws, Seller returns double the deposit within __ days”). - Cost split:
“Plusvalía municipal shall be borne by Seller; Registry and purchase taxes by Buyer. Deed granting costs as per law by Seller.”
14) Quick reference table
| Topic | At a Glance |
|---|---|
| Typical deposit | ~10% (agreed freely) |
| Common type | Penitential (walk-away with predefined consequence) |
| If Buyer withdraws | Loses deposit (penitential) |
| If Seller withdraws | Returns double (penitential) |
| Duration | Up to 6 months (or as agreed) |
| Extension | Yes, by signed annex |
| Canary taxes (buyer) | IGIC 7% (new-build) or ITP 6.5% (resale) — typical |
| Plusvalía municipal | Usually Seller (unless agreed otherwise) |
| Notary requirement | Not mandatory for arras, recommended for certainty |
15) Common mistakes (and how to avoid them)
- No financing clause when you actually need a mortgage → deposit at risk.
- Vague deadline (“around late June”) → recipes for disputes. Put a date & hour.
- No formal notification method → use burofax for the serious stuff.
- Assuming costs instead of writing them → write them.
- Not checking debts/charges/community fees → do a proper search (nota simple), ask for proof of being up to date with the community and utilities.
16) Mini-glossary (because Spanish legalese likes to show off)
- Arras: Deposit/payment to reserve the property under agreed terms.
- Escritura pública: Public deed signed before a notary — where the sale is completed.
- Burofax: Certified postal notice — the “please don’t ignore this” way to communicate.
- Plusvalía municipal: Local tax on the increase in land value (usually paid by the seller).
- Nota simple: Extract from the Land Registry showing ownership and charges.
17) Final word (and a calm cup of tea)
The contrato de arras is not meant to scare you — it’s there to keep the path to your new home tidy, fair and predictable. Choose the right type, write clear dates and consequences, add any financing condition you need, and keep communications formal. With a good lawyer and a sensible seller, it’s smooth sailing to the notary.
⚖️ Disclaimer
This article is for informational purposes only and does not constitute legal advice.
Property laws and tax rules can vary depending on your location and personal circumstances.
Before signing any contract — especially a contrato de arras — always consult a qualified lawyer (abogado) or a certified property professional in Spain.
