Deposit contracts (arras): what to check before signing

An arras contract reserves the property and sets the terms of the purchase before completion. Signing the wrong type could cost you your deposit.

What an arras contract is

It is a private contract signed by the buyer and the seller before the title deed. The buyer pays a deposit, which is deducted from the final price, and both parties agree to complete the sale within a set period.

The three types

• Penitential (arras penitenciales): the most common. If the buyer withdraws, they lose the deposit; if the seller withdraws, they must return double the amount (article 1454 of the Spanish Civil Code).
• Confirmatory (arras confirmatorias): the deposit counts as a payment on account. If either party fails to comply, the other can demand completion or cancel the contract and claim compensation.
• Penalty (arras penales): the deposit acts as a penalty for non-compliance, but it does not release either party from completing the contract.

What to check before signing

• The type of arras, stated explicitly.
• The property details and confirmation that the seller is the registered owner.
• Any charges or debts recorded at the Land Registry.
• The price, the deposit paid and how it is deducted.
• The deadline for signing the title deed and who pays each cost.
• What happens if the mortgage is not approved.

A nota simple from the Land Registry, requested before signing, prevents most surprises.