Arras contract in Spain: types of deposit, what happens if either side pulls out and what to include

What is an arras contract?

An arras contract (contrato de arras) is the private agreement that buyer and seller sign before the public deed of sale (escritura), in which the buyer pays a sum known as the arras or señal: a deposit. The starting point is art. 1454 of the Spanish Civil Code, which says that where arras have been given in a sale, the contract may be ended by the buyer agreeing to lose them or the seller agreeing to return them doubled (“devolverlas duplicadas”).

That article describes only penitential arras. If the contract does not make clear that the deposit is there to let the parties withdraw, Spain’s Supreme Court treats it as a simple advance on the price that confirms the sale. No Spanish authority publishes an official English explanation of arras, so this guide works from the Civil Code and case law, with the Spanish terms you will see in your contract.

The amount is up to the parties. The Andalusian government’s consumer service, Consumo Responde, says it is normally free and decided by the signatories, and that the deposit is deducted from the total price of the home.

Is an arras contract compulsory? Do you need a notary?

It is not compulsory. Spain’s General Council of Notaries puts it this way: the arras document “no es obligatorio”, but the law considers it a valid contract, so from the moment you sign it you are bound to fulfil it. That matches art. 1278 of the Civil Code: contracts are binding whatever form they were made in.

Nor do you need a notary to sign it. The Andalusian government notes that in Spain the form of a property sale is free, although either party can demand that it be executed as a public deed under arts. 1279 and 1280 of the Civil Code. That said, the notaries recommend taking impartial advice from a notary and raising the arras to a public deed, given how much is at stake.

Types of arras: confirmatory, penalty and penitential

Spanish case law distinguishes three kinds. The Supreme Court’s judgment 538/2026 of 9 April (Roj: STS 1558/2026), quoting judgment 719/2010, defines them as follows:

• Confirmatory arras (confirmatorias): meant to reinforce the existence of the contract, as a sign or proof that it was made, or as a first step in performing it.
• Penalty arras (penales): meant to guarantee performance, through their loss or double return if the contract is breached.
• Penitential arras (penitenciales): a lawful way for the parties to withdraw from the contract by losing the deposit or returning it doubled. These are the arras of art. 1454.

In every case, the same judgment adds, arras always count as payment if the contract is performed: when the sale completes, the deposit comes off the price.

What happens if the buyer or the seller pulls out?

With penitential arras

Either side may withdraw: a buyer who pulls out loses the deposit and a seller who pulls out pays it back doubled. The Supreme Court’s judgment 178/2026 of 9 February (Roj: STS 572/2026) adds three points: penitential arras allow withdrawal without giving any reason, they do not allow a claim for further damages, and they cannot be reduced by the court.

The same judgment closes a loophole for sellers: they do not need to declare expressly that they are withdrawing. If their conduct shows they have no intention of completing, the buyer who terminates for breach is entitled to the deposit doubled. In that case, with €10,000 of penitential arras, the Supreme Court ordered the seller to pay €20,000 plus statutory interest.

With confirmatory arras

There is no right to walk away by paying. If one side fails to perform, the other can choose, under art. 1124 of the Civil Code, between demanding performance or termination, with damages and interest in either case.

With penalty arras

They work as a penalty clause guaranteeing performance. Under art. 1152 of the Civil Code, the penalty replaces damages and interest unless otherwise agreed. Art. 1153 adds that the debtor cannot escape performance by paying the penalty unless that right was expressly reserved, and that the creditor cannot demand both performance and the penalty unless that option was “claramente otorgada”, clearly granted. Here the court can adjust the amount: it will modify the penalty fairly if the obligation was partly or irregularly performed (art. 1154).

What the Supreme Court requires for arras to be penitential

The case law is settled: the arras of art. 1454 are exceptional and call for a restrictive interpretation, and unless the parties’ intention is beyond doubt, the deposit must be read as “un simple anticipo a cuenta del precio”, a simple advance on the price that confirms the contract. That is how judgment 583/2018 of 17 October (Roj: STS 3513/2018, ECLI:ES:TS:2018:3513) puts it, quoting earlier rulings.

In that case the money had been paid “como arras y parte del precio”, as arras and part of the price, with a reference to art. 1454, and it was not enough: for the Court, merely mentioning art. 1454 does not state clearly what obligations the parties are taking on. The clause it had accepted as penitential in an earlier judgment (583/2018 quotes judgment 581/2013) read, in Spanish:

“[…] que serán entregadas en concepto de arras, según lo estipulado en el artículo 1454 del Código Civil, es decir en caso de que la parte compradora desista perderá íntegramente las arras entregadas, y si fuera la parte vendedora, las devolverá duplicadas.” In short: if the buyer withdraws, they lose the whole deposit; if the seller withdraws, they return it doubled.

Judgment 538/2026 cites the 2018 ruling and distinguishes it: in a reservation contract, the sentence “esta cantidad se entrega en concepto de arras penitenciales, según lo dispuesto en el artículo 1454 del Código Civil” was enough. The drafting lesson is not to leave it to chance.

Quoting art. 1454 is not enough. Make sure the contract uses the word “penitenciales” and spells out what happens if each side withdraws: the buyer loses the deposit and the seller returns it doubled.

Buying off-plan: the developer clause the Supreme Court calls unfair

In consumer contracts that were not individually negotiated, such as the developer reservation in judgment 538/2026, the Supreme Court considers it unfair to depart from art. 1454 to the consumer’s detriment, so that the consumer can withdraw by losing the deposit but the business can withdraw without returning it doubled. Spain’s consumer law points the same way: art. 87.2 of the General Consumer Protection Act lists as unfair the retention of sums paid by the consumer who withdraws, without an equivalent compensation if it is the business that withdraws.

In Andalusia, Decree 218/2005 adds that the explanatory note on the price must state that any sum paid before the contract is formalised will be deducted from the total, unless it is unequivocally stated that the payment is made on another basis (art. 8.2).

What an arras contract should include

There is no compulsory official model, but Consumo Responde lists what a deposit contract (contrato de señal) should contain, among other things:

• The details of the parties.
• The seller’s statement that they really are the owner of the home, and the buyer’s that they are interested in it.
• The reservation of the home and its price (plus any garage or storage room).
• The deposit paid, the account it goes into and a statement that the home is taken off the market.
• The penalty terms if the buyer does not turn up to complete the sale.
• The refund terms if the seller ultimately cannot deliver the home.
• Both parties’ signatures and the date.

To that list, add what the case law requires and what the notaries ask you to check before signing anything:

• The type of arras, by name and with its consequences, for the reasons above.
• Who signs for the seller: in a sale between individuals, every owner; if the home is marital (ganancial) or the family home, both spouses.
• The price and how it is paid: never agree to state a price lower than the real one, and never pay undocumented sums.
• Charges and fees: whether there is a mortgage, an embargo or unpaid taxes such as IBI, whether the owner is up to date with the community of owners and whether special levies (derramas) have been approved.
• Who pays the costs. If nothing is agreed, art. 1455 of the Civil Code puts the costs of executing the deed on the seller and those of the first copy and after the sale on the buyer; a developer cannot pass on to a consumer the costs the law places on the developer (art. 89.3 of the consumer act).

And before you sign, check the seller’s statements against the Land Registry. The Andalusian government advises requesting a nota simple, which lets you check that the home is in the seller’s name and what charges could limit its use or ownership. If you buy through an agency in Andalusia, the fact sheet you get at the viewing must back those details with a nota simple no more than three months old (art. 10.1 d) of the Regulation of Decree 218/2005). We explain how to order one for €9.02 plus taxes and how to read it in our guide to the nota simple.

Common mistakes with arras

• Assuming the mortgage will come through. The Supreme Court treated as a withdrawal, with loss of the deposit, a buyer who said she would not complete until the financial system recovered and she could get financing (judgment 485/2014, as summarised in judgment 178/2026). If the purchase depends on a loan, decide and put in writing what happens if it does not arrive.
• Believing confirmatory arras let the buyer walk away by losing the deposit. They do not: the seller can demand performance or termination, with damages (art. 1124).
• Paying without proof. Consumo Responde notes that the payment can be recorded in the contract itself or in a receipt.

For agencies: your own arras template in Domuspace

Domuspace does not include an arras template and does not decide which type to agree: that is for the parties and their lawyer. What the contracts module does, from the Professional plan, is let you import your own template under “Otros contratos” (other contracts), as .docx, .html or .txt, and have it signed in Spain in person, with a drawn signature, or remotely, with a 6-digit code sent by email.

Under Domuspace’s terms, that signature has legal effect and evidentiary value, but it is not automatically an advanced or qualified electronic signature. If the parties want more, they can raise the document to a public deed, as the notaries recommend. We explain the types of signature in electronic signatures for real-estate contracts, and how to secure the owner’s mandate first in how to win exclusive listings. If you work in Málaga, see Domuspace on the Costa del Sol.

This article is for information only and is not a substitute for legal advice. The data were checked on 29 September 2026 against the official sources linked above.