Contrato de Arras in Spain: Deposit Agreement Risks (2026)
If you are buying a home in Spain, the contrato de arras is usually the first document you sign, and it comes much earlier than most British buyers expect. You pay a deposit of around 10% of the price, often within days of agreeing the deal, and both sides commit to completing by a fixed date. In England and Wales, nothing binds you until exchange of contracts, by which point your solicitor has finished the searches. In Spain, the deposit is often paid before anyone has checked the property at all.
On Mallorca, where international demand keeps the pressure on, that gap catches people out every season. This article explains how the Spanish deposit agreement differs from what you know at home, the three types of arras and what each means if the sale falls through, the risks that matter most for overseas buyers, and how to sign without flying over.
In this article you will find: how the arras stage compares with the UK process, the three types of contrato de arras and their consequences, a comparison table, the deposit agreement risks overseas buyers face, including currency, how to sign remotely with a power of attorney, and answers to the most common questions.
How the Spanish deposit agreement differs from the UK process
The deposit comes before the checks
In the UK, your conveyancer runs searches and raises enquiries before exchange, and you can walk away freely until then. In Spain there is no equivalent stage built into the process. The contrato de arras is a private contract between buyer and seller that fixes the property, the price and the deadline for signing the deed. Once you pay, walking away has a price.
A reservation fee may come first
Many estate agents in Mallorca ask for a reservation fee before the arras, a smaller sum to take the property off the market for a few days. It is not regulated in the way UK buyers might assume, so read the reservation document carefully:
- Who holds the money, the agent or the seller.
- When it is refunded if you do not go on to sign the arras.
- Whether it is deducted from the later deposit.
The notary will not protect you at this stage
The arras is normally signed without a notary. The notario only appears at completion, when the public deed is signed, and even then acts for neither side: the notary confirms identities and the formal validity of the deed, but does not check whether the terms you agreed in the arras are good for you. We explain the difference in Do I Need a Lawyer to Buy Property in Spain?
The three types of contrato de arras in Spain
Spanish law recognises three types of deposit. They look almost identical on paper and lead to very different outcomes if one side does not complete.
Arras penitenciales: the walk-away deposit
This is the type most often used on Mallorca. Either party can pull out at a fixed cost: if the buyer withdraws, they lose the deposit; if the seller withdraws, they must pay back double what they received.
Arras confirmatorias: a binding part payment
Here the deposit is simply an advance on the price and confirms that the sale is agreed. Neither side can walk away. If one party fails to complete, the other can either force the sale through or cancel the contract and claim damages.
Arras penales: a penalty for breach
The deposit works as a penalty. The party that keeps its side of the deal can retain the deposit as compensation and, depending on the wording, may still insist on completion.
Why the wording matters so much
Spanish courts expect the right to withdraw to be agreed clearly. If the contract is vague, the arras are usually treated as confirmatory, and the option to walk away by losing the deposit disappears. A contract that just says "arras" is not a sound basis for a purchase of this size, especially one written only in Spanish.
The three types at a glance
| Type of arras | Can either side withdraw? | If the buyer pulls out | If the seller pulls out |
|---|---|---|---|
| Penitenciales | Yes, both | Loses the deposit | Pays back double the deposit |
| Confirmatorias | No | Seller can force the sale or cancel and claim damages | Buyer can force the sale or cancel and claim damages |
| Penales | No | Loses the deposit as a penalty and may still have to buy | Pays the agreed penalty and may still have to sell |
Deposit agreement risks for overseas buyers
Most problems come not from the type of arras but from signing too early or with an incomplete contract.
Paying before the property has been checked
Before you transfer anything, you should know who the registered owner is, whether there are mortgages or embargoes on the property, whether there are unpaid community fees or local property tax (IBI), and whether the house and any extensions are legal from a planning point of view. The land registry extract (nota simple) is a starting point, not a full review.
Not every owner has signed
If the property belongs to several people, to a married couple under Spain's community property regime, or to heirs who have not yet formally accepted an inheritance, all of them must agree to the sale. One missing signature can turn your deposit into a claim that is hard to recover.
Deadlines you cannot meet from abroad
A completion date that is too tight is one of the most common traps. If a Spanish bank is slow to approve a non-resident mortgage, or you do not yet have your NIE number, you can lose the deposit without ever changing your mind. Check in particular:
- The completion deadline and who chooses the notary.
- A mortgage condition that returns your deposit if the bank declines the loan.
- Delivery with vacant possession, free of charges and tenants.
- An inventory of the furniture and fittings included in the price.
Currency between deposit and completion
If your funds are in sterling or dollars, you will usually pay the deposit and the balance weeks or months apart. A shift in the exchange rate can add thousands to the final transfer, and the completion date in the arras will not move to suit the market. Many buyers fix the rate for the balance with a currency specialist once the arras are signed.
Who holds the money
UK buyers are used to deposits sitting in a solicitor's client account. In Spain, the deposit is often paid straight to the seller. If the seller then pulls out, recovering double may require court action, with the time and cost that involves. Holding the deposit with the agent or in a lawyer's client account gives you more protection.
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Signing without flying over
Many of our clients buy from the UK, Ireland, Scandinavia or the US. Buying remotely works well when it is planned properly.
The arras can be signed remotely
Because it is a private contract, the contrato de arras can be signed at a distance, for example by e-signature or by exchanging signed copies. What matters is not where you sign, but that someone has reviewed the contract and the property on your behalf first.
A power of attorney for completion
The deed itself must be signed before a Spanish notary. With a power of attorney, a person you trust, such as your lawyer, signs for you. You can grant it before a notary public in the UK, with an apostille from the FCDO and a sworn translation, or at a Spanish consulate. Arrange it early, so the arras deadline does not pass while the document is still in the post. We cover this in Buying Property in Spain as a Non-Resident.
Frequently asked questions
- Can I pull out after paying a deposit in Spain?
- With arras penitenciales, yes, but you lose the deposit. With arras confirmatorias, you cannot simply withdraw, and the seller can force the sale or claim damages.
- What happens if the seller pulls out of a contrato de arras?
- With arras penitenciales, the seller must pay you back double the deposit. With confirmatory arras, you can force the sale or cancel and claim damages.
- How much deposit do you pay on a property in Spain?
- There is no legal amount. Around 10% of the price is standard, and it can be negotiated.
- Is my deposit refunded if my mortgage is refused?
- Only if the contract says so. Without a mortgage condition, under arras penitenciales you would normally lose the deposit.
- Does the Spanish notary check the deposit agreement?
- No. The arras is a private contract, usually signed without a notary. The notary only takes part at completion and acts for neither side.
- Do I need to travel to Spain to sign?
- No. You can sign the arras remotely and grant a power of attorney so that someone else signs the deed for you.
How KJ Can Help You
Check first, pay second
A deposit takes minutes to transfer, but its consequences stay with you until completion. The property checks, the type of arras and the conditions in the contract should all be settled before you pay anything, as part of the full process we describe in Buying Property in Mallorca as a Foreigner: The Complete Guide.
KJ Legal Plus reviews or drafts your contrato de arras in English, checks the property before you sign and stays with you through to completion. You never need to fly over.
About to sign a deposit agreement? Request a consultation