Short answer: the contrato de arras is the document that actually decides your purchase. It fixes the price, the deadline, who pays what and — above all — what happens if the sale never reaches the notary. The heading on the document does not determine its legal nature: a paper titled “contrato de arras” may contain confirmatory, penitential or penalty deposits, with very different consequences. Before transferring any money, the land registry extract, the planning status and the charges on the property should already have been checked.
At our office in Alfaz del Pi we see the same scene every week: a Nordic or British buyer finds the property, the agency hands over a two-page document and asks for a €6,000 transfer “to reserve it”. They sign the same day. Three weeks later an unregistered swimming pool, a court charge or a twenty-square-metre discrepancy appears — and the real problem begins: how to exit the contract without losing the money.
This article sets out what must be checked before signing, and what to do when the legal review uncovers a defect.
Contents
- Reservation, deposit, private contract and arras: what each term means
- The three types of arras and their consequences
- The title of the document does not determine its legal nature
- The fifteen checks before signing
- Specific issues for foreign buyers
- What happens if the legal review uncovers a problem?
- Red flags: when you should not sign yet
- Final checklist
- Frequently asked questions
- Legal sources
Reservation, deposit, private contract and arras: what each term means
Four expressions are used interchangeably in Spanish property practice, although they are not synonyms.
Reservation (reserva). A short document, usually drafted by the agency, under which the buyer pays a small amount — €3,000 to €6,000 is typical on the Costa Blanca — so the property is taken off the market for a few days or weeks. It is normally followed by an arras contract. This is the stage at which most people sign without having read anything.
Deposit (señal). Not an autonomous legal figure, but a colloquial description of the sum paid. Its regime depends on what the contract says.
Private purchase contract. A complete agreement that perfects the sale under article 1445 of the Spanish Civil Code, even though ownership does not yet pass. Under Spanish law ownership transfers through the combination of title and delivery (article 609 CC), which in practice occurs when the deed is executed before a notary.
Arras. The agreement under which a sum is paid in connection with the sale contract, whose function — evidence, security or right of withdrawal — depends on what the parties agreed.
The three types of arras and their consequences
Confirmatory arras (confirmatorias). This is the general rule. The sum paid evidences that the contract exists and is credited against the price. Neither party may withdraw. If one party defaults, the other may demand specific performance or terminate with damages under article 1124 CC. Article 343 of the Commercial Code reflects the same principle.
Penitential arras (penitenciales). These are the deposits of article 1454 CC: where arras or a deposit have been given in a contract of sale, the contract may be withdrawn from by the buyer forfeiting them or the seller returning them twofold. They create a defined right of withdrawal. Neither party can compel the other to buy or sell.
Penalty arras (penales). These operate as a penalty clause under articles 1152 and 1153 CC. They confer no right of withdrawal: the sum is pre-agreed compensation for breach, and performance may still be demanded if expressly agreed.
The title of the document does not determine its legal nature
This is probably the most misunderstood point in the whole field, and it deserves to be stated plainly: the fact that a document is headed “contrato de arras” does not mean it contains penitential arras. What matters is the content of the clauses and the intention of the parties, interpreted under articles 1281 et seq. of the Civil Code.
Supreme Court case law is consistent: article 1454 is exceptional in character and must be construed restrictively. For arras to be treated as penitential, the parties’ intention must be unequivocal. Vague formulas such as “by way of deposit” or “on account of the price” are not enough. Where there is doubt, the courts classify them as confirmatory. The Directorate General for Legal Certainty and Public Faith applies this doctrine in decisions published in the Official State Gazette, including those of 13 July 2022 and 31 July 2024.
Practical consequence: if you sign believing you can walk away by forfeiting €6,000, and the document does not clearly create that right, you may find the seller suing to compel you to complete a €350,000 purchase. And the reverse also applies: a seller who wants to sell to someone else for more money cannot always simply return double.
The fifteen checks before signing
1. Identity and capacity of the seller
Verify that the signatory is the owner or holds sufficient power of attorney: identity document or passport plus NIE. Situations requiring particular care include a seller married under community of property or where the family home is involved, heirs who have not yet accepted the estate, companies whose director must prove a current appointment, and persons under judicial guardianship. If an attorney signs, the power must be read literally — its existence alone is not enough.
2. Registered title
An up-to-date land registry extract (nota simple) must be obtained. You can request it yourself: we explain how in nota simple and cadastral certificate. The registered owner must match the seller. An extract from six months ago is not sufficient: charges can be registered on any day.
3. Exact description of the property
Cadastral reference, registered plot number, built and plot surface areas, boundaries and annexes (garage, storeroom). An error in the cadastral reference in the arras contract can force the document to be redrawn.
4. Consistency between Land Registry, Cadastre and physical reality
The most frequent defect on the Costa Blanca. The registered surface area, the cadastral surface area and what is actually on site must be compared before signing. Where they diverge, there is almost always an unregistered construction behind it. We analyse the fourteen typical scenarios in Land Registry vs Cadastre in Spain: what to do when the square metres, the pool or the buildings don’t match.
5. Mortgages
The registry extract will show whether a mortgage is registered and the secured liability figure. Note: the registered liability figure is not the outstanding balance. An up-to-date debt certificate from the lender is required.
6. Court charges and other encumbrances
Preventive annotations of seizure (embargo), tax charges, resolutory conditions, easements, pre-emption and redemption rights, and planning or coastal charges. All of these appear, or should appear, in the registry extract. See our article on what an embargo is and how to cancel it.
7. Planning status
Land classification, applicable planning parameters, and whether the building complies with the plan or is outside planning (fuera de ordenación). This is evidenced by municipal planning information. On non-developable land the check is even more demanding: see our article on buying property on rustic land in the Valencian Community.
8. Undeclared works, pools and extensions
Swimming pools, glazed terraces, porches, basements and added floors that do not appear in the deed or the registry. A municipal certificate confirming the absence of planning enforcement proceedings should be requested. The full regime is explained in building or renovating without a licence in Spain.
9. Owners’ community
Statutes, internal rules, participation quota, current resolutions and restrictions — particularly relevant if the property is to be let to tourists. Our article on owners’ communities in Spain develops these obligations.
10. Debt certificate and special levies
Article 9.1.e) of Law 49/1960 on horizontal property creates a charge over the property itself: the acquired unit answers for sums owed by previous owners, up to the limit of the elapsed part of the current annual period and the three preceding calendar years. The seller must produce a certificate from the secretary countersigned by the president at the time the deed is executed, unless the buyer expressly waives it — a waiver we rarely recommend. Beyond arrears, it must be established whether extraordinary levies have been approved in general meeting and remain to be charged.
11. Occupants, tenants and possession
Is the property delivered free of occupants? Is there a tenancy in force and, if so, a tenant’s pre-emption right? Is there occupation without title? Delivery of vacant possession must be expressly agreed, with a date and consequences for breach.
12. Energy certificate and required documentation
The energy performance certificate is mandatory on transfer under Royal Decree 390/2021 and is the seller’s responsibility. Alongside it: first or second occupancy licence where applicable, installation certificates, latest IBI receipts, refuse charge and utility bills, and a certificate of absence of planning infringement where the case warrants it.
13. Price, sums paid and method of payment
Total price, sum paid on signature, schedule of further payments, payment method and express crediting of sums against the price. Any ambiguity as to whether the sum is forfeited, returned or credited must be eliminated.
14. Date and conditions for executing the deed
Deadline, designated notary, who convenes, what documentation each party must produce and what happens if the date is missed for reasons outside the parties’ control. Thirty days is common and, for a foreign buyer without a NIE or a Spanish bank account, frequently insufficient.
15. Consequences of breach
The most important clause in the contract. It must state, without room for interpretation, what happens if the buyer defaults, what happens if the seller defaults, whether a right of withdrawal exists, and whether additional damages are agreed.
Specific issues for foreign buyers
NIE. Essential in order to execute the deed and to settle taxes. Obtaining it can take weeks. The contractual deadline must be realistic. See our guide to the NIE.
Financing. If the purchase depends on a mortgage, the contract must expressly regulate what happens if the bank declines. Without such a clause, refusal of the mortgage is not in itself a ground for terminating without consequences: it is the buyer’s risk.
International transfers. Anti-money-laundering controls can hold funds for several days. Timings must allow for this and the source of funds must be evidenced to the notary and the bank.
Powers of attorney. If you cannot attend the signing, a power may be granted before a Spanish notary or before a notary in your home country with a Hague Apostille and sworn translation. This should be arranged before signing the arras contract, not afterwards.
Non-resident seller and the 3% withholding. Where the seller is not tax resident in Spain, the buyer is obliged to withhold 3% of the price and pay it to the Spanish tax authority using form 211, under article 25.2 of the consolidated Non-Resident Income Tax Act (Royal Legislative Decree 5/2004). This is not optional: if the buyer fails to withhold, the property itself becomes liable for the tax. The obligation should be reflected in the arras contract. We cover it in capital gains tax when selling property in Spain.
Allocation of costs and taxes. Article 1455 CC allocates the cost of executing the deed to the seller and the cost of the first and subsequent copies to the buyer, unless otherwise agreed — and in practice it is almost always otherwise agreed. Plusvalía municipal falls on the seller in transfers for consideration. ITP is paid by the buyer.
Rates currently in force in the Valencian Community. Since 1 June 2026, under Law 5/2025 of 30 May of the Generalitat, the general transfer tax (ITP) rate on resale homes is 9% for properties valued up to €1,000,000 and 11% above that figure. The general stamp duty (AJD) rate is 1.4%. New-build homes are taxed at 10% VAT plus AJD. You can run your own figures with our purchase costs calculator or read the complete guide to all fees and taxes.
What happens if the legal review uncovers a problem?
Finding a defect does not mean the purchase must be abandoned. It means the contract must be adapted. Below we set out the legal objective each contractual provision should achieve. We do not supply model clauses: the drafting depends on the specific case, and a clause copied from the internet frequently does more harm than its absence.
Registered mortgage
The objective is that the property transfers free of charges. Two operations must be distinguished: economic redemption — payment of the outstanding balance — and cancellation at the registry, which requires a separate deed of discharge and its registration. The usual mechanism is to retain from the price, at the moment of signing, the amount needed to redeem, paid by banker’s draft to the lender, with a documented undertaking to process the registry cancellation. The arras contract should anticipate this mechanism and allocate the cancellation costs.
Registered seizure (embargo)
The creditor, the amount and the state of proceedings must be identified. The objective is that the annotation is cancelled before the deed or, failing that, simultaneously, by deposit or payment out of retained price funds together with a cancellation order. A seizure by the tax authority or Social Security behaves differently from one arising from civil proceedings, and the timetable must be set accordingly.
Unregistered pool or extension
First it must be established whether the works can be legalised, whether the period for planning enforcement action has expired, or whether the building sits outside planning. Only then can it be decided whether to require the seller to execute a declaration of new construction — on grounds of age under article 28.4 of Royal Legislative Decree 7/2015 where the requirements are met — who bears the technical, notarial, registry and tax cost, and by what deadline. Crucially, a declaration of new construction based on age is not the same as planning legalisation.
Discrepancy between Land Registry and Cadastre
It must be established which description corresponds to reality and whether correction proceeds through the registry, the cadastre or both. Where the discrepancy affects financing or a future sale, the reasonable position is that the seller resolves it before the deed, with a deadline and an express consequence in the contract.
Planning problem
The appropriate provision makes the buyer’s obligation conditional on obtaining specific, verifiable municipal documentation — planning report, certificate of absence of proceedings — within a fixed period, and regulates what happens if that documentation is not obtained or reveals an infringement. The generic formula “subject to everything being in order” is not workable before a court.
Community debt
The article 9.1.e) certificate should be required as advance documentation, not only at signing. If a debt exists, the corresponding amount should be retained from the price and paid directly to the community at the deed.
Approved special levy
Who bears it must be expressly determined. The rule is not as clear-cut in statute as many believe: what matters is the date of the general meeting resolution and the criterion agreed. An undertaking by the seller in the deed is useful, but if the seller does not pay, the community can proceed against the property. Retention is safer than a promise.
Coastal Law
Before assuming a definitive obligation, the position of the plot relative to the maritime-terrestrial public domain and its easements must be checked administratively. Silence in the registry extract does not evidence the absence of a coastal restriction. We explain what to check in Buying a property affected by the Spanish Coastal Law.
Financing
Refusal of a mortgage releases the buyer only if the contract says so. A well-drafted condition identifies the lender or lenders, the minimum loan amount, the period for obtaining a decision and how the refusal is to be evidenced. Without those elements the clause is worthless.
Red flags: when you should not sign yet
- You have no current land registry extract, or the one you have is months old.
- The document identifies neither the registered plot nor the cadastral reference.
- You are asked to pay in cash, into a third party’s personal account, or into the agency’s foreign account.
- The seller signs through an attorney and you are not given a copy of the power.
- There is a pool, an enclosed porch or an extension that does not appear in the deed.
- The contract says nothing about what happens if the bank declines the mortgage.
- You are pressed to sign today because “another buyer is interested”.
- The deadline to the deed is thirty days and you still have no NIE.
- The seller is non-resident and the document does not mention the 3% withholding.
- You are asked to sign a document in Spanish that you have not read in a language you understand.
Final checklist
- Current land registry extract obtained and reviewed.
- Seller’s title and capacity verified; powers of attorney examined.
- Cadastral reference, registered plot and surface areas compared with physical reality.
- Charges identified: mortgages, seizures, tax charges, easements.
- Planning status checked with the town hall.
- Community debt certificate requested and levies verified.
- Possession and tenancy position clarified.
- Energy certificate and occupancy licences available.
- Price, payment schedule and payment method set out in writing.
- Realistic date for the deed and notary designated.
- Nature of the arras expressed unequivocally.
- Financing condition drafted with lender, amount and deadline.
- Allocation of costs and taxes expressly agreed.
- 3% withholding provided for if the seller is non-resident.
- Document reviewed by an independent lawyer before the transfer.
Frequently asked questions
What happens if the buyer changes their mind after signing arras?
It depends on the type. With penitential arras, the buyer may withdraw and forfeit the sum paid. With confirmatory arras there is no right of withdrawal: the seller may demand performance or terminate and claim the loss actually suffered, which may be more or less than the sum paid.
Does the seller always have to return double?
No. Double return is the effect proper to penitential arras under article 1454 CC. If the arras are confirmatory, the defaulting seller answers under article 1124 CC, which may amount to more or less than double. If they are penalty arras, the agreed penalty applies.
What happens if the bank refuses the mortgage?
If the contract contains a well-drafted financing condition, the buyer recovers the sum on the agreed terms. If it does not, the refusal does not excuse them: the risk of obtaining finance is, as a general rule, the buyer’s. It is the most common cause of forfeited deposits among our clients.
Can I recover the reservation if a planning problem appears?
It depends on what was agreed. If the contract makes the transaction conditional on obtaining favourable planning documentation, yes. Without that provision, it must be analysed whether the defect amounts to seller’s breach, mistake in consent or a latent defect — which is litigation territory with an uncertain outcome.
Can an arras contract be amended?
Yes, provided both parties agree, by written addendum signed by both. This is routine when the deadline for the deed proves insufficient or when the legal review reveals a defect requiring correction. A verbal agreement with the agency does not amend the contract.
How much is normally paid as arras?
No amount is fixed by law. On the Costa Blanca the usual range is 5% to 10% of the price, frequently preceded by a reservation of €3,000 to €6,000. The larger the sum, the more rigorous the prior review should be.
Should I sign arras before having the land registry extract?
We advise against it in all cases. The nota simple establishes who the registered owner is and what charges affect the property. It is obtained within hours and costs very little. Signing without it means committing to buy something whose legal status is unknown.
What happens if there is a mortgage on the property?
It does not prevent the purchase. The usual arrangement is to redeem the mortgage out of part of the price at the deed, by banker’s draft to the lender, and then process the registry cancellation. What it does require is that the arras contract provides for the mechanism, the debt certificate and who bears the cancellation costs.
Legal sources
- Royal Decree of 24 July 1889, Spanish Civil Code: articles 609, 1124, 1152, 1153, 1255, 1281, 1445, 1454 and 1455 (BOE).
- Royal Decree of 22 August 1885, Commercial Code: article 343 (BOE).
- Law 49/1960 of 21 July on horizontal property: article 9.1.e) (BOE).
- Royal Legislative Decree 5/2004, consolidated Non-Resident Income Tax Act: article 25.2 (BOE) and form 211 (Agencia Tributaria).
- Royal Legislative Decree 7/2015, consolidated Land and Urban Rehabilitation Act: article 28.4 (BOE).
- Royal Decree 390/2021 on energy performance certification of buildings (BOE).
- Law 5/2025 of 30 May of the Generalitat Valenciana (DOGV), amending ITP and AJD rates with effect from 1 June 2026.
- Decisions of the Directorate General for Legal Certainty and Public Faith of 13 July 2022 and 31 July 2024 on the restrictive construction of article 1454 CC (BOE).
Review of your contract before signing
We review reservation and arras contracts before signature, with registry, cadastral and planning verification, and adapt the document when the check reveals a defect. We work in English, Swedish, Norwegian, Danish and Spanish.
Read more about our property purchase service or run your figures with our free tools: buying costs and plusvalía municipal.
Colás Abogados / Advokater — Hugo Gutiérrez Colás, Lawyer no. 6.539 ICALI
Calle Mozart 9, 03581 Alfaz del Pi (Alicante)
Email: [email protected]
Telephone: +34 629 549 430
Web: www.colas-abogados.com
Author: Hugo Gutiérrez Colás, Lawyer no. 6.539 of the Alicante Bar Association. Published 19 August 2026. Last legal review: 19 August 2026.
This article is informative in nature and does not constitute legal advice on a specific case. The classification of an arras contract depends on its content and on the circumstances of each transaction.