Arras contract when buying property in Spain
An arras contract is a private agreement commonly signed before the public deed of sale. It can have significant legal and financial consequences and should not be treated as a non-binding reservation.
What types of arras exist?
Spanish private law traditionally distinguishes between arras confirmatorias, arras penitenciales and arras penales.
Confirmatory arras confirm the contract and are normally credited against the purchase price. Penitential arras create an agreed right to withdraw subject to the agreed consequences. Penal arras operate as a contractual penalty and do not in themselves create a free right to withdraw.
Under Catalan law, penitential arras must be expressly agreed.
What happens if a party withdraws?
Where penitential arras have been validly agreed, a buyer who withdraws normally loses the deposit. A seller who withdraws generally has to return twice the amount.
Those consequences do not automatically apply to every payment described as “arras”. The wording of the contract is decisive.
Bank financing
Where the contract anticipates third-party financing, Catalan law provides specific consequences if the designated lender refuses financing under the statutory conditions. The financing clause should therefore be reviewed before signature.
Review before payment
Before a substantial deposit is paid, the Land Registry, charges, cadastral position, tax situation and, where applicable, the owners' community should be reviewed.
How we can help
We review and draft arras agreements and coordinate them with the legal due diligence, financing and subsequent public deed.