The Arras Contract in Spain in 2026: Deposit Types, How Much to Pay, Deadlines and What to Check Before Signing

The arras contract is the document that turns “we're interested” into a commitment with money on the table. Buyer and seller set the price, the date for the notary and the conditions, and the buyer pays an amount as a deposit. If all goes well, that amount is deducted from the price on the day of the deed. If someone pulls out, what happens to that money depends almost entirely on what has been written in the contract.

That's why it's worth understanding before you sign. In this guide we go through what the law says and what the Tribunal Supremo (Spain's Supreme Court) has ruled, the differences between arras penitenciales, confirmatorias and penales, how much is paid as arras and over what timescales, what happens if you don't get the mortgage, which clauses shouldn't be missing and who should hold the money in the meantime. It's designed for sales in the Comunidad de Madrid (Madrid region), where the general Spanish Civil Code applies.

What an arras contract is and what it's for

Arras, also called señal (deposit), are a sum of money the buyer pays the seller to secure a sale that will be signed later before a notary. The document recording that payment is the arras contract. The OCU (Spain's main consumers' organisation) describes it as a first contract in which both parties undertake to sign another one later, with an amount paid as a deposit.

In practice it serves three purposes. It takes the home off the market while the buyer obtains financing and the paperwork is prepared. It puts the agreed price and conditions in writing, so nobody changes them along the way. And it sets out what happens if one of the parties doesn't make it to the notary. That last purpose is the one that causes the most disputes, and it depends on the type of arras agreed.

It shouldn't be confused with other documents that come up in a sale, such as the purchase proposal or offer, or the reservation sometimes signed with an intermediary before the owner accepts. Those documents can have very different consequences, and later on we'll look at a real case resolved by consumer arbitration in the Comunidad de Madrid.

What the law says: article 1454 of the Civil Code

The only express rule on arras in a sale is in article 1454 of the Código Civil (Civil Code). It's a very short article stating that, if arras or a deposit have been paid, either party can undo the contract by accepting a fixed cost.

The contract may be rescinded by the buyer agreeing to forfeit them, or the seller agreeing to return them doubled.

Civil Code, article 1454

This article describes what are now known as arras penitenciales or arras de desistimiento (withdrawal deposit). The other two types, confirmatorias (confirmatory) and penales (penalty), don't have an article of their own: they arise from what the parties agree and from how the courts have interpreted those agreements, in connection with the general rules on breach of obligations (article 1124 of the Civil Code) and the rules on penalty clauses (articles 1152 onwards).

A regional point: in Catalonia, the Catalan Civil Code regulates arras in its article 621-8 and, as notary Enric Brancós explains on elderecho.com, presumes that money paid is arras confirmatorias unless arras penitenciales are expressly agreed. In the Comunidad de Madrid there is no such rule, and what governs is the national Civil Code together with the Supreme Court's case law.

Arras penitenciales, confirmatorias and penales: how they differ

Arras penitenciales allow either party to pull out without further explanation. The price of that freedom is fixed: if the buyer withdraws, they lose what they paid; if the seller withdraws, they pay back double. There's no need to prove damages or go to court to demand performance, because the contract is understood to have provided for that way out. The OCU notes that they are the most common type in home purchases, but warns that they don't apply by default: they must be expressly agreed and article 1454 must be cited.

Arras confirmatorias work as an advance on the price that proves the contract exists. They don't give a right to withdraw. If one party breaches, the other can demand that the sale be signed or ask for the contract to be terminated, and in both cases claim any damages they can prove. This type gives the most certainty that the sale will go through, but it's also the one that can end in a long lawsuit if someone digs their heels in.

Arras penales serve to guarantee performance with a penalty agreed in advance. As LegalToday explains in an analysis from July 2026, they work like a penalty clause: the damage is pre-set and whoever breaches bears the penalty, but this doesn't give them the right to withdraw. The OCU points out that the penalty is set freely and doesn't have to match the amount paid or double it.

Source: article 1454 of the Civil Code; OCU, “Modelo de contrato de arras penitenciales” (Template contract for arras penitenciales) (May 2025); LegalToday (July 2026). Indicative summary: the exact consequences depend on the wording of each contract.

If the contract doesn't say what type of arras they are: what the Supreme Court has ruled

This is one of the most frequently searched questions, and case law gives a fairly clear answer. The Supreme Court has repeatedly held that arras penitenciales are the exception and only apply if the parties clearly intended to be able to walk away from the contract. Where that intention isn't shown, the money paid is treated as an advance on the price, that is, as arras confirmatorias.

They are of an exceptional nature that requires a restrictive interpretation.

Tribunal Supremo, Civil Chamber, judgment 498/2009 of 29 June, on the arras of article 1454

In that 2009 judgment, the Supreme Court confirmed that a deposit was arras confirmatorias because the clause was ambiguous and didn't show a “clear, evident, unequivocal” intention to allow withdrawal, and because another clause treated the amount paid as a payment on account of the price. A few months earlier, in judgment 168/2009 of 16 March, the court had already described such payments as “a simple advance on account of the price which serves precisely to confirm it”.

This line has been maintained. In judgment 583/2018 of 17 October, the Supreme Court again described arras penitenciales as subject to “restrictive interpretation” and added an important nuance: citing article 1454 is not enough on its own if the rest of the contract doesn't make clear what obligations the parties are taking on. In other words, putting “arras” or “deposit” in the heading doesn't turn the document into arras penitenciales.

The practical consequence is simple. If you want either party to be able to withdraw by forfeiting or paying back double, the contract must say so in no uncertain terms: that the arras are penitenciales, that they are governed by article 1454 of the Civil Code and exactly what happens if each party withdraws. If you want the opposite, that nobody can pull out, it's also best to write that down. Leaving it open to interpretation is the surest way to end up in a dispute.

An example with figures: what happens to the money if someone pulls out

To see the effect of each type, let's take a €300,000 home with a 10% arras deposit, that is, €30,000 paid on signing. The figures are just an example calculation; for arras penales we've assumed the agreed penalty equals the amount paid, although it could be different.

Example calculation prepared by Llavely based on article 1454 of the Civil Code and the description of each type of arras by the OCU and LegalToday.

Note a detail that confuses many sellers: “paying back double” means the buyer gets back what they paid and receives the same amount again. The real cost for a seller who withdraws is the amount of the arras, not double, but they must have the full sum available to pay it back. If they've already spent the deposit, the problem is bigger.

How much is paid as arras? 10% and other reference figures

No law sets how much must be paid. It's an agreement between the parties, and the sources consulted agree that the most common reference in Spain is 10% of the price. Some guides widen the range to 5%–15%, and the OCU notes that paying more than 10% is unusual.

Source: pages from the OCU, BBVA, Bankinter, Tinsa and The Objective cited at the end of the article. These are common practices, not legal requirements.

Beyond the percentage, the OCU offers a useful rule of thumb: the amount should reflect how committed each party is. A very determined buyer may prefer a high deposit, because with arras penitenciales the higher the deposit, the more it costs the seller to pull out. On the other hand, if the buyer has doubts or the seller is hoping for a better offer, a small deposit reduces what each side has at stake.

You also need to think about liquidity. The arras come out of the buyer's savings, and they will also need money for the part of the price the bank doesn't finance and for the taxes and costs of the purchase. If you're buying, first read our guide “Costs of buying a home in the Comunidad de Madrid” so you don't come up short on the day of the notary signing.

Deadlines: how much time passes between the arras and the notary

Here too there is no legal deadline: the parties decide. According to the sources in the table above, the usual period is between one and three months, with 60 to 90 days the most frequently cited reference. That's the time the buyer usually needs to finalise the mortgage and valuation, and the seller needs to gather the paperwork and, if there is one, pay off the outstanding mortgage.

What matters is that the contract sets a clear deadline for signing the deed and what happens if it's exceeded. A deadline that's too short can leave the buyer without their mortgage in time; one that's too long leaves the home tied up. If more time is needed, Tinsa recommends extending it through a written agreement, an annex signed by both parties, rather than a simple message.

It's also wise to put in writing how the notary will be chosen and how the signing date will be communicated, for example with minimum notice and to a specific email or address. It seems a minor detail, but when a dispute arises the first thing argued about is whether someone was properly summoned.

What happens if I don't get the mortgage after signing the arras

This is the big question for buyers, and the short answer is that it depends on the contract. If the arras are penitenciales and the contract says nothing about financing, a buyer who doesn't get the mortgage can't pay the price and, in principle, loses the deposit. BBVA sums it up like this: what was paid isn't recovered unless the contract includes a clause allowing it. Tinsa adds that, without that clause, the seller can keep them.

The solution is to include a financing condition, often called a condición suspensiva de hipoteca (mortgage condition precedent). The OCU points out that, if agreed, the arras can be returned without penalty when the buyer doesn't obtain the loan, and that any exception must be written into the document itself. For this clause to work and not become an open door, it should specify at least the following:

1. The mortgage amount the buyer needs and, if desired, reasonable maximum terms.
2. The time the buyer has to obtain approval, which must fit with the deadline for the deed.
3. How the refusal must be proven: for example, with a letter from the bank and, if agreed, from more than one bank.
4. Within what period the arras are returned if the condition isn't met, and by what means.
5. What happens if the buyer doesn't apply for the mortgage or applies without complying with what was agreed, so the clause can't be used as an excuse.

From the seller's side, this clause is reasonable if it comes with a short deadline and clear evidence. What makes no sense is accepting an open-ended condition that lets the buyer withdraw at no cost months later. And for the buyer, the most prudent approach is to reach the arras stage with financing already looked into; in “Euribor and mortgages in 2026” we review the state of the mortgage market this year.

Essential clauses before signing an arras contract

A well-drafted arras contract looks a lot like a sale in miniature. Combining the recommendations of the OCU, BBVA and Tinsa, these are the points that shouldn't be missing:

• Identification of the parties: full name, DNI (Spanish ID card) or NIE (foreigner's identity number) (or CIF, the tax ID, for a company), address and, if someone signs on behalf of another, the power of attorney that allows it. All owners must sign or be duly represented.
• Identification of the property: address, cadastral reference, Registro de la Propiedad (Land Registry) details and included annexes, such as a garage, storage room or furniture.
• Charges and legal status: whether there's an outstanding mortgage, seizures or other charges, who will cancel them and when, and whether the home is free of occupants. Ideally, attach a recent nota simple (land registry extract).
• Price and method of payment: total price, amount paid as arras, how it is paid (preferably by bank transfer) and how the rest will be paid at the notary.
• Type of arras, stated clearly: if they are penitenciales, expressly mention article 1454 of the Civil Code and the consequences for each party.
• Financing condition, if the buyer needs a mortgage, with the details in the list above.
• Costs and taxes: who pays each item, for example cancelling the seller's mortgage at the Registry, the plusvalía municipal (municipal capital gains tax) or the notary's fees.
• Condition of the home: the condition in which it's handed over, which fixtures and furniture are included, and the existence of the energy performance certificate.
• Deadline and notary: deadline for executing the deed, how the notary is chosen and how the date is notified.
• Handover of keys and possession: whether they're handed over at the signing or later, and how utilities, IBI (property tax) and community fees are dealt with until then.
• Addresses or emails for notifications, so that communications take effect and there's a record of them.

If you're selling, you'll need much of this information for the deed anyway. In “How to sell a flat in Madrid in 2026” we explain which documents it's best to have ready from the start so the arras aren't signed blind.

Who should hold the arras money

In most sales between private individuals, the arras are paid by bank transfer directly to the seller. It's the simplest option, but it has a precondition: checking that the person receiving the money really is the owner or has the power to sell. The nota simple from the Land Registry shows who the owner is, and the contract should state the account to which the money is paid. Paying in cash or into third-party accounts makes it much harder to prove payment if a problem arises.

The most delicate case is paying an intermediary. The OCU warned years ago about practices such as requiring a sum from the buyer before presenting their offer to the seller, with documents that appear to carry the owner's agreement but are in fact proposals, and without making clear who receives the money or who returns it if there's no agreement. Its advice still stands: don't hand over money until the real owner signs. Not all intermediaries behave this way, but when it happens, the buyer is left in a weak position.

An award by the Junta Arbitral de Consumo (Consumer Arbitration Board) of the Comunidad de Madrid from November 2022 illustrates the problem. A buyer paid €2,000 to an agency as a requirement for submitting a purchase proposal and then couldn't get it back. The arbitration panel considered that the document was a purchase proposal, not arras penitenciales, and ruled in equity that €1,000 be returned to them, while the agency kept the other half as remuneration. The lesson: if the money isn't tied to an arras contract signed by the owner, getting it back can be difficult.

There are alternatives that reduce the risk. In October 2025, El Debate reported a property expert's recommendation to deposit it with a notary or in an account managed by professionals, and to pay the seller directly only as a last resort. If that option interests you, first ask the notary's office whether it offers this service and on what terms. In any case, the contract should say who holds the money, in which account and when it is released.

Common mistakes when signing arras

Most disputes over arras don't come from bad faith, but from haste and documents copied from the internet without adapting them. These are the most frequent mistakes:

1. Not stating what type of arras they are, or just writing “arras” and assuming they are penitenciales.
2. Signing without a financing clause when the buyer depends on a mortgage.
3. Not checking charges: discovering a mortgage, a seizure or a debt with the community of owners after signing.
4. Paying someone who isn't the owner, or signing with only one of several co-owners.
5. Setting an impossible deadline for the deed, or not setting one at all.
6. Not putting in writing who pays each cost or what's included in the sale, such as furniture, a garage or a storage room.
7. Extending deadlines or changing conditions by message without a signed annex.
8. Spending the deposit received before the notary signing without considering that, with arras penitenciales, it would have to be paid back doubled if the seller withdraws.

Does the arras contract have to be signed before a notary?

It isn't compulsory. The arras contract is a private contract and is valid with the parties' signatures; Tinsa expressly points this out. What is compulsory to register the sale at the Land Registry is the subsequent public deed.

Even so, in sales involving large amounts, several owners or some complication, it makes sense to involve a professional before signing. A notary or a lawyer checks the identity and capacity of those signing, reviews ownership and charges and helps draft clauses that leave no room for doubt. That cost is usually small compared with what's at stake in the deposit.

Taxes: what happens to the arras in your income tax return

If the sale is completed, the arras are simply part of the price. Things change if the sale falls through and someone ends up with extra money. The Dirección General de Tributos (Directorate-General for Taxation), in its binding ruling V0397-20 of 20 February 2020, concluded that arras kept by the seller when the sale doesn't go ahead for reasons attributable to the buyer are a capital gain that doesn't derive from a transfer and is therefore taxed in the general base of IRPF (income tax) for the year in which the seller is entitled to keep them under the contract.

If it's the buyer who receives double because the seller withdrew, the amount received above what they paid will also have an effect on their tax return. As the treatment depends on each case, it's best to have your tax adviser review it before filing your return.

And for renting? Why we don't talk about arras there

The arras contract is a feature of property sales. For residential lettings, what the Ley de Arrendamientos Urbanos (LAU, Urban Leases Act) regulates is the compulsory fianza (security deposit) of one month's rent and any additional guarantees that may be agreed, which in contracts for a habitual home cannot exceed two months' rent. In May 2026 the Ministerio de Consumo (Ministry of Consumer Affairs) pointed out that asking for more than these limits is one of the most frequent unfair clauses, as is charging the tenant the letting agency's management fees, which under article 20.1 of the LAU are the landlord's responsibility.

Sometimes a prospective tenant is asked for a “deposit” or “reservation” to hold a flat before signing. If this happens to you, ask for it to be put in writing who you are paying, that it will be deducted from the security deposit or first month's rent and in which cases it will be returned, and never pay without having seen the property and checked who the owner is. In “Rental scams in 2026” we explain the most common warning signs.

How we do it at Llavely

At Llavely, the arras are drafted by specialised lawyers, and the type of arras, the deadline, the notary and the financing condition are always set out explicitly in writing. Beforehand, we check the seller's identity and ownership and the buyer's ID, and we talk to each buyer to find out how they would pay. This reduces two of the risks in this article: paying someone who isn't the owner and signing without knowing how the purchase will be paid for. Offers are made in writing within Llavely, either with no deposit or with a deposit of 1% of the price, always by bank transfer, which reserves the home for five days while the seller decides. We hold that deposit in a separate account: if there's an agreement, it counts as part of the arras, and if not, it's returned in full.

If you're selling, “Venta Llavely” (our Llavely Sale service: 2.5% + VAT, all inclusive and only if you sell) includes the lawyers, who draft the arras, review charges and the nota simple and come with you in person to the notary. If you're buying, you pay nothing: the lawyer handling the sale explains each clause, the deadlines and the paperwork to you free of charge before you sign. No extra payments or hidden costs: what you see is what you get.

None of this replaces reading carefully what you sign, but it should stop a badly drafted arras contract from costing you thousands of euros.

Frequently asked questions

Sources

1. Template contract for arras penitenciales (deposit allowing withdrawal) (OCU, 5 May 2025)
2. Template arras contract for a home sale (OCU, 13 May 2022)
3. New and aggressive techniques used by estate agencies (OCU, 6 October 2013)
4. Judgment of the Tribunal Supremo (Supreme Court) 498/2009 of 29 June (El Notario)
5. Judgment of the Tribunal Supremo (Supreme Court) 168/2009 of 16 March (El Notario)
6. The nature of arras: penitenciales or confirmatorias. Supreme Court judgment 583/2018 of 17 October (Civil Mercantil, CEF)
7. Between withdrawal and breach: the legal nature of arras (LegalToday, 2 July 2026)
8. Arras in the Civil Code of Catalonia (elderecho.com, 23 November 2021)
9. Consumer arbitration award, case 02413.2/2022 (Junta Arbitral Regional de Consumo, Regional Consumer Arbitration Board, Comunidad de Madrid, 10 November 2022)
10. The arras contract (Tinsa, 24 November 2025)
11. Arras contract: how much money is paid (The Objective, 27 January 2025)
12. The arras contract (BBVA, updated 31 January 2023)
13. The arras contract (Bankinter, 14 October 2024)
14. Tax treatment of arras penitenciales if the transfer doesn't take place. DGT binding ruling V0397-20 (fiscal-impuestos.com, CEF)
15. Arras: paying them to the seller only as a last resort (El Debate, 2 October 2025)
16. Management fees or asking for more than one month's deposit among the most frequent unfair clauses in rentals (Ministerio de Consumo, Ministry of Consumer Affairs, via Europa Press, Bolsamanía, 22 May 2026)