What Is an Arras Contract in Spain? A Complete Guide for Buyers and Sellers

An arras contract in Spain is the private agreement signed by buyer and seller once an offer has been accepted, and before the sale is formalised in front of a Spanish notary.

Anyone buying or selling property in Spain — and especially in international markets like Sotogrande, where transactions regularly involve foreign buyers, corporate structures and cross-border fund transfers — will go through this stage. Understanding exactly what an arras contract commits you to, and what protection it actually offers, is essential before you sign one.

Under Spanish law, a contract is considered valid and binding once buyer and seller agree on three things: the property, the price, and the payment terms.

In theory, the buyer’s acceptance of the seller’s offer is enough. In practice, for that agreement to be legally enforceable, it needs to be clearly and unambiguously documented.

What actually binds the parties is the arras contract, normally drafted by lawyers once the essential terms of the deal have been agreed. This is the moment the negotiation turns into a legal commitment.

Precisely because of this, signing an arras contract without proper legal review — however much trust exists between buyer and seller — is usually a mistake.

The arras contract performs three main functions:

• Confirms the agreed price and the terms of the sale.
• Fixes the deposit amount, typically 10% of the purchase price, though this can be negotiated.
• Sets the deadline for signing the title deed (escritura pública) before a notary.

Spanish law recognises different types of arras, and choosing one over another changes the legal consequences if either party fails to complete.

This distinction is often overlooked, but it can significantly affect the legal position of both buyer and seller.

Arras Penitenciales (Withdrawal Deposit)

This is the most commonly used type in residential property sales, and generally what most people mean when they refer to “arras.”

Arras penitenciales are specifically regulated under Article 1454 of the Spanish Civil Code, which grants both parties the right to withdraw from the contract under pre-agreed financial consequences.

Under this model:

• If the buyer withdraws, they lose the deposit paid.
• If the seller withdraws, they must return double the amount received.

This is a right of withdrawal with a pre-defined cost, which brings legal certainty and avoids disputes over damages caused by the deal falling through.

For this reason, arras penitenciales are the most widely used formula in residential property sales in Spain.

Arras Confirmatorias (Confirmatory Deposit)

These work differently.

They do not grant an automatic right to withdraw from the sale. If either party fails to complete, the injured party can pursue a court order forcing completion of the contract, in addition to claiming damages.

These are typically used when the priority is guaranteeing that the deal goes through.

Arras Penales (Penalty Deposit)

Arras penales function as a penalty clause.

The deposit acts as compensation for non-completion, but does not necessarily replace the possibility of pursuing court-ordered completion or additional damages. Neither party is authorised to withdraw from the contract.

Which Type Is Most Common?

In the large majority of residential transactions in Sotogrande and across Spain, arras penitenciales is the option used, and it’s normally what lawyers will prepare unless there is a specific reason to use another type.

The date set in the arras contract is the maximum deadline for completing the sale before a notary.

If it’s an arras penitenciales agreement and one party fails to appear or cannot complete within the agreed period, the pre-agreed consequences apply automatically:

• The buyer loses the deposit paid.
• The seller must return double the deposit received.

The logic is simple: both parties take on an equivalent financial consequence if they decide not to complete.

It’s worth noting that the date fixed in the contract works as a deadline, not a fixed, immovable appointment. If all documentation is ready, funds are available, and both parties are prepared to sign, completion can happen earlier than the date originally scheduled.

This is the period when most of the practical work needed to close the deal actually happens.

The duration depends mainly on which formalities are still outstanding, for example:

• Setting up and registering a purchasing company.
• Obtaining the NIE (Spanish foreigner identification number).
• Final approval of mortgage financing.
• Regulatory compliance and anti-money-laundering checks.
• Preparing legal and land registry documentation.

For international buyers, especially those transferring funds from outside the EU, bank compliance checks can become the factor that determines the transaction timeline. Speak to our team early if you’re planning an international transfer

Even cash buyers tend to set a cautious notary date to allow enough margin, though in many cases they end up signing weeks before the date originally scheduled.

Sotogrande is an overwhelmingly international market.

Because of this, procedures like obtaining an NIE, setting up a company, or going through international banking compliance checks aren’t exceptions — they’re routine.

In addition, during the summer months many law firms, banks and public bodies operate with reduced staff, which can extend certain administrative processes.

This doesn’t make the transaction riskier. It simply means buyers and sellers benefit greatly from understanding what’s genuinely driving the transaction’s timeline.

In practice, delays are usually related to administrative formalities, outstanding paperwork or banking processes — rarely to underlying legal problems, when the transaction has been properly structured from the start.

What is an arras contract in Spain?

It’s a private agreement signed by buyer and seller once they’ve agreed terms on a property. It sets out the price, the deposit, and the deadline for completing the sale before a notary, legally binding both parties.

How much is the deposit in an arras contract, typically?

The standard practice is 10% of the purchase price, although the parties can agree on whatever amount they consider appropriate.

What’s the difference between arras penitenciales and arras confirmatorias?

Arras penitenciales allow either party to withdraw from the deal by accepting a pre-agreed financial penalty. Arras confirmatorias, by contrast, oblige both parties to complete the contract and allow either to seek court enforcement.

Can the notary signing date set in the arras contract be changed?

Yes. If both parties agree, the date can be brought forward or postponed through a formal agreement, normally documented as an addendum between buyer and seller.

What happens if the buyer doesn’t show up on the notary date?

Under an arras penitenciales agreement, they lose the deposit paid.

What happens if the seller doesn’t show up on the notary date?

Under an arras penitenciales agreement, they must return double the deposit received to the buyer.

If either party fails to complete on the scheduled notary date, the affected party is advised to appear before a notary and have a formal notarial record (acta notarial) drawn up, setting out the specific circumstances and formally calling on the defaulting party to honour their commitment within a set period. This kind of potential dispute requires a thorough review of the specific case, and it’s essential to involve qualified legal professionals who can advise the client and help avoid further problems. If you’re navigating a purchase or sale in Sotogrande, it helps to work with a team that manages these transactions every day — you can see some of our clients’ experiences here.

Luis de Pedro is a lawyer specialising in real estate law. He spent over 30 years as Head of the Legal Department and Legal Counsel at Sotogrande, S.A., through the company’s evolution — from the era of the founding McMicking and Zóbel families through the subsequent acquisitions by NH Hoteles (Cofir), Cerberus and Orion.

His professional experience covers residential and corporate property sales, real estate contracting, due diligence processes, corporate structures linked to property assets, and advising national and international buyers and investors.

GP Abogados: https://www.gpabogados.eu/

Legal Review: Content reviewed by Luis de Pedro (GP Abogados), a lawyer specialising in real estate law and property sale transactions in Spain.

Legal Notice: This article is for informational purposes only and does not constitute legal advice. Every property transaction involves particular circumstances that should be reviewed by a qualified lawyer before making any decision or signing contractual documentation.