Between the handshake and the notary, a Spanish property purchase passes through the contrato de arras: a private deposit contract that takes the property off the market and fixes the terms of the sale. It looks like a formality. It is not - it is the single most consequential document in the purchase, because it is usually signed before your lawyer has seen anything, and the penalties for backing out are baked into it. Our buying property in Valencia guide covers the full purchase process; this post zooms in on the arras stage and the risks that hide behind it.
The three types of arras
Spanish law recognises three flavours of arras, and which one your contract names changes everything about what happens if the deal falls apart. Plenty of arras contracts do not clearly say which type they are - which is itself a red flag.
Arras penitenciales (withdrawal arras)
The type most buyers want, and the only one with a clean exit price. Either side can walk away: if the buyer withdraws, they lose the deposit; if the seller withdraws, they must hand back double. The walk-away right must be spelled out - courts do not assume it. If your contract does not explicitly invoke arras penitenciales (Article 1454 of the Civil Code is the usual reference), do not assume the deposit alone buys you out.
Arras confirmatorias (confirmation arras)
Here the deposit is simply an advance on the price, confirming the deal. There is no built-in walk-away option: if either side pulls out, the other can sue to force the sale through or claim damages - which can amount to far more than the deposit. Many generic arras templates default to this type without the buyer realising.
Arras penales (penalty arras)
The deposit works as a contractual penalty for non-performance. Unlike penitenciales, paying the penalty does not necessarily release you - the other side may still be able to demand that the sale goes ahead on top. Rare in ordinary residential deals, but it exists, which is one more reason to read what the document actually says.
How much: the customary 10%
The customary arras deposit in Spain is around 10% of the agreed price, paid when the contract is signed and deducted from the price at completion. It is a custom, not a law - the parties can agree more or less, and on expensive properties a lower percentage is often negotiated. What matters more than the number is where the money sits: paid to the seller directly, it is immediately at risk; held by the agency or in a lawyer's client account, it is at least in neutral hands until completion.
What happens when someone backs out
Under arras penitenciales the arithmetic is clean: the buyer walks, the deposit stays with the seller; the seller walks, the buyer gets double back. In a rising market, watch the second half of that sentence - a seller who receives a better offer can decide that paying you double your deposit is cheap next to the price jump, and there is little you can do about it. Under confirmatorias and penales, backing out means lawyers, and possibly a court ordering the sale to complete. Either way, the time to understand your exit was before signing, not after.
The five checks before you sign
Everything below is checkable in days and costs little. Every one of them is cheaper than losing a five-figure deposit.
1. Charges on the property: the nota simple
Order a nota simple from the Registro de la Propiedad before signing anything. This short registry extract shows who actually owns the property and every charge registered against it: mortgages, embargoes, court annotations, rights of way. It costs a few euros online and takes minutes to order. A surprising number of buyers sign arras on the strength of the listing and the seller's word - the nota simple is the document that word gets checked against.
2. Debts that follow the property
In Spain, some debts attach to the property rather than to the person who ran them up. IBI (the annual property tax) arrears and unpaid comunidad de propietarios fees can become the new owner's problem. Ask for a certificate from the comunidad administrator showing the fees are current, and proof of IBI payment for recent years - the notary checks some of this at completion, but by then your arras deposit is already committed.
3. Who is actually living there
Confirm the occupancy status in writing. A sitting tenant has legal rights that survive the sale, and an okupa situation can take long court proceedings to resolve - during which you own a property you cannot use. If the property is sold as vacant, have the arras contract say so, and make vacant possession at completion an explicit condition.
4. Licences on reformed properties
If the property has been extended, converted or seriously reformed, ask for the licences and the habitability certificate (cedula de habitabilidad or licencia de ocupacion). An unlicensed reform can block your mortgage valuation, complicate insurance and land the regularisation cost on you. If the seller cannot find the paperwork, price that risk - or walk.
5. The tax bill: ITP on resale homes
Resale purchases pay ITP (transfer tax), and the rate is set by each region - in the Comunitat Valenciana the standard rate is 10% of the price, with reductions for some buyers such as under-35s purchasing a primary home. On top come notary, registry and gestoria costs. Budget all of it before the arras stage: a buyer who discovers the tax bill after signing has no clean way back. The buying guide breaks down the full cost stack, and if estate planning is anywhere on your horizon, inheritance tax in Spain is regional too and worth reading early.
Get the contract reviewed before you sign - not after
The arras contract is drafted by the seller's side or the agency far more often than by anyone representing you. An independent lawyer reviewing the draft - the arras type, where the deposit is held, the completion deadline, the conditions - is the cheapest insurance in the whole purchase, and it only works before signature. Our property legal service does exactly this review, nota simple included, for buyers who do not have a Spanish lawyer yet.
The arras contract rewards buyers who slow down for one week and punishes everyone else. Order the nota simple, name the arras type, check the debts and the occupants, know your tax bill - then sign.
About to sign an arras contract?
Have an independent lawyer read it first. We review the contract and run the registry checks before your deposit is committed.
Get a legal review
About the author
Michael Bastin
Founder, ValenciaMove - Valencia since 2016
Michael moved to Valencia in 2016 and has helped dozens of families relocate since. He writes every guide on this site personally and verifies every fact against Spanish government sources before publishing.
Need help with your move?
Book a free 15-minute consultation. We handle visa, admin, and housing so you can focus on the exciting part.