Arras contract in Spain: what to check before signing and paying

Arras contract in Spain: what to check before signing and paying

Once a price has been agreed, buyers are often asked to sign an arras contract quickly. This document usually records essential terms of the future purchase and involves paying a substantial deposit.

An arras contract is not compulsory. However, a signed private contract is valid and binds the parties. The property, documents and contractual terms should therefore be reviewed before signing and transferring funds.

What are arras?

Arras are a sum paid by the buyer to the seller as a deposit and on account of the purchase price. Their legal effect depends on the wording. Not every “deposit” or “arras” clause gives either party an unrestricted right to withdraw.

Where the parties expressly agree on arras penitenciales, Article 1454 of the Spanish Civil Code allows withdrawal: the buyer forfeits the deposit, while a withdrawing seller must return twice the amount. The contract should clearly identify the type of arras and the circumstances in which those consequences apply.

What should be checked before signing?

1. Seller’s ownership and authority. Confirm the registered owner and ensure that every required owner, or a properly authorised representative, signs.

2. An up-to-date Nota Simple. It identifies the property, registered owners and rights or restrictions such as mortgages, attachments, usufructs or prohibitions. It is informative and reflects the register on its issue date.

3. Property consistency. Compare the Land Registry, Cadastre and physical condition, especially after extensions, enclosed terraces, renovations or changes in floor area.

4. Debts and expenses. Check local property tax, community fees, approved special assessments, utilities and other outstanding amounts.

5. Price and payments. The total price, deposit, receiving account, future payments and deduction of the deposit from the final price should be explicit.

6. Completion deadline. Set a realistic notarial completion date, identify the seller’s required documents and regulate delivery of keys and possession.

7. Mortgage finance. If completion depends on finance, state what happens if the bank refuses the mortgage or the valuation is insufficient.

8. Default and withdrawal. The contract should explain the consequences of delay, missing documents, withdrawal and other breaches by either party.

Foreign and non-resident buyers

A foreign buyer will normally need an NIE to complete the transaction and meet Spanish tax obligations. Obtaining an NIE does not replace legal due diligence. Buying property and obtaining Spanish residence are separate legal matters and should be assessed independently.

Why review everything before paying?

After signature, changing the contract requires the other party’s consent. Once funds have been transferred, recovering them may require a formal claim. A prior legal review can identify risks and insert protective conditions while the terms remain negotiable.

VMG Servicios Jurídicos provides property legal advice and transaction support in Spain, including review of the Nota Simple and documents, analysis of the arras contract, proposed amendments and assistance through notarial completion.

This article provides general information. The appropriate advice depends on the contract and circumstances of each transaction.