Contenido
Arras are a sum of money that the buyer hands to the seller when signing a contract, before the deed of sale. It looks like a minor step, but it decides what happens if either party pulls out. This guide explains what arras are, which types exist, what the law says and what to check before signing.
This guide is informative and does not replace the advice of a lawyer or a notary.
What are arras?
Article 1454 of the Spanish Civil Code is the rule that governs them, and it says: “If arras or a deposit (señal) have been given in a contract of sale, the contract may be rescinded, the buyer agreeing to lose them, or the seller to return them doubled”.
Put simply: if there are arras, the buyer can pull out and lose what was paid, and the seller can pull out by returning double. The article does not set an amount: the sum is agreed in the contract.
But that rule only applies to one specific type of arras, which is why it is worth knowing the three that exist.
The three types of arras
- Confirmatory arras: they are an advance on the price. They confirm that the contract has been made, but do not allow either party to withdraw. What is paid is deducted from the final price.
- Penitential arras: these are the ones in Article 1454. They allow either party to walk away from the contract: the buyer by losing the arras and the seller by returning them doubled.
- Penal arras: they are agreed for the case of breach of contract. Whoever paid them loses them if they breach and, if agreed on a reciprocal basis, whoever received them and breaches returns them doubled.
Penitential arras are not presumed
This is the point that surprises people most. The word “arras” appearing in a contract does not mean they allow withdrawal. The Supreme Court has said that penitential arras are exceptional and call for a restrictive interpretation: it must be clear that the parties meant to be able to withdraw by paying that price.
In judgment 583/2018 of 17 October 2018, the Supreme Court held that a mere mention of Article 1454 in the contract was not enough to treat the arras as penitential, because the clause did not clearly state the obligations the parties were taking on. You can read a summary in the Iustel Diario del Derecho.
In practice, this means the contract must expressly state that the arras are penitential and what happens if either party withdraws.
What happens if someone pulls out?
- If the buyer withdraws and the arras are penitential, the buyer loses the amount paid.
- If the seller withdraws and the arras are penitential, the seller has to return the amount doubled.
- If the arras are confirmatory, neither party can simply withdraw: what was paid is an advance on the price and the contract has to be performed.
If you buy a new-build: the money you pay is guaranteed
When you buy a home under construction, money paid before the deed has its own protection. The Spanish Building Act (Ley 38/1999 de Ordenación de la Edificación), in its first additional provision, requires a developer who wants to collect sums during construction to meet two conditions:
- Guarantee the refund of what was paid, from the moment the building licence is obtained, with a surety insurance contract or a joint and several bank guarantee from an authorised credit institution. The guarantee covers a build that does not start or is not completed within the agreed period.
- Collect through a credit institution, in a special account kept separate from the developer’s other funds, which may only be used for the construction costs of the homes.
The guarantee covers the sums paid, the applicable taxes and the legal interest. This rule replaced the former Law 57/1968, which has been repealed since 1 January 2016.
To see how the whole process works when buying off-plan, read buying a home off-plan: right or wrong?.
What to check before signing an arras contract
- The type of arras: the contract should state clearly whether they are confirmatory, penitential or penal.
- Who is who: the details of buyer and seller, and the exact identification of the property.
- The price and what you pay: the amount of the arras and how it is deducted from the final price.
- The deadlines: the last date to sign the deed.
- The consequences: what exactly happens if either party withdraws.
- On a new-build: the guarantee on the sums paid and the special account where they are deposited.
- The costs of the purchase: the ones that come after the arras, which we explain in the costs of buying a home.
If you are considering a new home on the coast, you can see our apartments for sale in Oropesa del Mar.
Frequently asked questions about the arras contract
What are arras in a property purchase?
A sum of money that the buyer hands to the seller when signing the contract, before the deed. Article 1454 of the Civil Code governs them, and the amount is agreed in the contract.
Do I lose the arras if I pull out?
It depends on the type. If they are penitential, you lose them when you withdraw. If they are confirmatory, you cannot simply withdraw, because what was paid is an advance on the price.
What happens if the seller pulls out?
If the arras are penitential, the seller has to return them doubled, as Article 1454 of the Civil Code says.
Do arras always allow you to withdraw from the contract?
No. According to the Supreme Court, penitential arras are exceptional and must be clearly stated in the contract. A mere mention of Article 1454 is not enough.
Is the money I pay on a new-build guaranteed?
Yes. A developer who collects sums during construction must guarantee their refund with a surety insurance or a joint and several guarantee, and collect them in a special account, under the Building Act.
And if you are still deciding where to buy, the guide to buying an apartment by the sea reviews what to look at before choosing.
After the arras and before the deed, it is worth checking the document that authorises occupying the home. It is explained in a separate guide: cédula de habitabilidad: what it is and what has changed.