The property feels right, you have agreed on the price, and someone sends you a document to “take it off the market”. The next step seems straightforward: sign and transfer the money. But before paying anything, there is a more important question than how much the deposit should be: what are you committing to, and under what circumstances could you get your money back?
In Spain, a property deposit agreement is known as a contrato de arras. It is not simply an administrative step. Although it may be signed privately, it can create binding obligations from that moment. As Spain’s General Council of Notaries explains, an arras contract is not compulsory, but a valid agreement must be honoured once it has been signed.
Nor does every type of arras allow you to withdraw from the purchase by simply forfeiting your deposit. The consequences depend on the arrangement you have actually agreed to.
Before signing an arras contract in Málaga, a property lawyer should help you answer three questions: what exactly are you buying, what could prevent the transaction from completing, and who will bear the consequences if that happens?
What are you really signing: a reservation agreement, an arras contract or a purchase contract?
The title on the first page does not, by itself, explain the legal effect of an agreement. Its clauses and the parties’ intentions must be considered, reading the document as a whole. The Spanish Supreme Court reiterated this approach in judgment 270/2025 of 19 February.
When you receive a document labelled “reservation agreement”, check who is making a commitment, which property it identifies, whether the seller has accepted its terms, whether a price has been agreed and what the payment is intended to cover.
Our recommendation is to consider the reservation agreement and any subsequent arras contract together. Ask for clarification from the outset about how the documents relate to each other and whether the initial payment becomes part of the arras deposit, is deducted from the purchase price or serves another purpose.
Before deciding whether a deposit is reasonable, you need to understand what it does.
The three types of arras: confirmatory, penalty-based and withdrawal deposits
The distinction between these arrangements is more than terminology. It affects whether you can withdraw, whether the other party can require you to complete the transaction and what financial consequences may follow.
| Type of arras | Main purpose | Key consequence |
|---|---|---|
| Confirmatory deposits — arras confirmatorias | Confirm the agreement and serve as an advance payment towards the price. | They do not, by themselves, provide a right to withdraw. A breach may lead to a claim for performance or termination, with damages where applicable. |
| Penalty-based deposits — arras penales | Establish a financial consequence for specified breaches. | Agreeing to a penalty does not automatically give either party permission to abandon the transaction. |
| Withdrawal deposits — arras penitenciales | Allow withdrawal under the agreed terms and Article 1454 of the Spanish Civil Code. | A buyer who withdraws loses the deposit; a seller who withdraws must return twice the deposit. |
These distinctions reflect the Civil Code’s rules on contractual performance and termination, penalty clauses and the withdrawal mechanism under Article 1454.
Arras penitenciales also allow the seller to withdraw
When negotiating withdrawal deposits, buyers sometimes focus only on how much they would lose if they changed their minds. But the seller’s right to withdraw also deserves attention.
Consider this illustrative example: you have paid €16,000, and the seller validly exercises a right to withdraw by returning double the deposit. The seller must pay you €32,000 in total: your original €16,000 plus another €16,000. It is not an additional €32,000 on top of the original refund.
The practical question is whether that arrangement suits your circumstances. If you are coordinating the sale of your current home, a move and another purchase, you may prefer to prioritise a commitment to complete rather than simply agree on the price of withdrawing.
It is also important not to mix up the different legal mechanisms. With penalty-based arras, for example, you should not assume that you can demand both completion and payment of the penalty. That entitlement must have been clearly granted.
The risks to check before paying your deposit
You need a mortgage, but the contract does not protect that requirement
This is one of the points that deserves an express agreement. Do not assume that a rejected mortgage application will automatically entitle you to a refund. The Bank of Spain recommends expressly agreeing on that possibility and allowing enough time to arrange the financing.
However, simply writing “subject to mortgage approval” can leave too many questions unanswered.
Imagine that you need a €240,000 mortgage, but the bank is only willing to lend €210,000. You do not have the extra €30,000. If the clause only covers an outright refusal, there could be a dispute about whether an offer that falls short of your needs triggers the refund.
The protection should address your actual financing requirements, rather than merely mention the bank.
When negotiating a mortgage condition, we recommend specifying the minimum loan amount, the deadline for obtaining a decision and, where essential, the maximum financing costs you can accept. The agreement should also explain how you will demonstrate that you applied, how the outcome must be documented, how you must notify the seller and when any refund becomes due.
It is worth addressing what happens if the deadline arrives and the lender has not yet responded.
The clause should be balanced. Protecting the buyer does not mean leaving the seller committed indefinitely. Requiring a diligent application, the necessary supporting documents and clear deadlines helps both parties understand their position.
The person negotiating may not have authority to sell
A nota simple, an information extract from the Spanish Land Registry, identifies the registered property, its owners and registered rights, restrictions or charges. It is a fundamental check, although the document is informative rather than a formal certification.
Use it as the starting point for checking whether everyone whose involvement is necessary will participate in the sale. Pay particular attention to properties with several owners, unresolved inheritance arrangements, usufruct rights or representatives acting under a power of attorney.
Knowing that someone is “handling the sale” is not enough. Ask your lawyer to check their authority to bind the owner, sign the agreement and receive money.
The property description also needs to be precise. Ask for the home, parking space, storage room and any other elements included in the offer to be checked against the documentation.
Our recommendation is to identify them individually rather than rely on general wording such as “including all associated units” when nobody has confirmed exactly what those units are.
The seller’s mortgage has been repaid, but the charge remains registered
Repaying a mortgage loan and removing the mortgage charge from the Land Registry are separate steps. The Bank of Spain explains that additional formalities are needed after repayment to complete the registration of the cancellation.
Do not stop at an assurance that “the mortgage has already been paid off”.
Ask for the agreement to identify existing charges and explain how they will be dealt with before or at completion. If part of the purchase price will be used to repay an outstanding loan, the procedure, documents, costs and any agreed retention should be prepared in advance.
Protection means more than stating that the property will be transferred free of charges. You also need a workable process for achieving that result.
The property does not match what you believe you are buying
When purchasing in Málaga or elsewhere on the Costa del Sol, we recommend considering the Land Registry records, cadastral information, planning position and physical condition of the property together.
The question is not simply how many square metres appear on a document. It is also whether you can use the property as intended and carry out the work you have in mind.
An enclosed terrace, an extension, a swimming pool or a space advertised as a bedroom deserves a specific check. Ask for its position to be verified rather than assuming that everything you have seen during the viewing is covered by the documentation.
If a property is offered with recognised asimilado a fuera de ordenación status, known as AFO, one distinction is essential: that recognition does not legalise the building. The Andalusian regional government expressly makes this distinction.
In that situation, we recommend obtaining the complete decision and assessing what it means for your intended use, future works and financing. “It has AFO” should be the beginning of the enquiry, not the end.
You plan to use the property for holiday lets without checking whether that is possible
If your projected return depends on holiday rentals, we recommend checking that use before committing to the purchase, rather than treating it as something to resolve afterwards.
Málaga City Council has announced measures suspending new tourist-use homes and, in July 2026, further restrictions concerning accommodation uses and certain changes of use. Their scope must be assessed against the particular application, including any exceptions or transitional arrangements.
For that reason, a description such as “ideal for holiday rentals” should not replace a proper assessment of whether your project is viable.
Ask for the community of owners’ rules and resolutions to be reviewed as well. Spain’s Horizontal Property Act provides for agreements approving, limiting, imposing conditions on or prohibiting tourist rental activity within the applicable legal framework.
Our approach is straightforward: if a particular use is central to your decision to buy, try to verify it before signing the arras contract. Where checks remain outstanding, negotiate a precise condition explaining what must be confirmed and what happens if it cannot be.
For a property in Marbella, Estepona, Mijas or another municipality, consult the relevant local authority. Do not automatically apply conclusions reached for Málaga city to a different location.
There are community debts or special levies you have not budgeted for
Request an up-to-date certificate of community debts and review recent minutes of the community of owners’ meetings. These documents answer different questions: what is already owed, and what expenditure has been approved or is being considered.
Under Spain’s Horizontal Property Act, the property itself can be liable for certain unpaid community charges owed by previous owners. The statutory limit covers the amounts already due for the year of acquisition and the three preceding calendar years.
For special levies funding improvements, the legislation refers to whoever owns the property when the payments become due. You should therefore not assume that the seller must pay every levy approved before the sale.
We recommend identifying known levies in the contract and specifying how the buyer and seller will divide their cost. That arrangement between the parties should be distinguished from any obligations owed directly to the community.
It is unclear who receives the deposit or when they can release it
Before transferring money, ask for the account holder, the purpose of the payment and the person responsible for making any required refund to be clearly identified.
If an estate agent or another third party is involved, document whether they are receiving the money on the seller’s behalf, holding it as a deposit or collecting it for another purpose. Ask for the conditions governing its release and return.
Do not treat the purchase deposit and the agent’s fees as interchangeable. We recommend recording them separately, with their respective recipients and conditions.
There is also a practical distinction worth remembering: an obligation to refund your money is not the same as having that money securely held and available.
Consider how the funds will be held, who can authorise their release and whom you would need to pursue if repayment became necessary.
Buying off-plan requires additional checks
When advance payments are made towards the construction of a home, the review should go beyond the consequences of an arras agreement.
The first additional provision of Spain’s Building Act regulates these payments. Its requirements include a special bank account and a repayment guarantee through surety insurance or a bank guarantee. The obligation to provide the guarantee applies from the granting of the building licence, on the terms set out in the legislation.
Ask your lawyer to verify which guarantee applies to your purchase, which payments it covers and what document proves that protection. A general statement that “the development is guaranteed” is not a substitute for checking your own position.
Pre-contractual information matters too. Within its scope, Andalusian Decree 218/2005 distinguishes between the Documento Informativo Abreviado, an abbreviated information document used for certain transactions, and the information sheet required for resale transactions involving a property professional.
Our recommendation is to obtain the documents appropriate to your purchase before taking on financial commitments.
The completion date is also something to negotiate
Do not choose the date for signing before the notary solely by deciding when you would like the keys.
Build the timetable around what still needs to happen: financing, outstanding documents, cancellation of charges, powers of attorney, technical checks and the availability of everyone who needs to sign.
We recommend recording four points clearly:
- Handover arrangements: who will occupy the property until completion, when the keys will be delivered and what furniture or equipment is included.
- Outstanding matters: what must be resolved, who is responsible and how completion of those tasks will be demonstrated.
- Signing arrangements: who will organise the appointment, how much notice must be given and how that notice will be communicated.
- Extensions and their effects: when an extension can be agreed, how it will be documented and whether it changes any payments, obligations or consequences.
An extension deserves the same attention as the original contract. In judgment 270/2025, the Supreme Court concluded that the extensions and additional payments in that case had not converted withdrawal deposits into confirmatory deposits: the agreements preserved their original nature and effects.
The practical lesson is to review every addendum in full. Do not treat it as nothing more than a change of date.
We also recommend avoiding vague conditions such as “subject to a satisfactory review” without explaining what will be reviewed. It is more useful to identify the outstanding documents, the relevant issues, the time allowed to resolve them and the consequences if they remain unresolved.
Must you pay 10% of the purchase price as an arras deposit?
No general rule in the Spanish Civil Code requires an arras deposit of 10%. The amount is negotiated within the applicable legal framework.
Instead of focusing only on whether the deposit should be larger or smaller, consider what uncertainties remain and how the agreement protects you against them.
A smaller deposit does not fix a poorly drafted breach clause. A larger deposit does not replace checking that the seller can transfer the property on the promised terms.
We recommend reviewing the amount, the type of arras, the refund conditions and the timetable together. That combination should reflect the needs of the transaction.
What to do if you have already signed and a problem arises
Do not assume the money is lost, but do not rush to announce that you are withdrawing either.
Before sending a formal communication, gather the contract, any addenda, proof of payment, the property advertisement and the messages exchanged. If the issue concerns financing, include your applications, the lenders’ responses and the relevant dates.
The purpose of the review is to establish what has happened and how it fits the agreement: an unmet condition, an outstanding seller obligation, a delay, a possible breach or the exercise of a right to withdraw.
The Supreme Court has emphasised the importance of interpreting the agreement as a whole and, where necessary, considering the parties’ conduct.
Our recommendation is to decide on the legal approach and the wording of any communication before accepting a loss, demanding a particular amount or signing a cancellation agreement.
Have a lawyer review your arras contract in Málaga
At Davo Law Offices, we provide real estate and planning law advice, including contract drafting and review and the assessment of issues that may affect a property transaction.
When requesting a review, explain what you intend to achieve: a main residence, a second home, an investment, a renovation or a particular use of the property. Provide the draft agreement, the available property documents and the proposed dates.
A review should do more than highlight problematic wording. Ask for an explanation of the practical consequences and the alternatives worth negotiating before you sign.