The arras contract: deposit types and what happens if someone pulls out
The difference between penitential and confirmatory deposits, what article 1454 of Spain's Civil Code says and what to review before paying a deposit.
1 min read
The arras contract is usually signed between agreeing the price and the deed. The buyer pays a deposit and both sides set the conditions and the date. What matters is how the deposit is defined, because the consequences are very different.
Penitential deposit
It is governed by article 1454 of the Civil Code and allows withdrawal: if the buyer pulls out, the deposit is lost; if the seller does, they return double. For it to work this way, say so expressly in the contract and cite the article.
Confirmatory deposit
It is part of the payment and reinforces the commitment, without giving a free right to withdraw. In a breach, the other side may demand performance or termination, with any compensation due.
If the contract is ambiguous
According to Supreme Court doctrine cited in several analyses, in case of doubt the deposit tends to be treated as confirmatory. Generic wording may leave you without the exit you thought you had.
What to review before signing
- The type of deposit, expressly citing article 1454 if penitential.
- Identification of the home and its cadastral reference.
- The price and the deadline for the deed.
- Charges and who cancels them.
- How costs and pending special levies are shared.
- What happens if the mortgage is refused: without an express clause, you may lose the deposit.
The law sets no amount: the parties agree it. It is usual to have a lawyer review the contract, especially if you depend on financing.
