Reservation, earnest money and private contract: the three steps before the notary

You have found the perfect property on the Costa Blanca. Your heart says yes the moment you step inside, but between that rush of excitement and the day you sign before a notary there are three stages worth understanding thoroughly: the reservation, the arras contract (earnest money deposit) and the private purchase agreement. Each one carries a different legal weight, involves different sums and determines what happens if either party changes their mind.

The reservation: the first sign of intent

The reservation is the opening gesture: you hand over a modest amount — typically between 1 000 and 6 000 euros, or roughly 1 % to 3 % of the price — so the seller takes the property off the market for a few days. It is more of a moral commitment than a legal one: Spanish law does not specifically regulate property reservations, so the conditions depend entirely on what is written in the document.

That is why signing a reservation document is essential. It should spell out at least three things: the amount paid, how long the reservation lasts and what happens to the money if the deal falls through. Without a written agreement, recovering the deposit can become a drawn-out dispute.

In practice, reservations are common in off-plan purchases — where the developer needs to gauge genuine demand — and when the buyer needs a few days to confirm financing before committing to an arras contract. If everything proceeds as planned, the reservation amount is usually deducted from the final price.

The arras contract: when intent becomes commitment

This is where things get serious. An arras contract is a private agreement between buyer and seller in which both parties commit to completing the sale within a set deadline, backing that commitment with a significant sum of money. Spanish civil law recognises three types of arras, and the difference between them matters greatly: it determines what happens if someone backs out.

Arras penitenciales (withdrawal deposit)

These are the most common type in residential property transactions. The logic is straightforward: if the buyer pulls out, they lose the deposit; if the seller pulls out, they must return double the amount received. This reciprocal penalty is set out in article 1454 of the Spanish Civil Code.

One crucial detail many buyers overlook: for the arras to be considered penitenciales, the contract must say so explicitly. Simply mentioning article 1454 without clarifying the nature of the deposit can lead to disputes, as Spain's Supreme Court has ruled on multiple occasions. Make sure the document includes the word «penitenciales» and describes the consequences of withdrawal for each party.

Arras confirmatorias (confirmatory deposit)

These work as an advance payment on the purchase price. The buyer hands over a portion of the total amount as proof that both parties confirm the agreement, and that sum is deducted from the final price. The key difference: neither party may freely withdraw. If one side fails to comply, the other may go to court to demand completion of the sale or claim compensation for damages.

They are less common between private individuals but appear in professional transactions or when both parties want an airtight deal with no exit clause.

Arras penales (penalty deposit)

These combine elements of both previous types: they impose a financial penalty for non-compliance — the buyer loses the deposit, the seller returns double — but also allow the injured party to demand fulfilment of the contract through the courts. In practice, they are the least frequent type in residential sales.

If you are unsure which type of arras you are signing, always have the wording reviewed by a lawyer before handing over any money.

How much money and how much time?

The standard arras amount ranges between 5 % and 10 % of the purchase price, with 10 % being the most common figure on the Costa Blanca. There is no legally mandated percentage: it is whatever the parties agree upon.

As for the deadline to sign the public deed before a notary, the most usual timeframe is 30 to 90 days. This window allows the buyer to arrange the mortgage, obtain a NIE (foreigner identification number) if needed and gather all the necessary paperwork. In more complex transactions — inheritances, outstanding charges, international financing — the deadline can be extended by mutual agreement.

The private purchase agreement

Sometimes the parties take an additional step between the arras and the public deed: a private purchase agreement. This document is more comprehensive than the arras contract and sets out the definitive terms of the transaction. The Spanish Civil Code recognises its full validity between the parties (article 1278, freedom of form), but for it to be enforceable against third parties it must be elevated to a public deed and registered with the Land Registry.

What it should contain

A complete private purchase agreement includes at least:

• Identification of the parties: full name, DNI or NIE, marital status and address of both buyer and seller.
• Registry description of the property: address, cadastral reference, registered area, annexes (garage, storage room).
• Total price and payment breakdown: arras already paid, amount due upon signing the private contract and balance to be paid at the notary.
• Statement of charges: existing mortgages, liens, easements or urban planning restrictions affecting the property.
• Deadline for elevating to a public deed.
• Termination clause for non-compliance, with agreed penalties.
• Allocation of costs: who pays notary fees, registry fees, taxes and legal management.

The three stages at a glance

• Reservation: takes the property off the market for a few days with a modest sum (1-3 % of the price) and limited legal protection.
• Arras: formalise the commitment with a larger sum (5-10 %) and clear legal consequences if either party withdraws.
• Private contract: locks in the definitive terms of the sale and serves as the basis for the public deed.

Not every transaction goes through all three stages. Many skip straight from the reservation to arras, or even from arras to the notary without an intermediate private contract. The structure depends on the agreement between the parties, the complexity of the deal and the financing timeline.

From private document to public deed

When the agreed date arrives, the private contract — or the arras, if no private contract was drawn up — is converted into a public deed before a notary. The notary verifies the identity of the parties, checks the property's registry status, confirms there are no hidden charges and certifies the transaction. After signing, the deed is filed with the Land Registry, and the property officially changes hands.

It is the final stop on a journey that may have started with a casual viewing and a reservation of just a few thousand euros. Each stage has added a layer of legal certainty, until the agreement between two people becomes a registered and protected right.

Frequently asked questions

Is signing an arras contract mandatory?

No. Arras are not required by law, but they are standard practice in Spanish property transactions because they protect both parties during the gap between a verbal agreement and the public deed.

Can I get the arras back if the bank denies my mortgage?

It depends on the contract. Some arras contracts include a suspensive clause allowing a full refund if the buyer fails to secure financing within a set period. If no such clause exists and the arras are penitenciales, the buyer forfeits the deposit.

What is the difference between «arras» and «señal»?

In everyday speech the two words are used interchangeably, but legally «señal» has no defined type under the Civil Code. What matters is that the signed document specifies the type of arras — penitenciales, confirmatorias or penales — and the consequences of non-compliance for each party.

Do I need a lawyer to sign the arras?

It is not legally mandatory, but it is highly recommended, especially for foreign buyers unfamiliar with the Spanish legal framework. A lawyer reviews the clauses, checks the property for charges at the Registry and ensures the contract accurately reflects what was agreed.

Does a private purchase agreement replace the arras?

They can coexist or replace each other. In many transactions the parties first sign an arras contract and then, weeks later, a more detailed private agreement before going to the notary. In others, the deal moves straight from a verbal agreement to a private contract with no intermediate arras. There is no mandatory sequence: it depends on what both parties consider most appropriate for their situation.