Reservation Deposits in Spain — What You Need to Know

The first deposit you pay is the reserva (reservation deposit). This is a relatively small payment — typically EUR3,000 to EUR6,000 — made immediately after your offer is accepted. Its purpose is to take the property off the market while your lawyer conducts initial due diligence.

How the reserva works:

• You pay the deposit to the estate agent, who holds it in a client account (or in some cases, directly to the seller's lawyer).
• The seller agrees to stop marketing the property and not accept other offers for an agreed period — typically two to four weeks.
• During this period, your lawyer orders the nota simple from the Land Registry, checks for debts and charges, verifies planning compliance, and reviews the community fee status.
• The reserva is deducted from the final purchase price — it is not an additional cost.

What happens if you pull out during the reserva period:

• If your lawyer discovers a material legal issue (title problems, illegal construction, outstanding debts, planning violations), you should be able to recover your deposit in full — provided the reservation agreement includes appropriate conditions. Always ensure your lawyer drafts or reviews this clause.
• If you simply change your mind (buyer's remorse, found another property), you will typically lose the reserva deposit. The exact terms depend on the reservation agreement.
• If the seller pulls out (accepts a higher offer), they must return your deposit. Some reservation agreements require the seller to return double, but this varies.

Important: The reserva is not a legally standardised document in Spain — its terms can vary. Never pay a reservation deposit without your lawyer reviewing (or drafting) the reservation agreement first.

If your lawyer's initial checks are satisfactory, you proceed to the contrato de arras — the private purchase contract. At this stage, you pay 10% of the agreed purchase price (minus the reserva already paid). This is the point at which the purchase becomes formally binding, with significant financial penalties for withdrawal.

The arras contract covers:

• The identities of buyer and seller, with passport/NIE numbers.
• A full description of the property, including the Land Registry reference and catastral reference.
• The agreed purchase price and payment structure.
• The completion date (the date you will sign at the notary).
• What is included in the sale (furniture, appliances, parking space, storage room).
• The type of arras — this determines the withdrawal penalties (see next section).
• Any conditions precedent (most commonly, subject to mortgage approval).

Example on a EUR400,000 property:

Payment	Amount	Running Total Paid
Reserva deposit	EUR5,000	EUR5,000
Arras deposit (10% less reserva)	EUR35,000	EUR40,000
Balance at completion	EUR360,000	EUR400,000

The arras deposit is usually paid by bank transfer to the seller's lawyer's client account or directly to the seller. Your lawyer should verify the account details independently — deposit fraud (where criminals intercept emails and substitute bank details) is a real risk. Always confirm payment details by telephone with a known number, not by replying to an email.

Spanish law recognises three types of arras, each with very different consequences. The type must be explicitly stated in the contract — if it is not, courts typically interpret the deposit as arras confirmatorias.

1. Arras Penitenciales (Penalty Deposit) — Most Common

This is the standard type used in most Costa del Sol property transactions. It gives both parties the right to withdraw, but at a cost:

• Buyer pulls out: Loses the entire 10% deposit.
• Seller pulls out: Must return double the deposit to the buyer (i.e., the original 10% plus an additional 10% as penalty).

This is regulated by Article 1454 of the Spanish Civil Code and provides a clean mechanism for either party to walk away, making it the most predictable and widely used option.

2. Arras Confirmatorias (Confirmatory Deposit)

This is simply a payment on account of the purchase price. It confirms both parties' commitment but does not give either party the right to withdraw. If either party pulls out:

• The other party can demand specific performance (a court order forcing the sale to complete) or claim full damages — which could exceed the deposit amount.

This is a stronger form of commitment and is occasionally used in high-value transactions where the seller wants to ensure the buyer cannot simply walk away.

3. Arras Penales (Penal Deposit)

A hybrid: the deposit acts as a minimum penalty for withdrawal, but the non-defaulting party can also claim additional damages on top. It combines the fixed penalty of arras penitenciales with the additional remedies of arras confirmatorias. This type is rare in residential transactions on the Costa del Sol.

If you sign an arras penitenciales contract (the standard type) and then decide not to proceed, the consequence is clear: you lose your 10% deposit. The seller keeps the money, and the deal is cancelled. There is no court action, no further claim — the deposit is the full extent of the penalty.

Common reasons buyers pull out:

• Mortgage refusal: If your mortgage application is declined after signing the arras, you lose the deposit unless the contract includes a specific mortgage clause. Always insist on a clausula de hipoteca (mortgage condition) if you are relying on finance.
• Personal circumstances: Job loss, divorce, illness. The arras contract does not care about your reasons — the penalty applies regardless.
• Found a better property: You lose the deposit. On a EUR400,000 property, that is EUR40,000 — expensive buyer's remorse.
• Due diligence issues discovered after signing: If a problem was discoverable before signing and you proceeded anyway, you lose the deposit. If the seller concealed a material issue, you may have grounds to reclaim it.

Protecting yourself:

• Never sign the arras before your lawyer completes at least the initial due diligence (nota simple, planning check, debt check).
• If you need a mortgage, include a clear mortgage condition with a reasonable timeframe and defined terms (amount, interest rate, LTV).
• If there are any outstanding issues (ongoing planning applications, missing documents), include them as express conditions in the contract.

Under an arras penitenciales contract, a seller who withdraws must return double the deposit to the buyer. On a EUR400,000 property where the buyer paid EUR40,000, the seller must return EUR80,000 (the original EUR40,000 plus EUR40,000 as a penalty).

Common reasons sellers pull out:

• Received a higher offer: The most common reason. Despite having signed the arras, a seller may conclude that paying you double the deposit is worthwhile if a higher offer substantially exceeds the penalty. On a EUR400,000 property, the seller's penalty is EUR40,000 — so any competing offer above EUR440,000 makes economic sense for the seller to accept.
• Changed personal circumstances: Relationship breakdown, decision not to sell, relocation plans changed.
• Unable to deliver clear title: Outstanding debts, unresolved planning issues, or disputed ownership that cannot be resolved before the completion date.

Your options if the seller pulls out:

• Accept the double deposit: Under arras penitenciales, this is the agreed remedy. Take the money and look for another property.
• If arras confirmatorias: You can sue for specific performance (a court order forcing the sale) or claim damages beyond the deposit amount. This is expensive, slow (Spanish courts can take years), and uncertain — but the option exists.
• Negotiate: Sometimes a seller who has received a higher offer will negotiate with you — perhaps splitting the difference — to avoid the double-deposit penalty. Your lawyer can advise on whether this is worthwhile.

The double-deposit penalty is the buyer's main protection against gazumping in Spain. It is far stronger than any protection available in England and Wales, where gazumping remains legal right up to exchange of contracts.

Here is the complete deposit flow, presented as a step-by-step process, for a typical EUR400,000 resale property purchase:

Stage	What Happens	Amount Paid	Penalty If Buyer Withdraws	Penalty If Seller Withdraws
1. Offer accepted	Verbal agreement on price	Nothing	None	None
2. Reserva	Property off market; lawyer starts checks	EUR5,000	Lose EUR5,000 (or recover if legal issue found)	Return EUR5,000 (terms vary)
3. Arras	Binding contract signed; 10% paid	EUR35,000 (to reach 10%)	Lose full EUR40,000	Return EUR80,000 (double deposit)
4. Escritura	Sign at notary; keys handed over	EUR360,000 (balance)	N/A (sale complete)	N/A (sale complete)

Key takeaways:

• Your financial exposure increases significantly at each stage. At the reserva stage, you risk EUR3,000-EUR6,000. After signing the arras, you risk 10% of the purchase price.
• Never pay the arras deposit until your lawyer has completed initial due diligence. The reserva period exists to give you this window.
• Always use a lawyer-reviewed reservation agreement with conditions that allow you to recover the reserva if a material legal problem is found.
• Ensure your currency exchange and bank transfers are arranged well in advance of each payment deadline. International transfers can take 2-5 business days, and missing a deadline could put you in breach of contract.

For a full breakdown of all costs at each stage, including taxes and professional fees, use our buying cost calculator.

Based on the most common issues we see with UK buyers on the Costa del Sol, here are practical steps to protect your money:

• Always instruct an independent lawyer before paying anything. Never use a lawyer recommended by the selling agent — your lawyer should act solely in your interests. Budget EUR1,500-EUR2,500 plus IVA for a good property lawyer.
• Verify bank details by telephone. Email interception is the most common form of deposit fraud in Spanish property transactions. Always call a known number (from the lawyer's website or letterhead, not from an email) to confirm account details before making any transfer.
• Insist on a conditional reserva. Your reservation agreement should state that the deposit is refundable if your lawyer's due diligence reveals a material issue. If the agent or seller refuses this condition, walk away.
• Include a mortgage clause in the arras if you are relying on finance. Specify the loan amount, maximum interest rate, and a clear deadline. Without this clause, mortgage refusal is your problem — you lose the deposit.
• Pay to the lawyer's client account where possible, rather than directly to the seller or agent. A regulated lawyer's client account provides a layer of protection.
• Lock in your exchange rate. If you are transferring GBP to EUR, consider a forward contract with a currency specialist. An adverse exchange rate movement between signing the arras and completion could cost you thousands. A 2% swing on EUR360,000 is over EUR7,000.
• Keep a paper trail. Save all correspondence, receipts, and transfer confirmations. If a dispute arises, documentation is everything.

The deposit system in Spain, while daunting at first, actually provides stronger buyer protection than the English system. Once you sign the arras, you cannot be gazumped without the seller paying you a significant penalty. Understanding the system — and ensuring your contract is properly drafted — is the key to buying with confidence.