What are deposits in a real estate purchase and sale?

When you begin the process to buy a home in Spain , you often hear about the contrato de arras (earnest money contract). But what does this term really mean, and what implications does it have for buyers and sellers?

At InmoAlcossebre, we want you to be clear and well-informed about every step of your real estate transaction. That’s why we’re explaining everything you need to know about this key concept.

What is the contrato de arras (earnest money contract)?

The earnest money contract is an agreement prior to the final sale of a property. In this agreement, the buyer and seller agree to close the transaction under agreed conditions, usually with an initial payment from the buyer. This amount is deducted from the total price of the home and serves as a guarantee for the commitment made.

Earnest money contracts have a dual purpose:

Firm commitment: They formalize the intention of both parties to complete the sale.
Compensation in the event of withdrawal: If one of the parties breaches the agreement, there are clear financial consequences.

Most common types of deposits

There are several types of deposits, but in the Spanish real estate sector, the most common are the penitential deposits, regulated by Article 1454 of the Civil Code. These allow both parties to withdraw from the contract, but with a penalty:

If the buyer withdraws, they lose the amount paid.
If the seller backs out, they must return double the amount received.
There are also confirmatory deposits (which act as part of the payment) and penal deposits (which include additional penalties), although these are less common.

What information should an earnest money contract include?

An earnest money contract must clearly reflect:

Identification of the buyer and seller.
Description of the property.
Total purchase price.
Amount paid as earnest money.
Deadline for signing the final contract.
Type of deposit agreed upon.
Possible penalties or consequences in case of non-compliance.

Is it mandatory to sign a deposit agreement?

It is not mandatory, but it is highly recommended, as it legally protects both parties before signing before a notary. At InmoAlcossebre, we always recommend signing it with the support of a real estate professional to ensure that all terms are clear and fair.

Are you thinking of buying or selling a property in Alcossebre?
At InmoAlcossebre, we will accompany you throughout the entire process, from the first visit to the delivery of the keys, including the drafting and management of the deposit agreement.

Contact us and take the first step with confidence.