When you buy property in Spain, you go through a legal process that is basically similar to the Belgian or Dutch procedure, but very different in content. Correctly identifying and using the right form of contract is crucial for the security of your investment.
In Spain, there are several types of agreements prior to the notarial deed. Below we analyse the legal nuances of the reservation contract, the promise to buy and sell, the arras (compromise) and special constructions such as hire purchase.
1. The Reservation Contract (Contrato de Reserva)
What is it? A reservation contract is a short-term agreement by which the property is taken off the market for a specific period (often 14 to 30 days) in exchange for a deposit.
In practice, this is often the first step. The seller may no longer offer the property to third parties. This gives you as a buyer time to legal and engineering controls (Due Diligence) to be carried out.
- The deposit: You pay a reservation fee (often between €3,000 and €6,000).
- Recovery: If your investigation reveals legal or technical defects (e.g. illegal construction or debts), you can recover this sum in full.
- Cancellation: Do you abandon the purchase without a valid, contractually defined reason? Then you will lose the deposit.
Find more information on the reservation contract here.
Expert Tip: "Consider a reservation as a paid option. You are not obliged to buy, but you are buying time to assess the risks."
2. The Purchase and Sale Promise (Promesa de Compraventa)
What is it? A promise to buy and sell is a mutually binding agreement in which both parties promise to conclude the effective sale within a certain period of time.
This contract type goes beyond an option. It is legally enforceable. Upon signing, the buyer usually pays an advance of 1% to 2% of the purchase price.
The crucial difference with a reservation is the enforceability in case of default:
- Judicial coercion: The aggrieved party can enforce the purchase or sale through the court.
- Compensation: If the sale does not go ahead due to the seller's fault, the buyer can claim double the advance paid.
This type of contract is recommended when you are absolutely sure about the purchase (for example, in the case of a unique opportunity) and you want legal certainty that the seller cannot back out.
3. The Compromise (Contrato de Arras)
What is it? The Contrato de Arras is the equivalent of the Belgian compromise: the final private sale agreement that sets out all the terms, price and completion date.
What to look out for when buying a property in Spain?
Upon signing this contract, the buyer usually pays 10% of the purchase price (minus the reservation fee already paid). Spanish legislation (Código Civil) provides for three specific variants of this contract, with major consequences for dissolution:
A. Arras Confirmatorias (Confirmatory deposit)
Here, the deposit is purely an advance payment. In case of default, damages are separate from this amount; the injured party has to prove the actual damages. Important: the injured party can prove the forced execution of the sale requirements.
B. Arras Penales (Penalty clause)
The down payment acts as set compensation.
- Does the buyer cancel? Loss of full deposit.
- Does the seller cancel? Repayment of the double amount to the buyer. Again, the possibility of judicial enforcement of the sale remains.
C. Arras Penitenciales (Mourning purchase)
This is the most common and advised form for foreign buyers in Spain (regulated by Article 1454 Spanish Civil Code).
- Buyer cancels: Loss of deposit (10%).
- Seller cancels: Must refund double of down payment (20%) to buyer.
- Crucial difference: There is no possibility to legally enforce the purchase. This offers flexibility: you can "buy" to get out of the contract by paying the penalty, without years of proceedings.
4. Is compromise mandatory in Spain?
No, a private sale agreement is not required by law. In theory, after a verbal agreement, you can go straight to the notary for the deed (Escritura).
However, this is strongly discouraged. Skipping the compromise (and the associated due diligence period) is a huge risk. Without written agreements and prior research, you do not know if there are debts, building violations or inheritance issues on the property.
5. Alternative forms of contract
Lease-purchase and Lease with option to buy
At hire purchase you pay rent which is (partly) offset against the later purchase price. This is useful if you want to move into the property immediately but the financing is not yet in place.
At lease with option to buy (arrendamiento con opción de compra) you have the straight (not duty) to buy after the lease period.
- Note: Contractual clarity is required. What if you do not light the option but continue to live there? Without strict clauses, this often leads to conflicts.
Buy with Rental Guarantee
This is an investment model. You buy property (often in a resort) and hand it over directly to an operator who guarantees you a fixed return.
- Limitation: You often have limited personal use (e.g. 2 weeks per year).
- Risk: Always check the solvency of the party offering the guarantee.
Read more about buying with rental guarantee.
6. The Notarial Act (Escritura Pública)
The Escritura is the final deed formalising the transfer of ownership.
It is essential to understand that the role of the Spanish notary is more limited than those in Belgium or the Netherlands.
- The notary identifies the parties and verifies payment.
- The notary verifies not standard on building violations or the physical condition of the property.
- Agreements on who pays for any regularisations must be in the compromise beforehand; the notary rarely takes over these commercial agreements in the deed.
Learn more about the role of the notary in Spain here.
Frequently asked questions (FAQ)
What is the difference between a reservation contract and a compromise (Arras)? A reservation contract is a temporary "lock" on the property to do research, with a small deposit. The compromise (Arras) is the final purchase agreement with detailed terms and conditions and a deposit of usually 10%.
Will I lose my money if I break the purchase contract in Spain? It depends on the type of contract. At Arras Penitenciales you lose your down payment (usually 10%), but the seller cannot force you to still buy the house. With other forms of contract, however, the seller can demand that the sale go ahead.
Does the Spanish notary check whether the house was built illegally? No, the Spanish notary has an administrative role and mainly checks identity and land registration. He does not carry out a town planning survey. This is the responsibility of your lawyer before signing the deed.
Which type of compromise is safest for foreigners? The Arras Penitenciales (governed by Art. 1454 of the Civil Code) is the most recommended. It offers a clear exit strategy for both parties through financial compensation, without the possibility of being forced to buy through the courts.
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
