Mis-selling in Spain: What are your rights when a reservation contract is signed?

Have you signed a reservation contract for a Spanish property and paid a deposit, but are unsure about the purchase? Don't panic: you are not legally obliged to buy the property (yet). Unlike the final sales contract (the compromise), a reservation contract only serves to temporarily take the property off the market. Although in many cases you risk losing your initial deposit if you cancel without a valid reason, there are specific legal grounds on which recovery of your funds is possible.

Also listen to our podcast episode on cowboys in the Spanish property market. Listen via Youtube, Spotify or Apple Podcasts.

Below, we analyse your legal position, the difference between reservation and purchase obligation, and how to secure your deposit.

A recognisable scenario: regret after 'holiday impulse'

It often happens: you visit several properties in the Alicante region with an estate agent. The sun is shining, the villa has a pool and you are tempted to make a quick decision. You sign a reservation contract on the spot and immediately make €3,000 to €10,000 about reserving the property.

Once back in Belgium or the Netherlands, you do some further research, for example via Google Maps. You discover derelict plots around the villa that you had not noticed during the viewing. Anxiety strikes: What if people start building here and my view or peace disappears? You want to get rid of the sale.

Note: This scenario highlights the importance of rational 'the legal controls' over emotional decision-making. An impulsive signature triggers legal processes that you are better off managing proactively.

Reservation vs. Compromise: When are you really stuck?

It is crucial to distinguish between a reservation contract and a private sales contract (Compromis / Contrato de Arras).

The Reservation Contract

With this document, you temporarily take the property off the market. This gives your lawyer time to carry out legal checks.

• Obligation: You are not obliged to proceed with the effective purchase.

• Risk: As long as you do not compromise signed, your only risk is the loss of the reservation amount (usually between €3,000 and €10,000).

Read more about the reservation contract.

The trap of the quick Compromise

Some brokers try to get you to sign a compromise immediately or demand payment of 10% of the purchase price.

• Opinion: Tick never a compromise and do not pay a 10% deposit before your lawyer has fully legally and urban planning checked the property.

• Fact: The Spanish property market is unregulated in most regions. Anyone can call themselves an estate agent. The notary in Spain only has an administrative role and - unlike in Belgium - does not advise you on hidden defects or illegal constructions.

Why it is best not to sign the compromise in Spain immediately? We explain with a practical example.

Can I get my deposit back after cancellation?

The main rule is simple: the first deposit serves as a guarantee to the seller that you are serious. If you withdraw without a valid legal reason (e.g. "I've changed my mind"), you will generally lose this amount.

However, there are three exceptions in which you are entitled to a refund:

1. Legal defects: If the inspection reveals that the property contains illegal elements, there are building violations, or necessary permits are missing, the contract will be cancelled and you will get your money back.

2. Unfulfilled essential conditions: If the property does not meet a requirement for you determining property communicated in writing in advance.

   • Example: You are buying specifically for holiday rentals. Does research show that the property cannot get a rental licence? Then this is a valid reason for rescission, provided it was set as a condition.

3. Misinformation: If you can prove via written communication (email, WhatsApp) that the estate agent misinformed you about essential features of the property.

"In cases where clients have clearly written down their buying motives in advance, the success rate of recovering the reservation sum in case of unforeseen defects increases." - Confianz.

How do you limit the damage of a mis-selling?

Prevention is your strongest legal weapon in Spain. Follow these steps to protect your position:

• Communicate in writing: Always report your purchase reasons (e.g. rental, privacy, remodelling plans) to the broker and your counsel by e-mail. Verbal assurances are legally worthless.

• Use conditions precedent: Have your lawyer include clauses in the reservation contract. For example: 'Subject to planning approval'.

• Wait with the 10%: Pay the large retainer only after getting the green light from your lawyer (after the legal checks).

Frequently asked questions (FAQ)

Am I obliged to buy the house after signing a reservation contract? No, a reservation contract does not usually oblige you to buy the property. It only serves to temporarily reserve the property for you. You can still abandon the purchase, although you risk losing your reservation amount.

When will I get my reservation money back in case of cancellation? You will be entitled to a refund if serious deficiencies are revealed during the legal review (such as illegality), or if pre-determined written suspensive conditions are not met (such as obtaining a mortgage or rental licence).

Is a verbal commitment from a Spanish estate agent legally valid? In theory, yes, but in practice this is hard to prove. In Spain, make sure any commitment about the condition, location or possibilities of the property is confirmed in writing (by e-mail) to avoid discussions afterwards.

What is the difference between a reservation and a 'Contrato de Arras'? A reservation is a short 'option' with a small amount of money (around €3,000). A Contrato de Arras is the formal sales contract (compromise) where you usually pay 10% in advance. The latter is legally binding; if you cancel, you lose the 10% or the seller has to refund you double.

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.