What are your legal rights and damages when a seller in Spain goes back on an agreement? In most cases, this depends on the stage of the buying process. If a 'Contrato de Arras' (compromise) has been signed under the regime of 'Arras Penitenciales' (Art. 1454 Código Civil), as a buyer you are entitled to a refund of your down payment as well as damages in the same amount. Without a signed contract, enforceability in practice is often complex and financially unviable.
The purchase process in Spain differs substantially from that in Belgium or the Netherlands. Below, we outline what your legal position is at each stage.
Read more about the buying process in Spain.
1. The seller cancels before the reservation contract
At the stage where there is only a verbal agreement or email confirmation on price and payment terms, your legal position as a buyer is weak.
- Legal reality: While you can theoretically argue that there is an agreement of will (offer and acceptance), the burden of proof in Spain is very difficult.
- The opinion: Starting legal proceedings to force the sale is at this stage financially irresponsible. The litigation costs and lead time (often years) do not outweigh the uncertain outcome, especially when the seller is a foreign party.
- Conclusion: Without a signature on a reservation contract or compromise, you are left empty-handed. Acting quickly towards a written record is crucial.
2. Seller drops out after booking contract
The primary purpose of the reservation contract is to take the property off the market. Here, you pay a reservation fee (often between €3,000 and €6,000).
- Seller's obligations: The seller may no longer advertise the property or allow viewings.
- Consequences in case of cancellation: If the seller decides not to sell at this stage, this is a breach of contract. You have at least the right to a full refund of your reservation fee.
- Compensation: Unless specifically stated otherwise in the contract, compensation is often limited to the refund. However, a properly drafted contract may stipulate that the seller must also reimburse legal costs incurred.
Read more about the reservation contract.
3. Seller drops out after compromise (Contrato de Arras)
This is the most important stage. In Spain, the compromise is often called the 'Contrato de Arras' mentioned. Here, you make a down payment of 10% of the purchase price.
Here specifically, the mechanism of Arras Penitenciales (if correctly recorded in accordance with Art. 1454 of the Spanish Civil Code). This provides the heaviest guarantee for the buyer.
Read more about the payment method of purchasing a residence in Spain.
The 20% Rule (Double deposit)
If the seller cancels the sale after signing the Arras (e.g. because he has received a higher offer), he is legally obliged to:
- Refund your already paid advance (10%).
- Pay damages equal to that advance (another 10%).
In popular parlance, people speak of repaying the "double deposit". So in total, you will receive 20% of the purchase price from the seller.
Calculation example:
- Purchase price: €300,000
- Your down payment (10%): €30,000
- Seller cancels.
- Seller must pay: €60,000 (Your €30,000 back + €30,000 fine).
Note: This mechanism works reciprocally. As you as a buyer cancels without a valid condition precedent (such as failure to obtain a mortgage, if included), you will lose your full deposit of 10%.
You can also provide the option of judicially enforcing the purchase.
4. What if you fear a 'mis-sale'?
The concept of 'mis-selling' is not legally a valid reason for cancellation. Duty of investigation is essential before signing.
- Hidden flaws: If, after purchase, serious hidden defects ("vicios ocultos") are revealed that make it impossible to use the property, you have 6 months (after transfer) to take action.
- Illegal constructions: If it turns out that the property was (partly) built illegally and this was not reported, the sale can sometimes be annulled. This requires thorough legal investigation in advance.
What if the buyer cancels the sale because of a mis-selling?
Frequently asked questions (FAQ)
What is the difference between Arras Confirmatorias and Arras Penitenciales? At Arras Confirmatorias the down payment is only an advance and the parties cannot unilaterally annul the sale by paying a penalty; the sale can then be enforced through the courts. At Arras Penitenciales one can abandon the sale on payment of the penalty (double down payment for seller, loss of down payment for buyer).
Can I force the seller to sell rather than accept compensation? If the contract is specifically under Arras Penitenciales is signed, the seller has the right to "buy out" by paying the double deposit. You can then usually not enforce the sale. If there is an ordinary sales contract without this clause, you can demand fulfilment through the courts, although this often takes a long time.
Does force majeure (force majeure) apply as a reason for the seller to cancel penalty-free? Force majeure (such as death of the seller or destruction of the property by natural disaster) can, in exceptional cases, suspend or nullify the penalty clause. However, this strongly depends on the Spanish court's interpretation and the specific circumstances. Illness or failure to find a new home usually fall into this category not below.
How long will it take to get my money back if the seller cancels? This should ideally be done immediately upon official termination of the contract. In practice, a period of 14 days is often observed. If the seller refuses, going to court is necessary to seize the property.
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.
