Understanding the contrato de arras

What the contract does

The contrato de arras is not the reservation, although the two are often confused. A reservation is a short agreement with a small deposit, simply to take the property off the market while matters are looked into. The contrato de arras comes afterwards: it is the proper contract, fixing the price, the parties, the conditions and the date for completion, and the deposit is usually around ten per cent of the price.

It is a useful document and there is nothing unusual about it. It simply repays reading carefully, because the different forms of arras have quite different consequences.

The three forms

Arras penitenciales are the most common. They allow either party to withdraw: the buyer forfeits the deposit, the seller repays double. Arras confirmatorias confirm the sale and do not provide for withdrawal in the same way. Arras penales set a penalty while leaving the sale enforceable.

The heading on the document does not always match the terms beneath it, which is why we read the clauses rather than the title.

Two clauses worth attention

The first is what happens if a mortgage is not granted. Where the contract makes no express provision, the buyer carries that risk. It is a straightforward point to agree at the outset.

The second is the completion date and what follows if the seller is not ready, for instance because a charge has still to be cancelled. A little flexibility written in at this stage saves a good deal of difficulty later.

Our advice

Let us see the contract before you sign it. The searches, the registry position and the planning status all belong at this stage rather than afterwards, and any amendment worth making is far easier to agree before the deposit has been paid than after.