Deposit, contract of earnest money (arras) and public deed — Key differences when buying a property in Spain
Deposit contract, reservation and public deed in Spain
Buying a property in Spain involves a series of legal steps that are essential to ensure the safety of the transaction. For many foreign buyers, especially those interested in purchasing a home in areas such as the Costa Blanca, these processes can seem complicated or unclear due to differences from the legal systems in their countries of origin.
Understanding terms such as the property reservation, the deposit (arras) contract, and the public purchase deed is key to avoiding mistakes, protecting your investment, and making informed decisions. Each of these stages has a specific role within the buying process and carries important legal and financial implications. In this article, we explain clearly how each phase works and what you should take into account if you’re thinking about buying a home in Spain.
Property reservation: the first step to secure the home
A property reservation in Spain is normally the first step the buyer takes once they’ve found the home they want to purchase. Although it’s an initial agreement and doesn’t always have the same level of formality as other contracts, it’s a very common practice in the real estate market, especially in high demand areas such as Benidorm or Alicante.
The main purpose of the reservation is to temporarily take the property off the market, preventing other buyers from acquiring it while you carry out the necessary steps, such as applying for a mortgage, carrying out legal checks, or organizing the documentation. This step is particularly important in fast-moving markets, where well located properties can sell quickly.
In most cases, the reservation involves paying an initial amount, which is usually around €3,000, although it may vary depending on the property’s value or the agreement between the parties. This amount is formalized through a reservation document in which the buyer’s, seller’s and property details are set out, along with the agreed price.
It’s essential to check whether the amount paid is refundable or not, as this will depend on the agreed conditions. In some cases, if the buyer decides not to go ahead with the transaction, they may lose the deposit/reservation. For that reason, it’s advisable to seek professional advice before signing this document.
Deposit (arras) contract: the legal agreement governing the purchase
The next step in the process is signing the deposit (arras) contract in Spain, which represents a much more solid commitment with full legal validity. This contract sets out the terms of the purchase and defines the rights and obligations of both parties, including any penalties in the event of non-compliance.
At this point, the buyer typically pays around 10% of the total value of the property as a deposit. This amount forms part of the final purchase price of the home and serves as a guarantee of the purchase commitment. Unlike the reservation, the deposit contract has a clear legal framework that protects both the buyer and the seller.
One of the most important aspects of the deposit contract is setting the date for signing the public deed before a notary. In addition, all the agreed conditions are detailed, such as the final price, the payment method, and any specific clause related to the transaction.
From a legal standpoint, this contract includes clear penalties. If the buyer decides to withdraw without a justified reason, they lose the amount paid. On the other hand, if the seller fails to comply with the agreement, they are required to return double the deposit received. This structure ensures balance between the parties and provides security throughout the process.
For this reason, it’s highly recommended that the deposit contract be reviewed by a lawyer before signing, especially for foreign buyers who aren’t familiar with Spanish legislation.
Public purchase deed: the final and official step
The public purchase deed in Spain is the final stage of the process, when the property is officially transferred to the buyer. This act is carried out before a notary and has definitive legal character, making the buyer the new owner of the property.
The deed is signed at a notary’s office, which is normally chosen by the buyer. During this process, the remaining amount due for the property is paid, generally by bank cheque and the notary checks that all documentation is correct and in order.
The notary plays a key role in the transaction, acting as an impartial figure who ensures the legality of the deal. They verify the parties’ identities, the property’s title, the absence of hidden charges, and the validity of all documents.
Once the deed has been signed, the next step is to have it registered with the Land Registry (Registro de la Propiedad), which provides full legal certainty to the buyer and guarantees their ownership right against third parties.
Why is it important to understand each stage of the process?
Each of these phases reservation, deposit (arras) contract, and public deed, fulfills a specific function in the purchase of a home in Spain. Understanding them properly helps you avoid common mistakes and make safer decisions.
The reservation gives the buyer time to arrange financing, analyze the property, and move forward with the process without pressure. The deposit contract provides a legal basis that protects the rights of both parties and sets out the terms of the transaction. Finally, the public deed ensures legality and formalizes the transfer of the property.
For foreign buyers, this knowledge is especially important, as the system may differ significantly from other countries. Having professional advice throughout the process helps minimize risks and ensure a straightforward purchase without complications.
Safe purchase in Spain with professional support
At Estrellas Properties, we support our clients at every stage of the buying process from selecting the property to signing before a notary. Our team works alongside legal professionals and specialized advisors to ensure that each transaction is carried out with complete security and transparency.
We know that buying a property in another country can raise doubts, so we offer a tailored service for international buyers making each step easier and addressing any questions that may come up during the process.
Contact
WhatsApp / Phone: +34 677 878 548
Email: info@estrellasproperties.com
