Deposit contracts (arras) in Catalonia: types and what happens if someone pulls out

A deposit contract (contrato de arras) is the document with which buyer and seller reserve a sale, usually of a home, and the buyer pays an amount as a deposit. What matters is the type of deposit agreed: in Catalonia, unless the contract says otherwise, the money paid is treated as a confirmatory deposit, in other words, a sign that the sale is concluded and a payment on account of the price. A penalty deposit, which allows pulling out by losing the deposit or returning it doubled, must be expressly agreed.

In brief

• In Catalonia, Article 621-8 of the Civil Code of Catalonia applies.
• By default, the deposit is confirmatory: it confirms the sale and is deducted from the price.
• A penalty deposit must be expressly agreed: a buyer who withdraws loses it and a seller who withdraws returns it doubled.
• For property, a penalty deposit agreed for a maximum of six months and lodged with a notary can be entered in the Land Registry.

Which law applies

Contracts on property, unless the parties have chosen another law, are governed by the law of the place where the property is located (Article 10.5 of the Civil Code, which also applies to conflicts between Spanish regional civil laws under its Article 16). That is why the sale of a flat in Barcelona is usually governed by the Civil Code of Catalonia. It is best for the contract to say so expressly.

Confirmatory deposit

Under Article 621-8.1 of the Civil Code of Catalonia, the payment of money by the buyer to the seller “is understood to be made as a confirmatory deposit, that is, as a sign of conclusion and on account of the price of the sale”. In other words, the deposit shows that the sale is concluded and, unlike a penalty deposit, does not give either party a right to withdraw by losing it or returning double. If one party fails to perform, the other can demand performance, suspend its own obligations, terminate the contract and claim damages (Article 621-37).

Penalty deposit

A penalty deposit works as a price for being able to pull out. Article 621-8.2 itself requires it to be expressly agreed and sets out its effects:

• If the buyer withdraws, they lose the deposit, unless the withdrawal is justified under Article 621-49.
• If the seller withdraws, they must return it doubled.

The justified withdrawal in Article 621-49 concerns financing: if the contract provides that a credit institution will finance all or part of the price, the buyer may withdraw, unless otherwise agreed, if they show in writing within the agreed period that the institution has refused the financing (or the takeover of the mortgage), unless the refusal is due to their negligence. In that case, the seller must return the price paid and, where applicable, the penalty deposit.

Outside Catalonia, Article 1454 of the Civil Code sets out the same idea: the contract can be rescinded “with the buyer agreeing to lose the deposit, or the seller to return it doubled”.

Lodging with a notary and entry in the Land Registry

In property sales, a penalty deposit agreed for a maximum of six months and lodged with a notary can be entered in the Land Registry; in that case, the property is charged with its return, and if someone withdraws it is the notary who hands the deposit to the right party (Article 621-8.3). That charge ends:

• Sixty days after the agreed period, unless a notice of a claim by the buyer has been entered before then.
• When the buyer withdraws and the seller proves it reliably.
• When the sale is registered.

What to check before signing

• That the type of deposit is stated without ambiguity: if you want to be able to withdraw, it should expressly say “arras penitenciales” (penalty deposit).
• The deadline for signing the deed and what happens if the mortgage is not granted (if financing is planned, Article 621-49 applies unless otherwise agreed).
• The registry status of the property (ownership, charges, attachments) through a land registry extract (nota simple).
• Who pays each cost and how the deposit is deducted from the price.
• Whether it is worth lodging the deposit with a notary and registering it.

How we help you

We draft or review the deposit contract before you sign it, check the property’s registry entry and support you until the deed is signed. If the other party pulls out, we claim what you are owed. We see you at our Barcelona office or by video call. You can book your first consultation or learn about our service for property sales.

Legislation

• Law 3/2017, of 15 February, Book Six of the Civil Code of Catalonia (Articles 621-8, 621-37 and 621-49).
• Civil Code (Articles 10.5, 16 and 1454).