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Understanding Spain’s Arras Contracts and Real Estate

Learn more about the role of an Arras Contract when purchasing real estate in Spain

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What is an Arras?

Arras is the term frequently used for the deposit that the purchaser transfers to the seller when buying Spanish real estate. When buying real estate you may be asked to sign a private purchase agreement contract with the seller. This document establishes all the terms & conditions for completing the purchase. As part of the agreement, you are asked to deposit some funds and this is the Arras.

There are different types of Arras – Penal, Penitential and Confirmatory.

The most common is the Penitential Arras. Here either party can withdraw from the contract. So the buyer agrees to forfeit the deposit if they walk away from the purchase, if the seller pulls the sale, they will pay the buyer double their original deposit.

How does an Arras work?

Typically, the buyer will pay around 10% of the final price as a down payment. The exact percentage depends on the country and region, and both parties can negotiate a higher or lower percentage. 

If a signed Arras Agreement is not fulfilled by the purchaser, the seller can claim the down payment. This occurs when the buyer refuses to sign the final contract.

This means the buyer must pay the seller 10% of the property’s value as compensation for withdrawing from the deal. 

Conversely,  if the seller fails to sign the final contract, the potential purchase has the right to receive double the original Arras down payment from the seller.

Here, the seller would pay the buyer 20% of the property’s value as a penalty for ending the agreement without a transaction.

Let us to do the work!

How can a lawyer help me?

Our lawyers have a deep understanding of what should be covered and omitted in an Arras contract. Lexidy’s Real Estate experts will ensure the appropriate clauses are used in all documentation to protect your best interests.

They will draft the content of this document. This contract is often as long as 20 pages, so our property lawyers will ensure that rights are protected throughout the document by applying painstaking attention to detail.

The team will negotiate with the other party to remove suspicious clauses or clarify unusual language. Many of our clients aren’t native English speakers, so we work to ensure that they don’t get lost in translation and aren’t taken advantage of. 

It’s important to work with a lawyer because real estate deals are often conducted with strangers. Most contracts and deals proceed without issue, but it’s vital to verify your trust in the other party. Often, real estate agencies act in the interest of the seller, so having a lawyer by your side levels the playing field. 

Spain has different rules for each of its autonomous communities, so different contracts might be needed in your region of interest. 

Our Real Estate lawyers are here to prevent specific risks. These can include the property’s characteristics and issues with the documentation. Sometimes, contracts fall through and you may be entitled to compensation. By working with a lawyer from the start, they are familiar with your case and can help pursue settlements or litigation if the other party fails to meet their obligations.

¨Don’t get lost in translation. Buy Spanish real estate with confidence¨

– Real Estate Team

What are the requirements?

While there are no mandatory requirements to complete and finalise an Arras Agreement, it is vital that you carefully review all documentation with a Real Estate expert before signing any paperwork. These documents are essentially promissory contracts where both parties agree to specific rights and obligations that have financial consequences.

For example, if you encounter an issue after signing the Arras Agreement and withdraw from the purchase, you will lose the 10% down payment you made. 

We recommend that the buyer awaits for the following documents to be verified for proceeding:

  • Permanent Certificate or Simple Note
  • Urban Land Register
  • Property’s utilisation license
  • Energy Certificate

What's the Process for an Arras?

  1. Gather the relevant documentation, which typically takes clients up to 15 days.
  2. Verify the viability of the property and the paperwork, such as the Arras. We suggest allocating up to 30 days for this.
  3. Draft the deed. We will spend up to ten days on this step, depending on the other party demands.
  4. Sign the contract. You can do this in absentia by granting a Real Estate expert “Power of Attorney”

What else do I need to know?

Taxes

When buying a property in Spain, you must pay taxes and fees. Typically, there are as follows:

  • Property transfer tax of 6% to 10% for an existing property. If the property is a new build, you would pay 10% VAT, or IVA, instead
  • Notary costs, title deed tax and land registration fee of 1% to 2.5%

It’s also important to obtain an NIE, or foreign ID card, from the Spanish administration. This will allow you to open a bank account as well as set up utilities like electricity, internet and water.


Wills & Last testaments

We highly recommend that you draft a will when making a significant purchase, such as buying a property. 

A will is a legally-binding document that determines how your wealth will be distributed after your death. It establishes what happens to your assets, like cash or real estate, in the event you die rather than letting existing laws make decisions for you.

The lawyer will also explain the differences between each of the wills in order to choose the one that best suits your needs. A lawyer can also recommend the best way to make a will in Spain that is tax efficient.

Find you Real Estate Lawyer

Alejandro

Alejandro Cano

Associate - LLM Abogado ( El Salvador )
Carlota Foucault Llopart

Carlota Foucault Llopart

Real Estate Specialist
Julia

Júlia Cleries

Real Estate Specialist
Antonio Torres

Antonio Torres Valdés

Head of Real Estate Department

Frequently Asked Questions

In Spain, the contract is considered resolved and the buyer has the right to receive the 10% down payment. 

The party who hasn’t signed must compensate the other party with the amount agreed in the Arras Agreement or CPCV. 

However, if both parties are still interested in signing the contract, they can agree to proceed and forego compensation.

Usually, the parties agree to 30 months but it’s possible to include a time extension clause. However, it depends on the arranged agreement. 

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Lexidy Legal Tech
4.9
Based on 437 reviews
Rick Estrada-Stone
Rick Estrada-Stone
15:05 16 Jul 22
We are working with Lexidy for our immigration and real estate needs. Our real estate lawyer, Juan Diego Muñoz, has been amazing to work with throughout the entire process. His diligent communication during the real estate purchase has not only kept us informed every step of the way, but helped us to understand the differences and intricacies of purchasing property in Spain. We can't say enough great things about Juan Diego and the team at Lexidy.
Drew Mendoza
Drew Mendoza
16:12 06 Jul 22
Amazing service from Alejandro initially and then Juan. We were intending to purchase a property in Barcelona and Juan conducted all of the checks to ensure the deal was legitimate - it turned out that it was not as straight forward a transaction as initially expected and Juan helped us to avoid a potential financial disaster. We are so grateful and have 100% confidence in Lexidy's professionalism . We will certainly be using them more in the future and highly recommend them!
Phil S
Phil S
20:13 22 May 22
We have just completed the purchase of a new build apartment in Catalunya. Lexidy were recommended to me by a colleague who'd relocated from the US to the Costa Brava. As non Spanish/Catalan speakers, it was a great relief to have people we could trust working on all aspects of the purchase - including arranging a bank account, NIE's and the wifi..! From the initial meeting over Zoom to the final transaction Carlota and Antonia provided first class service and communication. And by providing them with Power of Attorney it meant we could do most of the things we needed to do without leaving the UK.
Pit Rissiek
Pit Rissiek
09:37 19 May 22
Absolutely Professional and worth-it Experience!I can highly recommend working with Carlota Llopart and Lexidy! Carlota and the team have gone beyond my expectations when it comes to owning and actually even driving the steps for my mortgage, the purchase of my flat as well as taxes filed. I have had an extremely difficult seller, but I was able to fully trust the team to guide me through this first acquisition.I have already recommended Lexidy to friends who had similar positives experiences and will continue working with Carlota and the team. Side note, me being German: Great value for money too!
Aleksandar Vorinski
Aleksandar Vorinski
08:12 25 Apr 22
I recently purchased apartment, got NIE and opened bank account with their help. I m satisfied with their service, they are accurate and responsible.
Don Ellis
Don Ellis
15:16 08 Sep 21
Great full service firm that provided our family professional legal services surrounding our move to Spain. Included assistance with both Visa application and real estate purchase. Highly recommend
Gail Robinson
Gail Robinson
18:48 05 Aug 21
Lexidy guided us through the purchase of an apartment in Barcelona. It was quite complicated; we were in New York and because of the pandemic had to do everything remotely. This would have been impossible without the sound advice--in English!--and help of various lawyer at Lexidy, particularly Alejandro Cano. They even inspected the apartment because we couldn't see it in person and arranged for us to open a bank account. Since Lexidy is the only law firm i Barcelona we've worked with, I can;t compare them to others there but working with them was certainly easier than dealing with U.S. law firms. Highly recommended!
chris charensac
chris charensac
17:06 23 Apr 21
I used Lexidy service for the purchase of a property and for an issue with an ex-employer.They helped me during the whole process of the purchase of the property.The conflict with my ex-employer was also resolved successfully i.e: it went to court and we won and that (awful) company had to pay.I would recommend using Lexidy.
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