Recently, some friends of mine have been house hunting, and the topic of deposits came up. It seems many people have a misconception that once you’ve paid a deposit, you can’t get it back. That’s not always true; it all depends on the type of contract you sign. Today, let’s break down the ins and outs of getting a property deposit refund in Spain.
First, Let’s Distinguish Between Two Types of “Deposits”: Reserva and Arras
In Spain, what we generally call a ‘deposit’ actually comes in two main forms, with completely different legal effects and refund conditions. Confusing them can be a costly mistake. One is the Contrato de Reserva, which can be understood as a ‘reservation agreement,’ and the other is the Contrato de Arras, which is what we would consider a traditional ‘deposit agreement’ and is much more binding.
| Type | English Meaning | Main Purpose | Refund Difficulty |
|---|
| Reserva | Reservation / Holding Deposit | To take the property off the market temporarily | Relatively Easy |
| Arras | Down Payment / Earnest Money Deposit | To formally establish the purchase agreement and terms | Difficult |
Generally, the amount for a Reserva is not high, usually just a few thousand euros. Its main purpose is to show your serious intent to buy, prompting the owner or agent to hold the property for you for a certain period, during which they cannot show it to or sell it to anyone else. The contract usually specifies that if the transaction cannot proceed within the stipulated time for certain specific reasons, this property deposit in Spain is refundable. However! This is only true if these conditions are explicitly written in the contract! Verbal agreements are generally worthless.
The Arras contract, on the other hand, is much more serious. Once signed, it means the buyer and seller have a formal agreement. This money serves as a guarantee for the fulfillment of the contract and is typically 10% of the property price. Getting a refund at this stage is difficult. According to the Spanish Civil Code, if the buyer unilaterally breaches the Arras agreement and decides not to buy, they will lose the Arras deposit, which the seller keeps. Conversely, if the seller defaults and decides not to sell, they must return double the amount of the deposit to you! This is fair to both parties.
So, before you sign anything and hand over your money, be sure to carefully check whether the contract is for a Reserva or an Arras. Read every clause meticulously, especially the sections concerning breach of contract and refunds. If your Spanish isn’t strong, it is highly recommended to hire an experienced lawyer to review it for you. Spending a little money now can save you a lot later, which is far better than arguing over thousands or even tens of thousands of euros in a deposit dispute. Have any of you encountered a similar situation? Feel free to share your experiences in the comments below!
