Home purchase · Contracts
A deposit agreement may give you the right to withdraw… or leave you obliged to buy.
The consequence does not simply depend on the document being called a “deposit agreement.” It depends on the type of deposit agreed, the specific wording of the contract and the terms agreed by the buyer and seller.
Deposits are an amount paid by the buyer in connection with a sale and purchase. Under common civil law, confirmatory deposits essentially operate as an advance payment of the price; earnest-money deposits allow withdrawal if that right has been clearly agreed, with the buyer forfeiting them or the seller returning them double; and penalty deposit serve as a guarantee or penalty in the event of breach. The name of the document is not enough: you need to review what obligation each clause actually creates.
They are not mandatory
The sale can proceed to the public deed without first signing a deposit agreement.
The contract is binding
The fact that it is a private document does not mean it can be ignored after it has been signed.
There is no single percentage
Article 1454 of the Civil Code does not establish a mandatory deposit percentage of the price.
The wording determines the risk
Especially important where there is a mortgage, legal review, deadlines or outstanding conditions.
Item
What are deposit agreements really?
The General Council of Notaries describes deposits as an amount paid by the buyer to the seller as a token payment towards the price. The preliminary document is not mandatory, but once signed it may create contractual obligations.
That is why it is more accurate to speak of a deposit agreement within the transaction for the sale and purchase rather than thinking of a simple “reservation” without consequences. The Directorate-General for Legal Certainty and Public Faith has also stressed that interpretation depends on the contract as a whole and on the intention that the parties actually expressed.
- The buyer and seller must be identified.
- The property subject to the transaction must be clearly identified.
- The price and how the amount paid is credited must be stated.
- It must be determined what happens if either party does not proceed.
- Deadlines, conditions and the process for executing the public deed must be set out.
If you are still at an earlier stage, first consult the guide on what to check before paying a property reservation deposit in España .
Types of earnest money deposits
Confirmatory, withdrawal and penalty deposits do not mean the same thing
The most important difference is determining whether the amount simply confirms a sale and purchase, grants a genuine right of withdrawal, or operates as security against breach.
| Type | Main function | Does it allow either party to withdraw freely? | Main consequence | Risk of confusion |
|---|---|---|---|---|
|
Confirmatory deposits Advance payment of the price |
They confirm the sale and purchase, and the amount paid is credited against the price. | No. They do not, by themselves, grant a unilateral right to withdraw from the agreement. | In the event of breach, contractual remedies may apply, including seeking performance or termination under the applicable legal terms. | Believing that simply forfeiting the deposit releases you from the purchase. |
|
Withdrawal deposits Right of withdrawal |
They allow the parties to withdraw from the transaction subject to the consequences previously established. | Yes, where this nature has been clearly agreed. | Under the framework of Article 1454 of the Civil Code, the buyer forfeits the deposit, while the seller must return double the amount if they are the party withdrawing. | Using an ambiguous clause and assuming that Article 1454 will apply automatically. |
|
Penalty deposits Security / penalty |
They reinforce performance and establish financial consequences in the event of breach. | Not by themselves. A penalty does not automatically amount to a right of withdrawal. | The effect depends on the agreed clause and the rules governing obligations with penalty clauses. | Confusing a penalty for breach with a contractual option to withdraw. |
A ruling by the Directorate-General for Legal Certainty and Public Trust of 2023 examined a document informally referred to as a “deposit contract” and considered the full content of the agreement to determine its true effect. The clauses must be consistent with one another.
Article 1454 of the Civil Code
Penitential deposits are those that allow the parties to withdraw from the transaction
Article 1454 provides for the possibility that the buyer may withdraw by forfeiting the deposit, or that the seller may do so by returning double the amount.
However, the case law cited by the Directorate-General for Legal Certainty and Public Trust emphasises the exceptional nature of this right and requires that the intention to establish a withdrawal deposit be sufficiently clear.
The document should state consistently that the parties wish to grant themselves a right of withdrawal and define its consequences precisely.
The buyer withdraws
Under properly agreed penitential deposits, the buyer forfeits the amount paid.
The seller withdraws
Under the framework of Article 1454, the seller must return double the deposit to the buyer.
The purchase proceeds
The amount paid is normally credited towards the price, as agreed.
Breach of contract
Forfeiting an amount and having the right to withdraw are two different things
This distinction explains why a buyer should not abandon a transaction simply by assuming that their liability ends with the deposit paid.
Confirmatory
They do not turn the contract into an option. Under general civil law, the article 1124 allows the aggrieved party, where applicable, to choose between seeking performance or termination, in addition to the compensation effects provided by law.
Penalty
The penalty may operate as an advance assessment of damages. Articles 1152 and following govern obligations with a penalty clause, but the specific scope depends on what has been agreed.
Withdrawal
In this case, there is a right to withdraw where it has been structured unequivocally in this way.
A breach involves failing to perform an obligation that has been undertaken. Withdrawal under a withdrawal deposit arrangement is a right that the agreement itself allows to be exercised, subject to a specific financial consequence. Legally, they are not interchangeable concepts.
How it works in practice
How the deposit contract should fit into a purchase
The buyer, seller, property, price and essential terms must be clearly specified.
Before taking on a significant financial obligation, it is advisable to verify the legal and documentary status of the property.
The contract must explain whether the deposit is confirmatory, withdrawal-based or penal, and exactly what that choice means.
Financing, outstanding documentation, legal issues and other relevant conditions must be expressly addressed if they affect the purchase.
It must be clear when the deed will be signed before a notary and how any issue, formal notice or exercise of a contractual right is to be communicated.
If the conditions are met and both parties proceed, the transaction moves towards the public deed and payment of the remaining balance.
See the full process in how to buy a home in España step by step .
Checklist before signing
The amount paid matters, but the clauses matter even more
The contract should be read with specific scenarios in mind: “what happens if…?” rather than only assuming everything goes as planned.
- Full identification of the buyer and seller.
- Authority or legal representation of anyone signing on another person's behalf.
- Unambiguous identification of the property.
- Total purchase price.
- Amount paid and method of payment.
- Statement as to whether the amount is deducted from the final price.
- Exact type of deposit agreement and the effects of each scenario.
- Deadline for the public deed.
- Outstanding documentation or checks.
- Financing condition where necessary and intended to be contractually protected.
- Consequences of breach by the buyer and seller.
- Procedure for notifying withdrawal, breach or any issues.
Financing
If you need a mortgage, do not assume what will happen if the bank says no
A buyer who depends on financing must expressly review what the contract says about obtaining the mortgage. The consequences should not be left to a later interpretation once a substantial amount has already been paid.
Is there a financing condition?
The document must state whether the purchase is in any way conditional on obtaining financing.
What evidence is required?
If there is a condition, it must be clear which documentation proves the outcome of the application.
What happens to the money?
The contract must specify whether a refund, forfeiture or any other consequence applies if the condition is not met.
For international buyers, also see the guide to mortgages in España for foreign buyers and non-residents .
Simple example
How properly agreed withdrawal deposit arrangements work
Imagine a property priced at 300.000 € and a contract that expressly establishes 15.000 € as withdrawal deposits subject to Article 1454 of the Civil Code.
The 15.000 € do not represent a mandatory percentage or a general recommendation. They are used solely to illustrate how the arrangement works mathematically.
The purchase is completed
The 15.000 € are credited against the purchase price in accordance with the contract, leaving 285.000 € of the price still payable.
The buyer withdraws
They forfeit the 15.000 € paid as withdrawal deposits.
The seller withdraws
They must return 30.000 € under the agreed double-refund mechanism.
Common risks
Seven mistakes that can turn a deposit into a contractual problem
Assuming they are all withdrawal deposits
This is the most important mistake: not every payment gives the right to withdraw.
Relying solely on the title
A PDF labelled “deposit contract” does not resolve contradictory wording.
Failing to provide for financing
Particularly risky when the purchase depends on a mortgage that has not yet been approved.
Signing before reviewing
The obligation may arise before important legal aspects of the property have been checked.
Ambiguous deadlines
An imprecise date for signing the deed, documentation or payment can lead to avoidable disputes.
Failing to provide for the seller
The contract must also address what happens when the issue arises from the seller.
Confusing a reservation with arras
They are stages and documents that may serve different purposes. Once again, the content is what matters.
Special jurisdiction
Cataluña has its own civil-law rules on arras
Therefore, a guide on “arras in España” should not automatically apply Article 1454 of the general Civil Code to every transaction.
The Article 621-8 of the Civil Code of Cataluña expressly establishes that the amount paid by the buyer is deemed to be confirmatory arras and that withdrawal arras must be expressly agreed.
- If the buyer withdraws under withdrawal arras, they forfeit them, subject to the legal exception provided for certain financing scenarios.
- If the seller withdraws, they must return double the amount.
- In property sales, certain withdrawal arras deposited with a notary for a maximum period of six months may be recorded in the Land Registry in accordance with the applicable rules.
- Article 621-49 contains a specific rule where the contract provides for financing by a credit institution and its requirements are met.
In territories with their own civil law, specific rules may apply. The applicable civil law must be verified for the specific transaction.
Reservation vs. arras
Do not decide based on the document's name: check what obligation it creates
In real-estate practice, documents may be referred to as a reservation, deposit, offer, arras or private contract. The commercial label does not replace an analysis of the contractual content.
Reservation
It is usually used at an early stage to temporarily take a property off the market or set preliminary terms, but its effects depend on the document.
Earnest money deposit
They are linked to the property sale and purchase and must be classified according to the legal function they actually serve.
Key points
The amount, refund, withdrawal, breach, deadlines and conditions must be clearly set out in writing.
Learn more about the previous stage in Reserving a property in España: what to check before paying .
Related guides
Continue the purchase process without duplicating the same intent
Professional support
The contract should be tailored to the transaction, not the transaction to a generic template
The property's location, the type of buyer, financing and documentation still pending, as well as the negotiated terms, may affect which clauses are relevant. RealtorList helps you find professionals by area, language and services.
Official sources
Legal basis used for this guide
The legal consequences stated are based on legislation and institutional sources. The terms of a specific contract must be interpreted individually.
The above sources were revisadaed for publication of this guide. Any transaction subject to special civil law or containing specific contractual clauses must be analysed in accordance with its own jurisdiction and documentation.
Frequently asked questions
Earnest money deposit agreement in España
No. The General Council of Notaries states that this preliminary document is not mandatory. However, if a valid contract is signed, the obligations undertaken may be enforceable.
Article 1454 of the Civil Code does not set a mandatory percentage. The amount depends on what the parties agree. The greater the amount committed, the greater the financial consequence of any loss or refund provided for in the contract may be.
No. That logic applies to withdrawal deposits when the right to withdraw has been properly agreed. Confirmatory and penalty deposits serve a different purpose and may entail other contractual consequences.
This should not be generalised. Double repayment is characteristic of earnest money deposits allowing withdrawal under Article 1454, and may also appear in certain penalty clauses, but the applicable remedy depends on the type of deposit and the contractual wording.
It should not be assumed that a bank rejection automatically cancels any earnest money deposit contract. If the purchase depends on financing, this situation should be reviewed and, where appropriate, expressly regulated. Cataluña also contains a specific civil rule in Article 621-49 for contracts that provide for third-party financing and meet its requirements.
Confirmatory deposits serve as an advance payment on the price and confirm the transaction; they do not in themselves grant a unilateral right of withdrawal. Withdrawal deposits do allow withdrawal where that right has been clearly agreed, with forfeiture by the buyer or double repayment by the seller under the framework of Article 1454.
They are deposits used as security for performance and as a financial mechanism in the event of breach. They do not automatically grant a right of withdrawal. The specific effect must be determined based on the contract and the rules applicable to the penalty clause.
It can be. The fact that there is not yet a public deed does not automatically make the document a statement without legal effect. The Notaries' Association warns that, once a valid contract has been signed, the parties are bound by its terms.
Not necessarily. A reservation may be used as a preliminary agreement, whereas earnest money deposits are linked to the sale and purchase contract and may serve confirmatory, withdrawal or penalty functions. In both cases, the actual content must be analysed, not just the name of the document.
Yes. The contract may bind the buyer before reaching the notary's office. It should therefore be coordinated with the documentary and legal review of the transaction, with any relevant outstanding conditions expressly provided for.
Resources from RealtorList
Buy a property with the full process in context
Actualidad inmobiliaria
Últimas publicaciones
Información práctica para agentes, agencias, compradores, vendedores e inversores del mercado inmobiliario español.
Capital gain on selling a property in España
Fiscalidad del vendedor · Ganancia patrimonial El impuesto no se calcula simplemente restando el precio de compra al precio de venta. Para determinar la gananci…
Leer más
How to calculate the return on a rental property
Inversión inmobiliaria · España Una buena inversión no empieza por la rentabilidad anunciada: empieza por entender todos los números y todos los riesgos. Compra…
Leer más
Scams and warning signs when buying a home in España
Seguridad inmobiliaria · España Una señal de alerta no demuestra una estafa, pero sí puede justificar detener el pago hasta verificar. Antes de entregar una res…
Leer más
Long-term or holiday rental: how to compare them
Inversión · Alquiler · Estrategia Larga temporada o alquiler turístico: compara primero la viabilidad y después la rentabilidad El alquiler turístico puede gene…
Leer más
Buying a property to invest in España
Inversión inmobiliaria · España Una buena inversión no empieza por la rentabilidad anunciada: empieza por entender todos los números y todos los riesgos. Compra…
Leer más
Buying a second home in España
Segunda residencia · España Una buena segunda vivienda debe funcionar también cuando no estás allí. Comprar una segunda residencia en España implica mucho más q…
Leer más
Tourist rental of residential properties in España
Inversión y alquiler · marco nacional Comprar para alquiler turístico no empieza con la rentabilidad. Empieza confirmando que el uso es viable. En España no exi…
Leer más
Where to buy a home in España: how to choose the right area
Elegir ubicación antes de elegir inmueble La zona adecuada no es la más famosa: es la que encaja con tu uso, presupuesto y forma de vida. España reúne mercados…
Leer más
Documentos necesarios para vender una vivienda en España
Checklist documental del vendedor Preparar los documentos antes de encontrar comprador puede evitar retrasos cuando llega el momento de firmar. Para vender una…
Leer más
Withholding of 3% when selling a property as a non-resident
Vendedor no residente · IRNR El 3% que se retiene en la venta no es necesariamente tu impuesto final. Cuando un contribuyente no residente sin establecimiento p…
Leer más