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The process of buying or selling a real estate property involves the signing of different documents and contracts with the aim of securing the interests of both parties.

One of them, one of the most important in this process, is that which is signed between both parties to guarantee the reservation of the property by the buyer. This is what we call the “earnest money contract” and usually includes the payment of a deposit as a guarantee of signature that obliges both parties to comply with the stipulations of the contract.

There are different types of earnest money contracts with different implications.

We explain them below.

What is the “contrato de arras”?

The earnest money contract is considered a fundamental part of the process of buying and selling a property. In this contract signed by the two interested parties, the different conditions and guarantees necessary to ensure that the parties comply with the stipulations included in the contract must be established.

For this purpose, there are different types of contracts that offer alternatives that are adapted to the needs of both the buyer and the seller.

This is also done so that neither party can freely withdraw from the sale and purchase already agreed with the other party, so that the conditions of sale of the property are set down in writing.

What are the types of “contrato de arras” (earnest money contract, from now on) that we can find?

There are different types of earnest money contracts. Depending on the type of contract we can find different clauses or conditions.

  • Penitential earnest money contract:

The penitential deposit refers to an amount of money that the buyer gives to the seller as a sign or deposit of commitment towards the acquisition of a property.

If the buyer withdraws or abandons the transaction without valid justification, he will lose the deposit. On the other hand, in the event that it is the seller who breaches the agreement, he will return double the amount received.

  • Confirmatory deposit contract:

In this case, the parties agree that the amount paid as earnest money will be part of the total price of the transaction. Therefore, in this case, the deposit is of a confirmatory nature and is not recoverable in the event that either of the two parties fails to comply with the stipulations.  Usually, when this type of contract is chosen, the transaction is close to completion and the agreement is sought to be signed definitively.

  • Penal deposit contract:

In this case, the earnest money has a punitive function. If one of the parties fails to fulfil the contract, it must pay a certain sum as a penalty. If both parties fulfil their obligations, the earnest money will be returned without any deductions.

What should a deposit contract include?

As we have explained, this is a formal and legal contract that stipulates many of the conditions of sale of a property between both parties.

Therefore, all the necessary information must be explicitly included in the agreement.

A deposit contract, therefore, must contain:

  • Identification of the parties: full names, addresses and contact details of both buyer and seller.


  • Description of the asset or property: In-depth details of the property being reserved or purchased. This may include the address, cadastral identification number or other relevant data.


  • Price and payment terms: You should specify the amount agreed as a deposit, as well as the conditions and deadlines for making the remaining payments.


  • Burdens: if there are any burdens affecting the property, it must be indicated who assumes them and the way in which they will be cancelled.


  • Deadline and terms of delivery: The deadline by which the final purchase contract is expected to be formalised and the conditions that must be fulfilled for this, such as obtaining financing or the approval of certain conditions, must be established.


  • Conditions for the return of the deposit: The circumstances under which the deposit will be returned, as well as the consequences in the event of non-compliance by either party, must be stipulated.


  • Costs and taxes: You can specify who will be responsible for the costs and taxes associated with the transaction, such as fees.


Due to the complexity of many of these operations and administrative procedures, we consider it very important to have the advice of a professional to help you both in the preparation of the signing of the contract and to explain any clause included in the contract that may cause you doubts or confusion.

At MAM Solicitors we have over 30 years experience in helping our clients.

Do not hesitate to contact us and we will help you with anything you need.

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