Deposit, deposit and purchase contract in Dénia: real differences

When you finally find “your” flat or villa in Dénia, the moment of truth arrives: you have to reserve the property and the estate agency or the owner start talking about deposit, arras contract, private contract…

And it is completely normal to have questions: what exactly am I signing? What happens if I end up not buying? And what if the seller backs out?

This article explains, calmly and in plain language, what an arras contract is, how it differs from the deposit and from the purchase contract, and how it is used in practice in Dénia. That way you will know exactly what you are signing before taking that step.

Before signing: what exactly is an arras contract when buying in Dénia?

An arras contract is a private agreement between buyer and seller in which both parties commit to completing the purchase of the property under specific conditions (price, deadline, etc.), and the buyer pays an amount of money as a deposit or advance.

That amount:

Reserves the property (the seller undertakes not to sell it to someone else).
Is deducted from the final price on the day of signing at the notary’s office.
Carries consequences if either party breaches the agreement (depending on the type of arras agreed).

Deposit, arras and private contract: they are not all the same

In everyday language “deposit” is used for almost everything, but legally it is important to distinguish exactly what is being signed in each case.

Deposit / “informal” reservation

Sometimes people talk about a “deposit” when in reality it is just a simple receipt or very basic document stating that X amount of money is paid to reserve the property. If it does not specify what type of arras it is, nor clearly define the rest of the conditions, it can easily lead to disputes.

Arras contract

This is a full private contract which sets out: data of the parties, description of the property, total price, amount paid, deadline for signing, type of arras, consequences if someone does not fulfil their obligations, etc.

Private purchase contract

Sometimes, instead of arras, a private purchase contract is signed directly, with part of the price already paid. In that case it is usually a deferred payment of the price, not arras: one party cannot simply pull out, and the rules are different.

That is why it is so important that the document clearly states whether the money is paid as arras and what type they are.

When is the arras contract signed when buying a property in Dénia?

In Dénia, the most common scenario is that the arras contract is signed when:

You have already visited the property and decided that you want to buy it.
A purchase price has been agreed with the seller.
Some time is still needed before going to the notary: for example, you are arranging a mortgage or the seller needs time to organise their move.

The arras contract “locks in” the deal while the paperwork, financing and the signing of the public purchase deed are prepared.

Types of arras contracts and what happens if one party backs out

In Spain, the Supreme Court recognises three types of arras, depending on the purpose of the agreement: confirmatory, penal and penitential.

This is not just theory: each type has very different consequences if someone fails to comply.

Confirmatory arras

Confirmatory arras are basically an advance on the price. They reinforce the commitment to complete the purchase, but they do not allow the parties to terminate the contract simply by “losing” the arras.

If one party breaches the agreement, the other may:

Demand that the contract be fulfilled (buy/sell).
Or request termination of the contract with compensation for damages.

In practice, they are not the most common option in private residential purchases, because they offer less “way out” if something important changes.

Penal arras

Penal arras include a kind of “penalty” or fine in case of breach, in addition to the right to demand performance of the contract.

If the buyer breaches: they may lose the arras, in whole or in part.
If the seller breaches: they must return the arras and pay an additional amount.

Penitential arras: the most common in residential purchases in Dénia

Penitential arras are the most frequent type in property purchases between private individuals.

They allow that, if one of the parties backs out, the other is protected in a simple way:

If the buyer withdraws: they lose the amount paid as arras.
If the seller withdraws: they return double the arras to the buyer.

However, to be truly penitential, the contract must state this very clearly. If nothing is specified, they are usually considered confirmatory by default.

How arras are used in practice in Dénia and the Marina Alta

The legal framework for arras is national, but practice varies slightly depending on the area and the market. In Dénia and the surrounding area (Marina Alta), use is very similar to the rest of the Costa Blanca, with nuances depending on the buyer profile (many foreign buyers, financed transactions, second homes, etc.).

Typical time frames between arras and signing the deed in Dénia

The law does not set a minimum or maximum period for going to the notary after signing the arras contract: this is freely agreed between buyer and seller.

In Spain in general, many professionals work with typical time frames of 30 to 90 days between the arras and the signing of the deed, with around 90 days being very common to allow time for financing, procedures and moving.

In Dénia you often see, for example:

30–45 days: when the purchase is paid in cash or the financing is already well advanced and the property is ready to be handed over.
60–90 days: for purchases with a mortgage, or when the seller needs time to move out, cancel charges, etc.

The key is that the time frame agreed in the arras contract is realistic for both parties and, if there is a mortgage involved, that it clearly states what happens if financing is delayed or not granted.

How much is usually paid as a deposit when buying a home in Dénia?

There is no legally fixed percentage for arras. In Spain, the general practice is that the amount paid under the arras contract is around 10% of the property price, although there is a wider range, usually between 5% and 15% depending on the transaction.

In the Dénia area you very often see agreements such as:

10% of the purchase price, especially when the time until the notary appointment is 1–3 months.
Around 5% for fast transactions (for example, signing in less than a month).
Adjusted percentages when the price is very high or the time frames are longer.

The important thing is that it is a meaningful amount (showing a real commitment), but that it fits your financial situation and the time left until the deed is signed.

Arras contract vs purchase contract: what each one includes

Although they are sometimes confused, the arras contract and the public purchase deed are different but complementary documents.

Minimum information an arras contract in Dénia should include

Generally speaking, a good arras contract should include at least:

Full details of buyer(s) and seller(s) (name, DNI/NIE, marital status, etc.).
Identifying description of the property (address in Dénia, cadastral reference, land registry details, annexes such as parking space or storage room, etc.).
Total purchase price and method of payment (cash, part financed, etc.).
Amount paid at that moment as arras and how it will be deducted from the final price.
Maximum time limit for elevating the contract to a public deed before a notary in Dénia or wherever is agreed.
Type of arras (confirmatory, penal or penitential) and consequences in case of breach.
Basic allocation of transaction costs (notary, land registry, municipal capital gains tax, transfer tax/VAT… although this is sometimes detailed later).
Special conditions: for example, that the transaction is subject to the granting of a mortgage, to the prior sale of another property, to the cancellation of a charge, etc.
Signatures of all those who must be party to the contract (pay attention to married couples and co-owners).

The clearer and more detailed the arras contract is, the fewer unpleasant surprises there will be later.

What is then completed in the public purchase deed

On the day of signing at the notary, the purchase contract is signed in public form, which develops and completes what was agreed in the arras:

The land registry situation is checked and it is confirmed that there are no unexpected charges.
The final price is updated and the method of payment is evidenced.
The obligatory certificates are attached (energy certificate, property tax, community, occupancy/other certificates as applicable).
The change of ownership is registered in the Land Registry.

Think of the arras contract as the “pre-agreement” that reserves the property and sets the rules of the game until the day you go to the notary.

Common mistakes when signing arras when buying a home in Dénia (and how to avoid them)

Using generic templates without adapting them to the real case

The internet is full of “arras contract templates”. The risk is that they:

Do not match the type of arras you actually need.
Do not cover typical situations (mortgage, charges, realistic time frames, etc.).
Contradict what you have really agreed verbally.

Tip: use templates only as a reference and ask the agency or your advisor to adapt the contract to your specific situation. For transactions involving large amounts of money, it is highly advisable to have a legal professional review the contract before you sign.

Not linking the arras contract to the granting of a mortgage

This is one of the most sensitive points:

If you are buying with financing, it is essential that the arras contract clearly sets out what happens if the bank ultimately does not grant the mortgage or grants it for a lower amount.

There are several ways to do this, for example:

Making the transaction conditional on the granting of a mortgage for at least X € before a certain date.
Specifying what happens to the arras if, after providing the required documentation, the bank refuses the loan.

If nothing is stated and you have signed penitential arras, it may happen that, even if you do not obtain the mortgage, you still lose the deposit, because it is understood that you committed to buy in any case.

Unrealistic or poorly defined time frames

Another common mistake is accepting “nice” but unrealistic deadlines, for example 30 days for everything when:

The buyer has not yet seriously started the mortgage process.
The seller needs time to move out or regularise documentation.

If a very short deadline is set and it is not met, technically there is a breach of contract, and the consequences of the chosen type of arras then come into play.

Practical recommendation:

Assess realistically how much time each party needs.
Include the option to extend the deadline in writing if both parties agree.
If you depend on the bank, make it clear from the very beginning.

How we help you with the arras contract and the purchase in Dénia at Emiris Homes

Buying a home in Dénia is a major decision, and the arras contract is one of the key moments. Our role as a local real estate agency in Dénia is to ensure that you experience it with peace of mind and the right support, not with the fear of “getting it wrong”.

When you buy with us:

We draft or review the arras contract taking into account your situation (if you are buying with a mortgage, if you are coming from abroad, if you need to sell first, etc.).
We explain to you, step by step and in clear language, what each clause means and what each type of arras implies.
We coordinate with the seller’s side to ensure the document is balanced and reflects what you really want to do.

Our goal is that, when you sign, you know exactly what you are signing and what can happen in each scenario.

And we do not leave you alone after signing the arras:

We follow up on the valuation, mortgage process and documentation.
We speak with the notary, the bank and the seller so that everything fits within the agreed time frame.
We accompany you through to the signing of the deed, checking that everything is in order.

One last important note

Everything explained here is general information about arras contracts and the purchase of residential property in Dénia. The regulations may change and each case has its own nuances (personal situation, marital property regime, type of property, deadlines, taxes, etc.). It is always advisable to discuss your specific situation with your advisor, notary or trusted lawyer.

If you are about to reserve a property in Dénia and would like us to guide you through the whole process, we can go through everything together in person at our office: Emiris Homes – Calle Carlos Sentí 37, Dénia.