You've found your dream home on the Costa Tropical. The price is agreed and the seller takes the property off the market. Then comes the first question: “How much do I need to pay now?”
International buyers are often taken aback when money is requested early in the buying process. Understandable, because the Spanish system works differently from many other countries. What's more, terms like señal, arras and deposit are often used interchangeably, yet legally they mean very different things.
What is a señal?
Literally, señal means “signal”. It's an amount with which you, as a buyer, show you're serious and genuinely intend to buy. In Spain this is very common, also for custom work and large purchases, such as with a furniture maker or when buying a car.
So the señal isn't a payment for the right to make an offer. In practice, though, it's often paid at the same time as the offer.
Important to know: a señal on its own usually doesn't create extensive contractual obligations yet. Those only arise in the next phase.
What are arras?
Once the offer is accepted, a contrato de arras is usually signed: the Spanish equivalent of a preliminary purchase contract. The buyer usually pays 10% of the purchase price, minus any señal already paid.
Unlike in many other countries, this amount is usually not deposited with the notary or an independent third party. The Spanish notary oversees the transfer of ownership but doesn't normally hold deposits. The 10% therefore usually goes straight to the seller or their representative.
There are three types of arras
In Andalusia, almost all property transactions use arras penitenciales, as set out in article 1454 of the Spanish Civil Code. With this type, both parties may withdraw:
Precisely because the consequences are clear in advance, this arrangement gives both parties the most legal certainty. Advisers from other regions sometimes opt for a different type, such as arras confirmatorias. That often fits less well with practice in Andalusia, and the legal consequences can differ considerably.
Think of it as a bank guarantee, but different
Like a 10% bank guarantee, the arras gives the seller security. The difference lies in how it works: in Northern Europe a deposit is often guaranteed by the bank or held by the notary. In Spain the amount usually goes straight to the seller. That requires trust, but above all good legal guidance.
Never pay without clear agreements
Always agree in writing beforehand:
- who the amount is paid to
- under what conditions it's refunded
- which type of arras applies
- the deadline for completion
- what happens if either party withdraws
Because a señal is more than a signal. And arras are more than a down payment.
