Reservation deposit (senal de reserva) before the arras contract

Key rules

• Written terms: Never pay a reservation deposit without a signed document that sets out the terms.
• Refund: Whether you get the money back depends on what the document says about withdrawal by each side.
• Off the market: The seller must stop marketing the property only if the document says so.

What a reservation deposit does

A reservation deposit (señal de reserva) is a small sum you pay to take a property off the market for a short time. During that time you and the seller prepare the arras or sale contract. It buys you a pause, not ownership.

No law defines it. It is a private agreement, so what it means depends entirely on what is written. Insist on written terms before you pay anything.

How long it lasts

The period is set in the document. Typical periods are 7 to 15 days, sometimes up to 30 days. The document must state the deadline to sign the arras or sale contract.

Will the seller really stop selling?

Only if the document says so. A seller is obliged to take the property off the market only when the paper contains that promise. Ask for a clause saying the seller will not market or sell the property during the period. If the seller sells to someone else anyway, you can demand your money back and damages.

Can you get it back?

It depends on the wording:

• Payment on account. If the sale fails because the seller pulls out, or through no fault of yours, you can normally reclaim the money.
• Arras effect. If the document expressly gives the sum arras effect, you lose it if you withdraw. If the seller withdraws, they return double.
• No clear clause. If you withdraw and nothing says you lose the money, courts often order a refund, because losing it must be clearly agreed. Without a clear agreed consequence for withdrawal, it is not that kind of arras.

If you are a consumer and an agent holds the money, an unjustified forfeiture clause can be challenged as abusive. Do not count on that. Fix the terms before you pay.

What the document should contain

It should name both parties, identify the property (address and land registry data), and state the price. It should also give the amount, who holds the deposit, and the signing deadline. Then it should say what happens if each side withdraws, whether the deposit is credited to the price, any conditions such as mortgage approval, and the seller's promise not to market or sell.

The documents list, checklist and warnings below go through these points in detail.

Timeline and deadlines

• Agree the reservation document in writing, including the deadline to sign the arras or sale contract: before you pay the deposit

• Pay the deposit and have the seller hold the property off the market: for the agreed period, typically 7 to 15 days

• Sign the arras or sale contract: by the written deadline, which can be up to 30 days in some cases

Documents you need

• A written reservation document signed by you and the seller. It names both parties, describes the property (address and land registry details), states the price, the amount paid and who holds the deposit, and gives the deadline to sign the arras or sale contract.

• The withdrawal terms inside that document: what happens if you pull out, what happens if the seller pulls out, and whether the deposit counts toward the price. Refunds depend on what is written here.

• A written promise that the seller will not market or sell the property during the reservation period. The seller only has to take the property off the market if the document says so.

• Any conditions you need, such as mortgage approval, written into the document.

Checklist

• Get the reservation terms in writing before you pay anything.

• Check whether the document treats the sum as a payment on account or gives it arras effect.

• Confirm the document says what happens if you withdraw and what happens if the seller withdraws.

• Check the deadline to sign the arras or sale contract and the amount, and who holds the deposit.

• Ask whether the deposit is credited to the price.

What to watch out for

• A reservation can turn into lost money: If the document gives the deposit arras effect, you lose it when you withdraw, and the seller returns double if they withdraw. A plain payment on account does not work this way. Read how the document describes the sum, and ask for it to be a payment on account if you want it refundable.

• Keeping the deposit without a clear clause: Courts often order a refund when you withdraw and nothing clearly says you lose the deposit. As a consumer, you can also challenge an unjustified forfeiture clause as abusive when an agent holds the money. Do not rely on this: get the refund terms written down before you pay.

• The seller may keep selling: The seller only has to take the property off the market if the document says so. If they sell to someone else, you can demand your money back and damages. Make sure the document includes a clause that the seller will not market or sell the property during the period.

Quick answers about reservation deposits and arras

Who holds the reservation money?

The reservation money is most often held by the estate agent, or paid directly to the seller. Arras money is usually paid straight to the seller by bank transfer. A notary or a lawyer's client account can be used if you all agree, and it is the safer choice.

Can I pay the deposit in cash?

Cash is allowed only up to a limit, and the limit is lower if an agent or other professional is involved. The cash limits are set out in the reservation deposit article on this page. Paying by traceable bank transfer, with a receipt stating what the money is for, avoids the problem and protects you.

Can the seller accept a higher offer after I paid a reservation?

It depends on whether the seller promised not to sell to anyone else, and that promise is the key point. If the reservation or arras contains that promise, accepting a higher offer is a breach. With a simple reservation that has no such promise, the seller may only have to return your deposit.

What can I demand if the seller breaks an exclusivity promise?

You can usually demand the sale or end the deal, get your deposit back and claim damages. This applies to confirmatory arras or a reservation with no right to withdraw. With penitential arras, the seller can walk away by returning double the arras, and the sale to the other buyer then stands.