What happens if you or the seller pull out

Key rules

• Default type: If the contract does not say otherwise, arras are treated as penitential, which allows withdrawal.
• Confirmatory arras: They give no right to withdraw; breaking the contract exposes you to completion or termination plus damages.
• Penal arras: The other side normally claims the penalty or completion, not both, unless the contract says so.
• Point of no return: Paying the price or signing the deed ends the right to withdraw.

The cost depends on the type of arras

What you pay for backing out depends on which kind of arras (deposit) your contract uses and how it is worded. Read the clause before you decide anything. There are three kinds: penitential, penal and confirmatory. If the contract does not say otherwise, arras are treated as penitential.

Penitential arras: pay to walk away

This is the usual kind. It works as a paid exit.

• If you are the buyer and withdraw, you lose the arras you gave. The seller cannot claim more damages on top.
• If you are the seller and withdraw, you return double the arras.

Withdrawal must follow the contract and happen before performance begins.

Deadlines for withdrawing

The law sets no fixed deadline, so the right stays open in principle. The contract may set its own term, and courts uphold it. Check it for a date.

The right ends once performance has begun, for example when the price is paid or the deed is signed. It can also end if you clearly act as though you will complete. To withdraw, tell the other side clearly and offer the arras, or deposit them with the court (consign them). The seller offers the doubled amount.

Penal arras: a penalty for breach

Penal arras are a penalty agreed for breaking the contract. The other side can claim the penalty or demand that the sale goes ahead. Normally they cannot claim both, unless the contract says so. Whether damages can be added depends on the wording. A court may reduce a penalty that is excessive. The penalty can therefore cost more than the deposit itself.

Confirmatory arras: no way out

Confirmatory arras are part of the price and proof that the contract exists. They give no right to withdraw. If either side breaks the contract, the other can demand completion or end the contract, and in both cases can claim damages and interest. If the contract ends, the arras are returned and damages are assessed separately.

The other side can still demand completion

With any type, a party who wants the sale to go ahead can ask a court to enforce it. With penitential arras, this fails if the other side has already withdrawn validly. So withdrawing is safe only if you do it correctly and in time.

Because the wording decides so much, have a lawyer read the arras clause before you sign, and again before you withdraw. The decision, timeline, warnings and FAQ below set out the options and risks.

Choosing between options

What are your options if you or the seller want out of the deal?

• Withdraw and give up the arras: Your arras are penitential, which is the default if the contract does not say. As a buyer you lose the arras and nothing more.

• Demand that the sale is completed: The other side has not validly withdrawn and you still want the property or the price. This is open to either side, and you can also claim damages and interest.

• End the contract and claim damages: Your arras are confirmatory and the other side has breached.

• Claim the penalty or the completion, not both: Your contract states penal arras. The arras act as a penalty that replaces damages, unless the wording says otherwise.

Your arras type and its exact wording decide the cost: loss of the deposit or its double return with penitential arras, no way out with confirmatory arras, and a penalty or completion with penal arras. Withdrawal is only possible before performance begins and within any term in the contract.

Timeline and deadlines

• Read your contract for an agreed withdrawal term and note any date in it: before you sign

• Decide whether to withdraw; the law sets no fixed deadline, so the right stays open: any time until the contract is performed

• Tell the other side clearly that you are withdrawing and offer or consign the arras (the seller offers the doubled amount): as soon as you decide

• Expect the right to withdraw to end once performance has begun, you pay the price or the deed is signed: from the moment either side starts to complete

• If the other side wants the sale to go ahead, expect a demand to complete or a claim for damages: if you have not withdrawn validly

What to watch out for

• Confirmatory arras give you no way out: If your arras are confirmatory, you cannot walk away by giving up the deposit. The other side can force completion or end the contract, and claim damages and interest either way. Check which type of arras your contract states before you sign, and ask for penitential wording if you want a way out.

• Walking away does not always stop a forced sale: Under penitential arras, the other side can still ask a court to enforce the sale if you have not withdrawn validly. Your withdrawal must be clear and the arras offered or consigned. Put your withdrawal in writing, offer the arras at the same time and keep proof of both.

• Penal arras can cost more than the deposit: With penal arras, the arras act as a penalty for breach. Whether damages can be added on top depends on the wording, so a badly worded clause can leave you paying more than you expected. Ask for the clause to say that the penalty replaces damages, and that the other side cannot claim both the penalty and completion.

• Acting as if you will complete can end your right to withdraw: Paying the price, starting performance or signing the deed ends the right to pull out. A clear sign that you mean to complete can have the same effect. Do not pay any part of the price or sign anything until you are sure you want to go ahead.

Frequently asked questions

Is there a deadline to pull out of penitential arras?

No, the law sets no fixed deadline, so you can withdraw until the sale is performed, unless your contract sets its own term. If it does, that term applies. Once performance has begun or the deed is signed, the right to withdraw is gone.

Can the other side force me to complete the sale instead of letting me walk away?

Yes, either side can ask a court to enforce the sale, unless the other side has already withdrawn validly. The innocent party chooses between forcing completion and ending the contract, and can claim damages and interest in both cases.

Can the seller keep my penal arras and also claim damages?

Normally no, because with penal arras the penalty takes the place of damages unless the contract says otherwise. The innocent party can claim the arras or the completion of the sale, but not both unless the wording allows it.

Do I get my money back if a sale with confirmatory arras is terminated?

Yes, if the contract is terminated the arras are returned to you. Damages are then worked out separately. If the sale goes ahead, the arras count as part of the price.