Arras and mortgages in Catalonia: protect the property deposit

If you buy with a mortgage in Catalonia, you can recover the arras when the lender refuses the finance, but only if the need for finance is stated in the contract, you act within the deadline and you can document the refusal. A verbal simulation, an ambiguous clause or an application submitted late can leave you without that way out.

The deposit is often thousands or tens of thousands of euros. Reviewing the finance before signing costs far less than arguing afterwards about who keeps that money.

Arras are a contract, not just a reservation payment

In Catalonia, money handed to the seller is treated by default as confirmatory arras, paid on account of the price. Penitential arras must be agreed expressly: a buyer who withdraws loses them, unless the withdrawal is justified under article 621-49, and a seller who withdraws must return them doubled (article 621-8 of the Catalan Civil Code).

What article 621-49 says

Article 621-49 of the Catalan Civil Code allows the buyer to withdraw when these conditions are met:

1. The purchase contract provides that a credit institution will finance all or part of the price.
2. There is no agreement to the contrary removing that possibility.
3. The designated lender refuses the finance or does not accept the planned subrogation.
4. The buyer proves that refusal in writing within the agreed deadline.
5. The refusal is not due to the buyer’s negligence.

When they are met, the seller must return the price paid and, where applicable, the penitential arras. The rule is a specific protection, not universal insurance against every problem in the purchase.

This guide explains the financial side and the applicable rule in general terms. A lawyer or notary must review your specific contract before you sign it.

Outside Catalonia. Where the Spanish Civil Code governs the sale, article 1454 provides that, if arras have been paid, the contract can be terminated by the buyer forfeiting them or the seller returning them doubled. It says nothing about finance, so your protection if the mortgage is refused depends on what the contract says.

The mistake of relying on a vague clause

“The purchase is subject to a mortgage” leaves too many questions open. How much do you need? By what date? Is an offer for 70% acceptable if you asked for 90%? What happens if the lender does not refuse but the valuation comes in low?

A well-drafted contract should identify, at least:

Do not copy a clause from the internet without adapting it. Someone who needs 80% does not carry the same risk as someone who can only buy with 95%.

A refused offer versus an insufficient one

Worked example. A home costs €300,000. You need €270,000, but the lender approves €240,000. The mortgage is approved, for an amount that does not let you complete.

The difference matters. If the contract only talks about “refusal”, the seller can argue that you did obtain finance. That is why the minimum amount must be written down and the consequence of a lower offer agreed.

The same happens with the valuation. If you buy for €300,000, the home is valued at €270,000 and the lender finances 80% of that value, the loan is €216,000. You are €84,000 short of the price, plus costs.

What may count as buyer negligence

The rule excludes a refusal caused by your own negligence. The risk appears if, for example, you:

• submit the application when the deadline is about to expire;
• do not provide the documents the lender asks for;
• hide loans, missed payments or a relevant change of job;
• apply for an amount different from the one in the contract;
• change your profile before approval by financing a car or taking on other debt;
• only make an informal enquiry and cannot prove a real application.

Keep emails, delivery receipts and lender communications. If the transaction goes wrong, the timeline matters.

The lender has no legal deadline to answer

The Bank of Spain warns that the rules set no deadline for a lender to answer a mortgage application. A branch saying “there is plenty of time” does not change the date you signed with the seller.

The timetable must allow you to:

1. gather and validate income, debts and statements;
2. analyse the property and order the valuation;
3. answer questions from the risk department;
4. compare more than one lender if the first does not fit;
5. receive and review the pre-contract documents before the notary.

The more complex the profile (self-employed, foreign income, purchase plus renovation or finance above 80%), the more margin you need.

Pre-approval, approval and FEIN are not the same

Signing arras on a simulation is betting the deposit that everything still missing goes well. Before handing over money, check the ratios in LTV and DTI in a Spanish mortgage.

Signing arras as a non-resident

For international buyers, the clause should reflect non-resident lending:

• Write a realistic minimum loan. Lenders typically finance 60–70% of the lower of price and valuation for a non-resident, not 80%. On a €300,000 home, 70% is €210,000: a clause that assumes €240,000 sets up the insufficient-offer problem above.
• Count the full cash. At 70%, that purchase needs €90,000 of your own money plus about €34,500 of Catalan transfer tax (10% up to €600,000) and other costs. Check it with the property purchase costs calculator and the Spanish mortgage calculator.
• Allow for foreign paperwork. Tax returns, translations, an NIE and, if you will not sign in person, a power of attorney all take time.
• Name realistic lenders. Not every lender takes non-residents; agree with your lawyer which lenders the clause designates.

Our non-resident mortgage service can test the finance before you commit.

Safe order before paying the deposit

• I have calculated the deposit, taxes and costs.
• I know the minimum mortgage amount I need.
• A professional has reviewed my income, debts and stability.
• The arras deadline allows the whole transaction to be analysed.
• The contract mentions the finance and contains no hidden waiver.
• It covers an approval below the amount needed.
• I know how to prove a refusal and to whom I must notify it.
• A lawyer or notary has reviewed the legal wording.

RCG Finance can assess the mortgage side and the timetable before you hand over the deposit. If you already have a draft, price and target date, request a free review with your income and savings. The legal review of the contract must be done by your lawyer or notary.