Reservation contract in Spain: how does it actually work?

Reservation contract in Spain: how does it actually work?Legal & Notarial
  • 20.05.2025
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Reservation Contract in Spain: How Does It Actually Work?

Making a property transaction in Spain is often the realization of a dream for many, whether motivated by personal aspirations, business objectives, or sheer love of the rich Spanish culture and beauty. Yet, the steps between identifying a property and securing it can be complex, particularly for those unfamiliar with the Spanish legal and real estate landscape. One critical step is the reservation contract. But what is a reservation contract? How does it protect you, and what are its implications? This exhaustive guide provides a thorough explanation, meticulously breaking down the process, legal context, practical considerations, and expert tips to navigate reservation contracts smoothly in Spain.

Table of Contents

What Is a Reservation Contract?

A reservation contract (in Spanish: contrato de reserva) is a document used in the Spanish real estate sector to temporarily reserve a property for a purchaser while the formal sales process unfolds. It acts as the first legally binding agreement in the process of buying or selling property in Spain.

In practical terms, it is a concise, straightforward contract that outlines the terms under which the seller agrees to remove the property from the market for a limited period, in exchange for a small financial deposit from the buyer. This period allows both parties to conduct due diligence, secure financing, or iron out any pending issues before proceeding to the more formal arras (deposit) contract and, ultimately, the signature of the deed before a notary.

Reservation contracts are especially prevalent in areas with high competition for properties—such as coastal regions, big cities, and sought-after vacation destinations—but are also common for new developments, off-plan purchases, and resale properties.

Reservation Contract vs Deposit Contract (Contrato de Arras): Key Differences

  • Reservation Contract: Temporary; initial step; minimal deposit; primarily reserves property.
  • Deposit Contract (Arras): Following step; larger payment (usually 10%); sets out detailed purchase terms; more robust legal implications.

Understanding this fundamental distinction helps ensure buyers and sellers know the weight and limitations of each contract type.

The reservation contract is a creation of custom and practice rather than being specifically enshrined in Spanish civil law. Nevertheless, it draws its legal force from the general principles of contract law outlined in the Spanish Civil Code and, for consumer protection, additional regional and sector-specific regulations.

Relevant Spanish Laws

  • Spanish Civil Code: The general rules for contracts (Articles 1254–1314) apply, meaning both parties' consent must be clear, and mutual obligations are enforceable.
  • Consumer Protection Laws: If the buyer is considered a consumer, additional local, regional, and EU protections may apply.
  • Real Estate Regulations: Particularly in regions like Catalonia and Andalusia, there are specific laws regarding property sales, developer obligations, and transparency.

Despite its legal force, the reservation contract—since it precedes the deposit (arras)—offers only limited recourse if things go wrong. Typically, its objective is to demonstrate serious intent and provide time for the next, more binding contractual step.

The Main Purpose of a Reservation Contract

The reservation contract serves several distinct functions within a Spanish property transaction:

  1. Removing the Property from the Market: The seller (or their agent) agrees not to show or market the property to others for the agreed period.
  2. Protecting the Buyer’s Interest: Buyer secures the exclusive right to continue with the purchase under agreed terms, reducing risk that the property will be sold to someone else.
  3. Facilitating Due Diligence: The buyer gains time to investigate property legality, secure financing, perform surveys, or seek legal advice.
  4. Formalizing Serious Intent: Both parties formally express their intention to move forward, reducing uncertainty or frivolous negotiations.
  5. Setting the Stage for the Following Steps: This contract paves the way for moving toward the arras or preliminary purchase agreement and, ultimately, the notarial deed transfer.

The reservation contract thus acts as a critical “pause button” in the fast-moving Spanish real estate market, buying time and clarifying intentions for all involved.

Key Clauses to Find in a Reservation Contract

A robust reservation contract includes several key elements. Understanding these will help you spot a fair agreement and avoid common pitfalls. Below are the essential clauses:

  1. Identification of Parties: Full names, IDs/passport numbers, and contact details of buyer(s) and seller(s).
  2. Property Details: Exact postal address, registry details, description (size, type, cadastral reference), or attached official extract (Nota Simple).
  3. Reservation Amount (Fee): Sum to be paid for the reservation, with confirmation of form of payment (e.g., bank transfer, cheque).
  4. Reservation Period: Clearly defined dates—when the reservation starts and when it expires.
  5. Purchase Price: The agreed total price for the property, which will be used in subsequent agreements.
  6. Seller’s Commitments: Obligation to remove the property from market and refrain from negotiating with other parties during the reservation period.
  7. Buyer's Commitments: Typically, to proceed with the transaction within the reservation period, subject to findings during due diligence.
  8. Outcome if Sale Proceeds: How the reservation fee will be treated (usually as a deduction from the future deposit or final price).
  9. Outcome if Sale Does Not Proceed: Clear position on refundability of the reservation fee, and under what circumstances (e.g., conditional on buyer financing, legal issues, or always non-refundable).
  10. Further Conditions: For example, “subject to mortgage approval” or “subject to satisfactory legal checks.”
  11. Signatures and Dates: Both parties must sign, and dates must be clear and unambiguous.
  12. Agent Involvement: If an estate agent is acting as an intermediary, their details and role should be noted.

These terms should be read and understood carefully. In some cases, the agent or seller may try to use their own standard templates. Any ambiguities should be resolved before signing—and where possible, contracts should be reviewed by an independent lawyer.

How Does the Reservation Contract Work? Step by Step Process

Here’s a clear walk-through of the reservation contract process from start to finish:

  1. Property Identified
    The buyer finds a property of interest and begins preliminary negotiations with the seller (directly or through an agent).
  2. Verbal Agreement of Main Terms
    Price, timing, reservation period, and additional key points are informally agreed.
  3. Drafting the Reservation Contract
    The reservation contract is drafted. Usually, this is prepared by the real estate agent or the seller’s lawyer, but the buyer should always have the right to have their own advisor review it.
  4. Review and Negotiation
    Both sides review the proposed contract. This is the time for the buyer to negotiate or clarify points such as refundability, reservation duration, or specific conditions.
  5. Signing and Payment
    If both parties agree, they sign the contract. The buyer pays the reservation fee (holding deposit), often via bank transfer, sometimes in cash, and receives a receipt.
  6. Property Removed from Market
    The seller (and/or agent) takes the property off the market. Listings are withdrawn, and viewings are suspended.
  7. Due Diligence and Preparation
    The buyer (often with their lawyer or adviser) begins due diligence. This may include legal and registry checks, review of property title, debts or encumbrances, obtaining a mortgage offer, or checking urban/condominium records.
  8. Proceeding to Deposit Contract/Arras (or Not)
    If everything checks out, both parties move on to the next, more substantial stage: signing a deposit (arras) contract and paying a larger sum (usually 10%).
  9. If the Buyer Withdraws or the Seller Defaults
    If the buyer withdraws within the agreed terms, the reservation fee may be forfeited—or, if the contract allows, refunded (for example, if due diligence reveals issues). If the seller defaults, sometimes the buyer can recover double the reservation fee (though this is more typical at the arras stage).
  10. Reservation Contract Ends
    The contract expires upon moving to the next stage (deposit contract) or upon failure to comply within the agreed timeframe.

This structure ensures all parties are clear on the seriousness of their intentions and what happens at each stage.

Reservation Fees: Amounts and Common Practices

The reservation fee is the sum paid by the buyer at the time of signing the reservation contract. This is a key element in the Spanish process.

Common Amounts and Variations

  • Standard Amount: Between €3,000 and €6,000 is typical for midrange properties.
  • Percentage of Price: For some luxury or higher-value properties (especially new developments), the reservation fee may be stated as 1% of the property price or a fixed figure agreed upon by both parties.
  • Lower Value Purchases: For more modest homes or rural properties, the fee may be as low as €500–€2,000.
  • Special Cases: For “off-plan” or new builds, developers may set their own reservation fee, sometimes higher to “lock in” escalating prices.

How Is the Reservation Fee Paid?

  • Preferred Method: Bank transfer to a designated escrow or agency account. This provides proof of payment and security.
  • Cash Payments: Sometimes accepted informally, but avoid if possible to ensure traceability and security.
  • Cheque: Less common, but still possible in some regions.

In all cases, buyers should obtain a receipt confirming payment and explicitly stating its nature as a reservation fee, as well as a copy of the signed contract.

Implications for Buyers and Sellers

Both buyers and sellers face significant implications—financial, legal, and practical—when entering into a reservation contract.

Implications for Buyers

  • Secures the Property: Removes risk of losing out to another buyer, especially in fast-moving markets.
  • Financial Stake: Money is tied up; if the buyer decides to back out without a justified reason (or the contract is non-refundable), the fee may be lost.
  • Due Diligence Time: Permits time to investigate property, legality, debts, obtain mortgage, or clarify any uncertainties.
  • Limited Protection: The contract is not as protective as later, more detailed agreements (like the arras).

Implications for Sellers

  • Guarantees Serious Buyer: Seller is reassured that the buyer is committed and not “window shopping.”
  • Property Off Market: Seller loses opportunity to negotiate with other potential buyers during reservation period.
  • Limited Assurance: Until the deposit contract is signed, the sale is not locked in; only the small reservation sum is payable if the buyer walks away.

Both parties, therefore, must be cautious, clear on the contract’s limitations, and aware of what is (and isn’t) binding at this early stage.

What Happens if the Reservation Contract Is Breached?

In the event of breach—where one side fails to fulfil their commitments—the outcome depends upon the terms of the individual contract.

If the Buyer Pulls Out

  • Non-Refundable Clause: Commonly, the buyer forfeits the reservation fee unless the contract specifically outlines refundable circumstances (for example, if legal checks reveal title problems, or if financing is not obtained).
  • Refundable Clause: Sometimes, especially if agreed as subject-to-finance or due diligence, the fee is returned to the buyer if specific conditions are not met.

If the Seller Pulls Out or Refuses to Proceed

  • Refund Obligation: The seller must refund the reservation fee to the buyer. In some contracts (less common at this preliminary stage), the seller is obliged to pay double the reservation fee as a penalty (though this is more standard at the arras deposit stage).
  • Additional Damages: Unless stated, the buyer’s further claim for damages is limited unless serious losses or intentional misrepresentation can be proven in court.

Ultimately, the specific remedies for breach are governed by the contract itself, so it’s crucial that these scenarios are anticipated and addressed at the drafting stage.

Rarely Discussed Risks and How to Mitigate Them

While reservation contracts are helpful, they are not without their risks. Awareness of these—often overlooked—details equips both buyers and sellers to avoid potential conflicts or disappointments.

Risks for Buyers

  • Non-Refundable Fees: If the contract is not clear about refund conditions, the buyer may lose their money even due to circumstances beyond their control (e.g., legal issues with the property, refusal of financing, hidden debts attached to the property).
  • Seller Still Markets Property: Unscrupulous sellers might ignore the contract, continuing to show or sell the property to others if terms are not explicit or not policed.
  • Lack of Transparency: Without an independent lawyer, buyers might not learn of issues until too late, after the fee is paid.
  • Weak Legal Force: Some contracts are so poorly drafted that enforcing them (especially for foreign buyers) is practically impossible.

Risks for Sellers

  • Buyer Withdraws: If contracts are too favourable to buyer or contain too many “subject to” clauses, seller is left with property off-market with little real compensation for lost time.
  • False Sense of Security: Seller might believe the buyer is “locked in” when, in truth, the buyer could step back with relatively little cost.

Mitigation Strategies

  1. Always Use a Lawyer: Have an independent specialist review the contract before payment or signing.
  2. Clear Conditions for Refund: Spell out all scenarios in which the reservation fee is refundable or not.
  3. Add Timeframes: Keep the reservation period short but realistic (most are 2–4 weeks) to minimize exposure.
  4. Insist on Proper Documentation: Ensure the title extract (Nota Simple), registry details, and seller’s proof of ownership are included or attached.
  5. Demand Receipts and Traceability: Always get a formal receipt for the reservation fee, ideally paid via traceable means.

Mitigating these risks is about being proactive, informed, and maintaining vigilance at every step.

Expert Tips and Best Practices

Property professionals and experienced buyers identify several “best practices” for navigating reservation contracts in Spain.

For Buyers

  • Get Everything in Writing: Never rely on verbal assurances or informal arrangements. A written contract is your security.
  • Use an Independent Lawyer: Do not depend solely on the agent or seller’s lawyer. Hire your own, ideally bilingual and specialising in real estate.
  • Confirm Property Documentation: Before signing, request the “Nota Simple,” town hall certificates, and check for any debts or encumbrances.
  • Specify “Subject to” Clauses: Especially if you need mortgage approval or are awaiting legal checks, include clauses making the reservation conditional.
  • Stick to Short Deadlines: Don’t allow the contract to drag on. One to two weeks is standard; four weeks is rarely justified unless complex legal problems exist.

For Sellers

  • Qualify the Buyer: Check the buyer’s seriousness and ability to proceed before taking the property off the market.
  • Retain Broker Support: Agents can provide valuable structure, enforce deadlines, and mediate disputes if necessary.
  • Include Default Penalties: If you feel at risk, add stipulations to compensate for lost time or genuine costs if the buyer withdraws unfairly.
  • Hold on to Reservation Fee: Retain possession of the reservation fee until clear grounds for refund are shown, if the contract makes refundability conditional.

General Best Practices

  • Transparency Is Key: A clear, fair contract protects all parties and reduces misunderstandings.
  • Deposit Funds Securely: Where possible, use escrow or agency accounts, not cash.
  • Monitor Key Dates Closely: Adhere strictly to deadlines for next steps, or renegotiate extensions in writing if needed.

Frequently Asked Questions (FAQs)

Is the Reservation Contract Legally Binding in Spain?

Yes, but with limitations. It is legally binding in the sense that it represents a clear agreement between two parties under the Spanish Civil Code. However, the remedies for breach are generally limited to forfeiture or return of the reservation fee, as specified in the contract. It is preliminary—not as powerful as the subsequent deposit (arras) contract.

Can the Reservation Fee Be Refunded?

Only if the contract specifies scenarios for refund (e.g., legal issues with the property, financing not granted, etc.). Otherwise, reservation fees are usually non-refundable unless the seller defaults.

How Long Does a Reservation Contract Last?

Most contracts are for 2–4 weeks, sometimes up to a month in complex cases, but rarely longer. The duration is always set by agreement.

Can I Sign a Reservation Contract From Abroad?

Yes. Buyers or sellers can sign by email with scan/photograph, via digital signature, or grant power of attorney to a local representative. Always ensure copies are exchanged and funds are traceable.

What Is the Next Step After a Reservation Contract?

The next step is signing a deposit or arras contract, at which point the buyer usually pays 10% of the purchase price and the detailed sale conditions are set out.

Is the Reservation Fee Regulated or Fixed?

No, there is no nationwide regulation fixing the fee; it is set by mutual agreement and custom, though local agencies or developers may impose standard sums.

Can an Estate Agent Hold the Reservation Fee?

Commonly, yes—especially if the agent acts as trusted intermediary. However, buyers should ensure the agent is reputable and that all paperwork is in order.

Will the Reservation Fee Be Deducted From the Purchase Price?

Yes, if the deal proceeds, the reservation sum is usually deducted from the next payment (the deposit or the final balance).

Conclusion: Navigating Reservation Contracts With Confidence

The reservation contract is a pivotal step in the Spanish property purchase journey. It sets out the intentions of both buyer and seller, bringing clarity, structure, and a temporary exclusivity that can be the difference between securing your dream property—or losing it to another. However, it is not without limitations and risks.

A well-drafted reservation contract provides both parties with necessary breathing space and certainty, but only when both understand its terms, legal status, and implications. Whether you are a buyer seeking the perfect Spanish villa or a seller seeking committed clients, investing in expertise, transparency, and careful drafting will ensure this crucial first step leads to a successful—and stress-free—property transaction in Spain.

Always work with certified and independent lawyers, insist on transparency and documentation, and make informed, timely decisions. With the right preparation and diligence, the reservation contract can pave the way for a safe and successful journey into Spanish property ownership.

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