Private Purchase Contract Spain: New-Build and Arras Guide

This guide is for foreign buyers signing a private purchase contract on the Costa del Sol. Most of our buyers are purchasing a new development, so we lead with the new-build contract and staged payments, then explain the resale contrato de arras as the contrast. You will learn what each contract is, the clauses that protect your money, and why the bank guarantee matters. By the end, you will know what to check before you sign.

Quick summary: For a new development, the private purchase contract is the developer's contract. You pay a fixed reservation fee, then staged instalments during the build - typically 20% to 40% of the price in total before completion (often around 30%) - and the 60% to 80% balance at completion. Every euro you pay before the keys must be protected by a mandatory bank guarantee (Law 57/1968, Ley 20/2015). A resale is different: there you sign a contrato de arras, pay about 10%, and complete in weeks. For either, insist on the right contract type and always have your own independent lawyer read it first.

The numbers that matter:

• 20% to 40% staged before completion on an off-plan new-build (often around 30%).
• 6.000 to 10.000 euros typical new-build reservation fee.
• 10% typical resale deposit (the arras).
• 10-year structural guarantee on a new-build.

What you will learn

• What the private purchase contract is
• The new-build contract: staged payments and the bank guarantee
• The resale contrast: the 3 types of arras
• How much you pay, and when
• What the contract must include
• Risks, traps and how to stay safe
• Your pre-signing checklist

What the private purchase contract is

The private purchase contract is the deal you sign before you go to the notary. What it looks like depends on what you are buying.

For a new development, it is the developer's private purchase contract (often called the PPC). You pay a reservation fee to take the unit off the market, then staged payments during the build, with the balance at completion. For a resale from a private owner, it is usually a contrato de arras (a deposit contract): you pay about 10% and both sides agree the price and the date to complete.

Think of it as the real commitment. The reservation holds the property for a few days. The full contract then locks the deal: it fixes the price, the payment plan, the completion deadline, and the penalty if anyone pulls out.

Important: this contract is binding. Once you sign and pay, walking away usually means losing what you have paid. So the words in this contract matter more than almost any other step. Never sign one you have not fully understood.

Bonus tip: Always have your own independent lawyer read the contract before you sign. Never sign at the developer's or estate agent's desk on the day. They work for the seller, not for you.

The new-build contract: staged payments and the bank guarantee

If you buy a new development from a developer, the paperwork is not a classic arras. You sign the developer's private purchase contract. The idea is the same - price, deposit, deadline - but the way you pay is the key difference.

Here is the off-plan path, the main scenario on the Costa del Sol:

• Reservation fee. A fixed amount, usually 6.000 to 10.000 euros, to take the unit off the market.
• Staged payments during the build. You pay instalments as the building goes up. In total these come to about 20% to 40% of the price before completion (often around 30%). On a 500.000 euros home that is roughly 100.000 to 200.000 euros across the build (30% = 150.000 euros).
• The bank guarantee. Every euro you pay before the keys must be protected by a mandatory bank guarantee or insurance (Law 57/1968, Ley 20/2015). If the developer fails to finish, you get your money back. Never pay a developer a single euro without it.
• Balance at completion. When the Licence of First Occupation is granted, you pay the remaining 60% to 80% at the notary on the escritura - roughly 300.000 to 400.000 euros (70% = 350.000 euros).

A new-build also comes with a 10-year structural guarantee by law, and a snagging inspection before completion so the developer fixes finishing faults.

Key-ready new-build is lighter. If the home is a finished new-build, you pay the reservation, then about 10% on the private contract, then the balance on completion within weeks - same new-build taxes (10% IVA plus about 1.2% AJD) and the same 10-year guarantee.

Real example. On a 500.000 euros off-plan new development, a staged plan might look like this. Every euro before the keys is covered by a bank guarantee:

• 8.000 euros - reservation fee (counts toward the price)
• 150.000 euros - staged payments during the build (about 30%, bank-guaranteed)
• 350.000 euros - balance at completion (about 70%), paid at the notary

Without a guarantee on those staged payments, your money is at risk.

At Spain Developments, we only work with developers who give a proper bank guarantee, and our lawyers check it for you. We are an independent buyer's agent, the developer pays our fee, and you pay no buyer fee. Feel free to contact us if you want this checked properly.

Danger: For a new-build, the single biggest risk is paying a developer with no bank guarantee. No guarantee, no payment. Also check the developer's track record - ask to see homes they finished before.

The resale contrast: the 3 types of arras

If you buy a resale from a private owner instead of a new development, the contract is a contrato de arras. Spanish law has three kinds. They look similar but the rules are very different. The contract must say which type it is.

Penitenciales (best for buyers)

• You can walk away
• If you pull out: you lose your deposit
• If the seller pulls out: they pay you double

Penales (still bound)

• No clean exit
• If you pull out: you pay a penalty and may still be forced to buy
• If the seller pulls out: they pay a penalty and may be forced to sell

Confirmatorias (worst for you)

• No clean exit
• The other side can sue you for breach and damages
• You can sue the seller for breach and damages

The most common type for homes is arras penitenciales (set out in Article 1454 of the Spanish Civil Code). It is the fairest for a buyer. If you must walk away, your loss is fixed: just the deposit. If the seller backs out, they pay you double.

The big trap: if the contract does not name the type, the law treats it as confirmatorias. That is the worst option for you. Under confirmatorias, the other side can sue you for far more than the deposit. So always check the type is written clearly.

Danger: Do not sign a contract that is silent on the arras type. "Silent" means confirmatorias by default, and that exposes you to a claim for the whole price. One missing line can cost you thousands.

How much you pay, and when

This is where new-build and resale split apart.

For a new development (off-plan), you do not pay a single 10% deposit. You pay a fixed reservation fee, then staged instalments totalling 20% to 40% before completion (often around 30%), then the 60% to 80% balance at the notary. On 500.000 euros that is roughly 150.000 euros across the build and 350.000 euros at completion. Every staged euro is bank-guaranteed.

For a resale, the custom is 10% of the price at the arras. This is not a legal rule and is negotiable, but 10% is what most private sellers expect. You then pay the remaining 90% at the notary on completion day.

Whatever you pay is not an extra cost. It counts toward the price.

Real example - new development. You buy an off-plan flat at 500.000 euros:

• 8.000 euros - reservation fee (counts toward the price)
• 150.000 euros - staged during the build (about 30%, bank-guaranteed)
• 350.000 euros - balance at completion (about 70%), at the notary

Real example - resale. You agree to buy a resale flat at 500.000 euros with arras penitenciales:

• 50.000 euros - deposit at signing (10%)
• 450.000 euros - balance at the notary
• 50.000 euros - what you lose if you walk away
• 100.000 euros - what the seller pays you if they walk away

So both sides have a real reason to complete. That is the point of the deposit.

Bonus tip: Whatever you pay forms part of the declared purchase price for tax. On a new-build (the main case here), tax is 10% IVA (50.000 euros on 500.000) plus about 1.2% AJD (6.000 euros), not ITP. On a resale in Andalucía, tax is 7% ITP (35.000 euros), due after completion. Plan for it now, not later.

What the contract must include

A good contract is detailed. Make sure yours has all of these:

• The parties. Full names, passport or NIE numbers (your Spanish tax ID number).
• The property. Full address, the referencia catastral (the cadastral reference, an official property ID), and a clear description.
• The price. Total agreed price and how it is paid.
• The payment plan. For a new-build, the reservation fee and each staged instalment with its trigger and amount. For a resale, the deposit you pay now.
• The bank guarantee (new-build). A clear commitment that every payment before completion is covered by a bank guarantee or insurance (Law 57/1968, Ley 20/2015). This is the most important clause in a new-build contract.
• The type of arras (resale). Stated clearly - you want penitenciales.
• The completion trigger and deadline. For a new-build, completion follows the Licence of First Occupation. For a resale, a fixed date, usually 30 to 60 days, sometimes up to 90.
• Charges. Any mortgage, debt, or limit on the property. There should be none left at completion.
• Who pays what. Notary, Land Registry, and tax costs. By law and custom, the buyer pays most purchase taxes.
• Withdrawal clause. What happens if either side pulls out.
• Conditions precedent. Things that must be true before you must buy - for a new-build, a valid building licence and a real bank guarantee; for a resale, a clean nota simple (the Land Registry extract that shows the owner and any debts) and no planning problems.

The conditions precedent are your safety net. They let you exit, and keep what you have paid, if the lawyer finds a serious problem.

Bonus tip: Ask your lawyer to add a clause that protects what you have paid if the property has hidden debts, no licence, or a title issue. A fair seller or developer will accept this. One who refuses is a warning sign.

Risks, traps and how to stay safe

Be honest about the risks. These are the ones that catch foreign buyers:

• Developer with no bank guarantee (new-build). This is the single biggest risk on a new development. No guarantee, no payment.
• No arras type named (resale). Defaults to confirmatorias and exposes you to a big claim. Always name it.
• No licence or illegal build. Some projects lack the right permit. Your lawyer must confirm the building licence, and for a new-build that completion follows the Licence of First Occupation.
• Hidden debts on a resale. Unpaid taxes or community fees can pass to you. Your lawyer checks the nota simple.
• Deadline too short. If you need a mortgage, make sure the completion timing gives the bank time.
• Paying into a personal account. Pay only into the proper account named in the contract, never an agent's private one.
• Verbal "agreements." A spoken deal is hard to enforce. Always get it in writing.
• Currency risk. If you pay in pounds, krona or zloty, the rate can move the cost by thousands across staged payments and completion. A currency broker can fix the rate.

Warning: If the seller, developer or agent rushes you to sign "today," slow down. A real deal gives your lawyer time to check the project and the contract. Pressure is a classic sign of a problem.

Your pre-signing checklist

Before you sign the private purchase contract, confirm:

• Your independent lawyer has read and approved it.
• For a new-build, the bank guarantee on every staged payment is real, and completion is tied to the Licence of First Occupation.
• For a resale, the arras type is named (you want penitenciales).
• The price, payment plan and completion timing are correct.
• The building licence is valid (and for a resale, the nota simple is clean with no surprise debts).
• Conditions precedent protect what you have paid.
• You pay only into the account named in the contract.

Want your contract checked before you sign? We review every contract, confirm the bank guarantee on new-builds, and only work with developers who give one, all with no buyer fee. Feel free to talk to Spain Developments.

Conclusion

The private purchase contract is where your purchase becomes real, so the detail is everything. For a new development, the contract sets your reservation fee, your staged payments (about 20% to 40% before completion, often around 30%) and the 60% to 80% balance at the notary - and every euro before the keys must be bank-guaranteed. For a resale, make sure the arras type is named and the deposit is fair. On a 500.000 euros home, a clear contract is the difference between safe money and a costly mistake. At Spain Developments, we review every contract and only work with developers who give a proper bank guarantee, with no buyer fee. When you are ready, feel free to contact us.