Between the verbal agreement and the notary appointment when buying property in Mallorca, the most important negotiation phase often takes place. This is precisely where reservation agreements, option contracts or a Contrato de Arras are used to fix the price, deadlines and exclusivity. For buyers, it is crucial: not every deposit has the same legal effect, and not every payment is automatically refundable.

Anyone wishing to buy a property in Mallorca should therefore clarify before signing which document is involved, who receives the payment, under what conditions it is refunded and what the consequences of withdrawal are.

1. Reservation Agreement: Short Block, Limited Security

A reservation agreement is often used to take a property off the market for a few days or weeks. The payment is usually lower than with an Arras contract and is often made to an agency, the seller or a trustee.

The benefit lies in speed: the buyer gains time for legal review, financing, technical due diligence and negotiation of the main contract. The disadvantage: many reservation forms are short, agency-driven and not always precise enough. Particularly risky are formulations according to which the payment is flatly “non-refundable” without prior verification of the land register status, ownership position, encumbrances, building permits or usage issues.

A good reservation agreement should at least contain:

complete identity of buyer, seller and, if applicable, representatives;
exact property description with address, land register data and cadastral reference, if available;
purchase price and clear statement whether the reservation payment is credited towards the purchase price;
recipient of the payment and escrow or repayment mechanism;
reservation period and next steps up to the Arras or option contract;
refund in case of negative legal review, lack of authority, undisclosed encumbrances or failed financing, if negotiated;
confirmation that the property will not be actively sold or contractually bound to third parties during the period.

2. Option Contract: Binding Purchase Right for the Buyer

An option contract goes further than a simple reservation. The seller grants the buyer the right to purchase the property within a certain period at a fixed price. If the buyer exercises the option in time, the seller must generally sell.

In Spain, a purchase option can be registered in the land register under certain conditions. According to the Spanish Mortgage Regulations, this requires in particular an express registration agreement, the purchase price, any option price and an exercise period. Especially for high-value properties, notarization and registration of an option can be useful if the buyer needs a longer review, financing or structuring phase.

The option price is negotiable. It can remain with the seller as an independent premium or be credited towards the purchase price upon exercise. It is crucial that the contract expressly regulates this.

3. Contrato de Arras: The Most Common Preliminary Contract

The Contrato de Arras is the usual form in Mallorca to bindingly secure a property transaction before the notary appointment. It is usually signed after the initial review and before the notarial deed of sale. A typical deposit is around 10 percent of the purchase price, although the amount and due date can be freely negotiated.

The type of Arras is important. In practice, arras penitenciales are often agreed. These allow withdrawal subject to an economic penalty: if the buyer withdraws, he loses the deposit paid; if the seller withdraws, he must generally repay double the deposit. This logic corresponds to Art. 1454 of the Spanish Civil Code.

The contract should expressly state that it concerns arras penitenciales conforme al artículo 1454 del Código Civil if this exact withdrawal model is intended.

4. Deposits: Amount, Recipient and Proof

Deposits should be regulated not only in terms of amount but also technically cleanly. For existing properties, the Arras payment often goes directly to the seller or to a lawyer's escrow account. For project developments and new builds, additional protection mechanisms apply: if a developer accepts deposits during the construction phase, these must, under certain conditions, be secured via special account and guarantee/aval structures.

Cash payments are particularly sensitive. As soon as a party acts as an entrepreneur or professional, strict limits for cash payments apply in Spain. In practice, reservation fees and Arras payments should be made by bank transfer with a clear reference.

5. Deadlines: Small Print, Big Impact

Deadlines are not a side issue in Arras and option contracts. They determine when due diligence ends, when the deposit is due, when the notarial deed of sale must be signed, and when a withdrawal constitutes a breach of contract.

For buyers, the following deadlines are particularly relevant:

deadline for submission of essential seller documents;
deadline for legal and technical review;
deadline for financing commitment, if the purchase is financed;
deadline for exercising an option;
date or latest period for the notary appointment;
regulation of what happens if the notary appointment must be postponed due to bank, land register, inheritance, cancellation of encumbrances or missing documents.

6. Withdrawal: Who Loses What?

With arras penitenciales, the basic logic is simple but economically harsh. The buyer can withdraw and loses the Arras. The seller can withdraw but must then generally refund double the amount. This is precisely why buyers should not make a high Arras payment before the core risks have been reviewed.

Typical grounds for withdrawal or refund that can be expressly negotiated include:

deviating or encumbered ownership position in the land register;
undisclosed mortgages, embargoes, easements or rights of use;
missing building permits, missing occupancy certificates or non-legalized extensions;
negative technical review with significant construction defects;
failed financing, if a financing clause has been agreed;
lack of consent from co-owners, heirs, corporate bodies or spouses;
unfulfillable conditions for holiday rental, renovation or change of use, if these are essential for the purchase.

7. Key Risks for Buyers in Mallorca

The biggest mistake is not the deposit itself, but a deposit without a verified basis. Before signing, buyers should at least have a current nota simple from the land register, the ownership and representation situation, existing encumbrances, municipal and community issues, and the building documentation reviewed.

Special caution is required for country houses, fincas and properties outside built-up areas. Extensions, pools, outbuildings, driveways, wells, agricultural uses or rental promises can be legally complex.

The role of the agency should also be clear. An agency can organize the transaction but does not replace independent legal review.

8. Special Features in the Premium Segment

In the premium segment in Mallorca, the amounts are higher, the structures more international and the time windows often tighter. Sellers sometimes expect quick reservation decisions, while buyers work with family offices, foreign banks, companies or trust structures. This makes proof of origin, beneficial ownership and money laundering checks more important.

For high-priced off-market properties, confidentiality agreements, proof of purchasing power and staggered document releases are also common. Buyers should nevertheless avoid making a significant payment before minimum documents are available.

9. Practical Recommendation

For buyers, the safest sequence is usually: short reservation with clear refund clause, quick legal and technical review, then a cleanly formulated Arras or option contract. The higher the purchase price, the less standard forms should be used.

Before any payment, the following should be clearly answered: Who gets the money? Is it credited? When is it lost? When is it refunded? What documents must the seller provide? What happens with encumbrances, missing permits or delayed financing? Only when these points are regulated in writing does the deposit fulfill its actual purpose.

Reservation, Option Contract and Arras When Buying Property in Mallorca