Article 1454 of the Spanish Civil Code allows a buyer who has paid arras, the deposit, to withdraw from the contract by forfeiting it, and the seller to withdraw by returning double. Article 1124 of the same Code authorises no withdrawal at all; when one party fails to perform, the other may demand performance or terminate the contract, with damages in either case. Many foreign buyers sign a document headed “reservation” or “deposit” convinced they are under the first article, when the courts only apply the withdrawal of article 1454 if the contract agrees it expressly. Any foreigner can buy a home in Galicia, with no restriction based on nationality or residence; you need a NIE, an account at a Spanish bank and, before handing over the first payment, a lawyer who does not depend on the seller or the agency to review the property and the contract, because the notary certifies what is signed and does not investigate on your behalf what is being bought. Buying does not grant residence either; the visa for property investors was abolished on 3 April 2025 by Organic Law 1/2025.
Three kinds of arras and what the party in breach owes
The Civil Code expressly regulates only penitential arras, and the case law interprets them restrictively. If the contract does not say the parties may withdraw, the arras are confirmatory, an advance on the price proving that the sale already exists, and whoever backs out is in breach of a completed contract. The seller may then demand that the buyer execute the deed and pay, or terminate and claim the losses he proves, under article 1124; the buyer has the same remedies if it is the seller who fails. Penal arras are the third kind, they work like the penalty clause of articles 1152 and 1153, replace damages with a sum fixed in advance and do not allow withdrawal either.
| Kind of arras | What it allows | If the buyer defaults | If the seller defaults | Legal basis |
|---|---|---|---|---|
| Penitential | Either party may withdraw from the contract | Forfeits the amount paid | Returns double the amount received | Article 1454 of the Civil Code |
| Confirmatory | Nothing, they are an advance on the price | May be compelled to buy or to pay proven damages | May be compelled to execute the deed or to pay damages | Article 1124 of the Civil Code |
| Penal | Nothing, they fix damages in advance | Forfeits the amount paid as a penalty | Returns the agreed penalty | Articles 1152 and 1153 of the Civil Code |
What separates one regime from another is a single line of the contract, and the agency usually drafts it from a template. Other lines carry almost as much weight. The deadline for the deed and what happens if it expires before the bank has approved the mortgage, because without an agreed condition precedent a buyer who fails to obtain financing is in breach. Who holds the money and on what basis, since an agency that collects the deposit as a “reservation” against its own fees poses a different problem from a seller who receives it on account of the price. That whoever signs as seller is the owner registered at the Land Registry, with the same identity document, and that if there are several owners all of them sign. And that the contract also binds the heirs, under article 1257 of the Civil Code, so the death of a party between the arras and the deed does not extinguish it; the seller’s heirs will have to execute the deed once they accept the inheritance, and the buyer’s heirs may demand it.
If the amount in dispute does not exceed 15,000 euros, a claim over arras is heard in the fast-track verbal procedure, a threshold set by Royal Decree-Law 6/2023, and since 3 April 2025 Organic Law 1/2025 requires an attempt at out-of-court settlement before filing suit. With a seller who lives outside Spain, that attempt and the subsequent claim become complicated, and that is one more reason for the arras to be signed properly.
NIE, a Spanish bank account and the money the bank and the notary will make you justify
The foreigner identification number is a precondition for any act with tax consequences in Spain, and buying a home is one. Without a NIE there is no self-assessment of the purchase tax and no registration at the Land Registry, and the notary requires it to authorise the deed. It is applied for at a police station in Spain, at the Spanish consulate in your country of residence or through a representative holding a power of attorney, and it should be requested as soon as you decide to buy, because appointments take time and the seller does not wait.
You also need an account at a Spanish bank. The notary must record the means of payment in the deed, with the originating and receiving accounts, and the price is almost always paid by banker’s draft or transfer from that account. Opening it as a non-resident requires proof of that status and justification of the origin of the money, which is where foreign buyers lose the most weeks.
Law 10/2010 on the prevention of money laundering makes banks, notaries and lawyers who take part in property transactions obliged entities. Each of them must identify the client and know where the money comes from, and they will do so with documents. Depending on the case these will be payslips and tax returns, the deed of sale of another property, the certificate of an inheritance or a gift agreement, together with the statements that trace the money to the Spanish account. An international transfer of some size may be held for several days while the bank checks it, and the signing date does not wait. If the funds come from a third party, for instance from your parents, the bank and the notary will want to see the document explaining that transfer, and that document has tax consequences I deal with below.
Cash payments in a property sale are subject to limits and identification, and in practice no notary accepts that part of the price be handed over without being recorded. If someone proposes paying part “under the table” to reduce the tax, what is being proposed is a falsehood resting on a buyer who does not know the language, and it also lowers the acquisition value you will declare when you sell.
The land registry report, charges and what the Registry does not show
The nota simple from the Land Registry, regulated in article 222 of the Mortgage Law, states who the owner is, how the property is described and what charges encumber it. It must be requested before signing the arras, with a recent date, and the notary will request another before the deed. It shows mortgages, attachments, notices of pending litigation, registered easements, tax liens and any planning limitations that someone has taken to the Registry. Article 34 of the Mortgage Law protects a buyer who purchases in good faith and for value from the registered owner, and who registers in turn; whatever is not in the Registry cannot be held against him. Article 38 presumes that registered rights exist and belong to their holder. That protection explains why the deed must be registered as soon as possible and why no one should buy from a person who does not appear as owner.
The same protection has limits that foreign buyers usually do not know. The Registry does not guarantee the surface area or the physical reality of what has been built, so an extension, an enclosed terrace or a house erected on rural land may exist without the Registry saying so. It is detected by comparing the registered description with the cadastral certificate, which includes the reference and the built surface, and with what can be seen on site. If the work is not recorded and has no permit, the town council may order its demolition until the time limit for restoring planning legality expires, which in Galicia is six years under Law 2/2016 on Land in Galicia, and on specially protected rural land there is no time limit. An extension registered as old construction under article 28.4 of the Land Law is not legalised either; it is registered because it can no longer be demolished, which is not the same as being able to renovate, extend or insure it normally.
In a finished home, the first occupation licence or prior notification certifies that what was built matches the building permit and that the home can be lived in; without it, connecting utilities may be blocked. The energy performance certificate is compulsory for a sale and must be handed to the buyer. A tenant occupying the home has the right to stay for the periods set by the Urban Leases Law even if the buyer did not know, so “free of tenants and occupants” must appear in the contract and be checked in person.
That check, document by document and before the client hands over the arras, is part of what we do at the firm in civil law, and it is the moment when a purchase gets fixed or is abandoned at no cost.
Community debts, unpaid IBI and special levies the buyer inherits
Article 9.1.e of the Horizontal Property Law makes the flat, and therefore its new owner, liable for unpaid community fees for the current year and the three preceding years. That is why the same rule requires the seller to provide in the deed a certificate from the community secretary-administrator on the state of debts, unless the buyer expressly releases him from doing so. Releasing him is a decision sometimes taken in a hurry that turns someone else’s debt into your own. The certificate should be requested before the arras, because a community with a defaulting seller usually has other problems.
Special levies are a different matter. Article 17.11 of the same Law assigns their payment to whoever owns the property when they fall due, so a façade or a lift approved at a meeting before the purchase, with instalments falling due afterwards, is paid by the buyer unless the contract says otherwise. The minutes of the latest meetings and the bylaws, consulted through the administrator, tell what the debt certificate leaves out, including the restrictions on tourist rentals I discuss further on.
Something similar happens with IBI, the property tax. Article 64 of the Local Finance Law declares the property itself liable for payment of the tax, and the new owner answers with the property for the seller’s unpaid bills. The notary must warn of this and ask for the latest receipt, and the buyer can obtain from the town council, with the seller’s cooperation, a certificate that the tax is up to date.
New builds and off-plan purchases, what Law 38/1999 guarantees
Anyone buying from a developer is under a specific regime. Law 38/1999 on Building Regulation sets in article 17 the liability periods for defects, ten years for damage affecting the structure, three for failures to meet habitability requirements, such as damp, insulation or installations, and one for finishing defects, for which the builder answers. The periods run from the handover of the works, so in a development finished some time ago the buyer receives what is left of them. Article 19 requires the developer to take out ten-year insurance for structural damage, and the policy must be delivered with the property documentation, together with the building book.
If the home is not yet built, the risk is the developer. The first additional provision of the same Law requires the sums the buyer advances to be guaranteed by a bank guarantee or insurance and deposited in a special account. The contract must identify the guarantor and the buyer is entitled to receive the guarantee or the individual insurance certificate for each payment. An off-plan contract that does not mention that guarantee, or refers it to a document that never arrives, should stop payment until it is in hand. If the developer vanishes with the money, what remains is a civil claim against a company that may be empty and, in some cases, a criminal route.
In a new build the price carries VAT at 10 per cent and the deed is additionally taxed by stamp duty, with a general rate in Galicia of 1.5 per cent. It is a different cost from that of a resale property, and it should be taken into account before comparing prices.
Purchase taxes in Galicia and the Cadastre reference value
The purchase of a resale home is taxed by transfer tax, ceded to the Autonomous Community, whose general rate in Galicia is 8 per cent; reduced rates exist for a main residence and for certain buyers, such as young people or large families, which a non-resident can rarely apply because they require living in the home. To that tax are added notary, Registry, a processing agent if there is one and the lawyer’s fees; the total is around a tenth of the price for a resale property and somewhat more for a new build.
The tax is self-assessed within thirty working days of the deed, and here is what almost nobody explains to the foreign buyer. Since 1 January 2022 the tax base is the higher of two figures, the agreed price or the reference value that the Cadastre assigns to each property, under article 10 of the consolidated text of the tax law. That value can be looked up at the Cadastre’s electronic office with the cadastral reference and should be known before the arras. If the price is lower and you pay tax on the price, the Galician tax agency may issue a supplementary assessment for the difference, with late-payment interest, within the four-year limitation period set by the General Tax Law, and in some cases open penalty proceedings. If you consider that the reference value does not match the property, because it is in worse condition or has less surface area than the Cadastre believes, the law allows you to challenge it, with evidence, normally a valuation. Filing the self-assessment late without a prior demand carries a surcharge that grows with the delay under article 27 of the same Law; after a demand, there is a penalty.
After buying, a non-resident pays each year the IBI, the community fee and, for a home not rented out, non-resident income tax on imputed income, an amount calculated on the cadastral value that is declared even if there is no income at all. If you rent it out, you are taxed on the rent, with expenses deductible only for residents of the European Union or the European Economic Area. When you sell, the buyer will withhold 3 per cent of the price on account of the tax on the gain; that is why you should keep from now on the invoices for the purchase and for any works, which increase the acquisition value and reduce that gain.
Municipal capital gains tax and the clause that tries to pass it to the buyer
The tax on the increase in value of urban land, the municipal plusvalía, is paid by the seller in sales under article 106 of the Local Finance Law. The same rule contains an exception that bears directly on this matter. When the seller is a non-resident, the buyer becomes the substitute taxpayer and answers for the tax to the town council. If you buy from another foreigner living outside Spain, the council will claim the plusvalía from you, and the sensible course is to withhold its amount from the price in the deed.
The contracts of some agencies contain a clause under which the buyer assumes “all costs and taxes of the sale”, plusvalía included. That agreement is valid between the parties, and the courts accept it, but it does not change who is liable to the council. In practice it means you pay a tax the law assigns to the seller, sometimes in an amount no one has calculated before signing. If the land has not gained value since the seller bought, there may be no plusvalía to pay, and that should be checked before accepting the clause.
In whose name you buy and what changes on inheritance
The deed must state who is buying, in what proportion and, if the buyer is married, under what matrimonial property regime. For a foreign married couple the Registry records the property “subject to their matrimonial regime”, under article 92 of the Mortgage Regulations, without determining which one it is. The consequence appears on selling, mortgaging or inheriting, when the notary or the Registry require proof of that regime under the law of the country of origin, and the spouse who did not buy may have to sign. For couples of different nationalities or who have lived in several countries, Regulation (EU) 2016/1103 determines the applicable law and allows it to be chosen. Deciding this before the deed avoids an opinion on foreign law years later.
Buying with others, with a sibling or an unmarried partner, is buying in co-ownership, under the rules on joint property in articles 392 and following of the Civil Code. Any co-owner may request division at any time, under article 400, and if the home cannot be divided it ends in a sale, so a prior agreement on use, expenses and exit matters as much as the deed. Buying in the children’s names with the parents’ money is, for tax purposes, a gift, and buying through a company makes sense in very few cases for a home for your own use.
Inheritance is the other side. Regulation (EU) 650/2012 subjects the succession to the law of the deceased’s habitual residence, unless he chose the law of his nationality in a will, so a foreigner who settles in Galicia will come under Spanish law unless he provides otherwise. The institutions specific to Galician law, such as the apartación and the pacto de mejora I explain in this article, require Galician civil status, which a foreign buyer does not have; a will before a Spanish notary limited to assets in Spain, on the other hand, saves the heirs a good part of the formalities. For inheritance tax, a non-resident heir is taxed in Spain on the property located in Galicia and may apply the Galician rules.
As for the parents’ money, whether the Spanish tax office taxes the gift depends on where the recipient lives and where the money is when it is given. A child who does not reside in Spain and receives the gift in a foreign account is not taxed here. A resident child pays gift tax under the rules of his region, and a gift made directly into a Spanish account may be treated as an asset located in Spain even if the child does not reside here. Galicia gives favourable treatment to gifts from parents to children formalised in a public deed, but the form and order of the transfers have to be decided before the money moves.
Renting out the home after buying
A good share of those who buy from abroad plan to rent out the home when they are not using it. In Galicia tourist rental requires registering the home in the Register of Tourism Companies and Activities under Decree 52/2019, meeting its requirements and, since 1 July 2025, obtaining the single rental registration number that platforms require to publish the listing. Some town councils, A Coruña among them, have restricted tourist-use homes through their planning rules, so the first check is municipal.
The second is the community. Article 17.12 of the Horizontal Property Law, as worded by Organic Law 1/2025 with effect from 3 April 2025, requires the community’s express approval by three fifths of owners and shares before a home may be used for tourist rental; before that date the community could only prohibit or restrict it. The bylaws and the minutes show whether that approval exists or whether a prohibition is in force, and they are requested before the arras. Long-term rental is governed by the Urban Leases Law and requires no licence, and a non-resident owner is taxed on the rent as explained above.
Buying from outside Spain with a power of attorney, and the lawyer who is not the agency’s
You do not need to travel to sign. A power of attorney granted before a Spanish notary, or before a notary in your country of residence with a Hague apostille and sworn translation, allows an attorney to sign the arras, the deed and the mortgage in your name, and to apply for the NIE. The power should be drafted for that purchase, identifying the property and the maximum price, and with authority to open an account, pay taxes and receive notifications. A general power drafted by the other side, authorising the purchase of any property at any price, is a document you should not sign.
The mortgage deserves two points. Law 5/2019 on real estate credit contracts requires the bank to deliver the European standardised information sheet at least ten days in advance, and the borrower to attend a notarial act before signing in which the notary explains the loan and checks that it is understood; if you do not speak Spanish an interpreter will be needed. Banks lend non-residents a lower percentage of the value than residents, so the money of your own you need before the arras is more than a buyer calculates using the rule of thumb from home.
As for the lawyer, what counts is who he depends on. The one recommended by the agency may be competent, but he earns from deals the agency closes, and his quote should state in writing what he reviews, what documents he obtains, whether he attends the signing and whether he handles taxes and registration. The notary controls the legality of the act and the identity of the parties, requests the land registry report and warns of charges, but does not negotiate for you, does not review the arras you already signed and does not check whether the enclosed terrace has a permit. And in any remote payment it is worth remembering that the IBAN that arrives by email may have been altered by someone who has broken into the agency’s or the lawyer’s email; what happens then, and what the bank is obliged to refund, I explain in bank refund after phishing.
Before signing the agency’s reservation
There are things you can do today on your own. Request the land registry report yourself at the electronic office of the College of Registrars, with the cadastral reference or the address; it costs a few euros. With that reference, look up the reference value at the Cadastre’s office and compare it with the price. Do not sign the agency’s reservation document or transfer any amount until someone has read it with you, and if you have already signed it, keep it together with the emails and messages that came with it, because they prove what you were told about the arras, the deadline and the costs. Ask the seller in writing for the community debt certificate, the latest IBI receipt and the energy certificate, and note whether he delays or resists. Do not sign any power of attorney that is not limited to this purchase. And confirm by telephone, using a number you already had, any bank account notified to you by email before sending money.
The first thing we look at when a purchase arrives with the arras already drafted
In a consultation about a purchase in Galicia the first thing we read is the document the agency or the seller has sent, to know whether the arras are penitential and who holds the money, and then that day’s land registry report against the cadastral certificate, because almost everything that is later costly to undo appears there. With that we know whether the purchase can go ahead as it stands, whether the contract has to be renegotiated before paying or whether it is better to walk away. Enquiries are answered as soon as possible and the first review is professional work with a prior quote. You can write through contact or call +34 677 841 007; property purchases are part of what we do in civil law.
Frequently asked questions
If I pay less than the Cadastre reference value, how much can the tax office claim from me and when?
The difference between the tax you paid and the tax due on the reference value, plus late-payment interest and sometimes a penalty. The tax base is the higher of the two figures, price or reference value, and the Galician tax agency has four years to claim it. If the reference value does not match the property, you can challenge it with a valuation.
Can I pull out after signing the arras? And if the seller pulls out, how much does he owe me?
Only if the contract expressly agrees penitential arras under article 1454 of the Civil Code; in that case you lose what you paid and a seller who withdraws returns double. If the contract does not say the arras are penitential, the courts treat them as confirmatory and the other party can demand that you complete the purchase or terminate it with damages under article 1124.