Option Contracts in Spain: Why You Need a Notarial Deed of Deposit
Based on an article originally contributed by Illeslex Abogados, property lawyers in Mallorca.
Short answer: when a buyer pays an option fee (often around 10% of the price) into a notary’s escrow account after signing a purchase option contract, both parties should also sign a notarial deed of deposit. Without it, the notary only knows that the buyer deposited money and must return it to the buyer on request, whatever the option contract says. With the deed, the notary is bound by the release conditions both parties agreed.
What is a purchase option contract?
A purchase option contract (contrato de opción de compra) gives the buyer the exclusive right to buy a property at an agreed price within a set period. The buyer pays an option fee (prima) in exchange. If the buyer exercises the option in time, the sale goes ahead and the fee is usually credited against the price. If the buyer does not exercise it, the seller normally keeps the fee.
It is an alternative to the more common arras contract. Option contracts are popular in Mallorca when the buyer needs time to arrange finance, obtain an NIE or complete due diligence while keeping the property off the market.
Why deposit the option fee with a notary?
Paying the fee directly to the seller leaves the buyer exposed: if the seller later refuses to sell or cannot meet the agreed conditions, the buyer has to claim the money back. Lodging the fee in a notary’s escrow account keeps it neutral. The seller knows the money exists and is committed; the buyer knows it has not yet been released.
The problem: a deposit without a deed is unilateral
If the buyer simply transfers the fee to the notary’s account and no deed of deposit is signed, the notary treats it as a unilateral deposit by the buyer. In that case:
- the notary is not bound by the option contract, because it was not party to it;
- if the buyer asks for the money back, the notary must return it;
- the buyer could withdraw the fee without the seller even being informed.
The seller’s protection then depends entirely on suing the buyer under the option contract, which defeats the purpose of using escrow.
How a notarial deed of deposit solves it
A notarial deed of deposit is signed by both parties before the notary when the funds are lodged. It records the conditions, freely agreed between buyer and seller, under which the notary will release the money, in whole or in part, to one party or the other. Those instructions are binding on the notary.
| Without a deed of deposit | With a deed of deposit |
|---|---|
| Notary only knows the buyer paid the money | Notary knows the agreement and the release conditions |
| Buyer can ask for a refund at any time | Funds are released only as agreed |
| Seller may not be told the money has gone | Both parties signed and have a copy |
| Disputes go straight to court | Clear instructions reduce the room for dispute |
What the deed should cover
- The amount deposited and who paid it.
- A reference to the option contract, the property and the option period.
- When the fee is released to the seller (for example, if the buyer does not exercise the option in time).
- When it is returned to the buyer (for example, if the seller breaches or a condition fails).
- What happens at completion: usually the fee is applied to the price at the notary.
- What documents or notices the notary needs before releasing the funds.
Spanish notaries must also comply with anti-money-laundering rules, so expect to show where the funds come from.
Frequently asked questions
Is a notarial deed of deposit expensive?
Notary fees for a deed of deposit are generally modest compared with the amount protected. Ask the notary for a quote in advance.
Can my lawyer hold the deposit instead?
Some transactions use a lawyer’s client account or a bank escrow. Whatever the method, the release conditions should be in writing and signed by both parties.
Is the option fee the same as arras?
No. An option fee buys an exclusive right to purchase; arras are a deposit paid under a sale agreement already concluded. The consequences of withdrawing are different, so your lawyer should explain which structure fits your purchase.
Related guides
Signing an option contract in Mallorca?
Have the option contract and deed of deposit reviewed before you transfer any money.
General information, not legal advice for your specific transaction.
Sophie Gutenberg is a legal content specialist focused on Spanish property law, real estate transactions, conveyancing, due diligence and tax issues affecting international property buyers in Spain. She works alongside qualified Spanish property lawyers .
