If the bank does not grant me the mortgage, do I get my deposit (“arras”) back?

Question

José Manuel Alburquerque · Accepted Answer

In Catalonia, yes, if the contract provided that all or part of the price would be paid with a loan, you prove in writing and within the agreed period that the bank has refused it and the refusal is not due to your own negligence. In that case you can back out and the seller must pay back what you paid, including the deposit (“arras”). The law allows the contract to say otherwise, so read the clause carefully before signing. In the rest of Spain there is no equivalent rule and, if the contract does not provide for it, the bank's refusal of the mortgage does not release you from the obligation to buy. What Catalan law requires The “Código Civil de Cataluña”, the Catalan Civil Code, allows the buyer to withdraw from the purchase if these conditions are met: That the contract provides that all or part of the price will be paid with a loan from a bank or other lender. The “Tribunal Superior de Justicia de Cataluña”, the High Court of Justice of Catalonia, has held that it is not enough for the seller to have known that you needed a mortgage. It must be stated in the contract or in a later agreement, for example one postponing the signing so that you can obtain the loan. That you prove with documents, within the agreed period, that the bank has refused you the loan. The same court has accepted that the contract need not say which bank. That the refusal is not due to your negligence. It will be up to you to prove that you genuinely sought financing, because the bank's letter is not enough. The court has refused repayment to buyers who applied for the loan on unreasonable terms or only pretended to look for it. If they are met, the seller must pay back whatever you have paid, whether it is a confirmatory or a withdrawal deposit. You, in return, must leave the seller in the same position they would be in if you had not signed. What the contract should say The law leaves some points open and allows the parties to agree otherwise. That is why the contract should state: The minimum loan amount you need and what happens if the bank grants you less, for example because the valuation comes in below the price. A realistic deadline for obtaining it. The law does not set one and the High Court of Justice of Catalonia looks at the circumstances of each case. As a guide, in one 2024 judgment it considered twenty days insufficient and in another, about two and a half months from the signing of the deposit agreement sufficient. How the refusal is to be proved, to whom it is to be notified and within how many days your money will be paid back. Some standard forms say that lack of financing does not entitle you to withdraw. The law allows that term, so read it before signing. In the rest of Spain, the “Tribunal Supremo”, Spain's Supreme Court, has held that failing to obtain the mortgage is a foreseeable risk borne by the buyer, which does not release them from performing. There, if the contract does not provide for it, the buyer forfeits a withdrawal deposit and, with a confirmatory deposit, runs the risk of being required to buy or facing a claim for damages. That is why it is always advisable to agree on it.