Do you lose your deposit if the bank rejects your Spanish mortgage? The financing clause that can save you (Madrid Appeal Court Judgment 260/2025)
You sign a Spanish earnest-money contract (arras penitenciales), pay 10 % and the bank rejects your mortgage. Do you get your money back? The case-law rule is harsh: obtaining finance is the buyer's risk and, without a financing clause, the deposit is lost (Barcelona Appeal Court Judgment 640/2021). But Madrid Appeal Court Judgment 260/2025 nuances when good faith and an implied resolutory condition allow recovery. We analyse the case law, the model clause every buyer should sign and the mistakes that cost tens of thousands of euros on the Costa Blanca.
Published 4 September 2026 · Bufete Padilla · Real Estate and Civil Law · Torrevieja, Elche and Moraira
It is the situation that worries our clients most each month: a buyer — Spanish or foreign — signs an earnest-money contract (arras penitenciales), pays €20,000, €30,000 or €50,000 to the seller, applies for the mortgage… and the bank says no. A low valuation, an insufficient credit score, tighter lending criteria, a forgotten default register entry. Whatever the reason: the deed cannot be signed and the seller, contract in hand, claims the deposit.
Can they keep it? The short answer is: it depends on what the arras contract says, and the long answer is being written by the Provincial Appeal Courts, with two judgments every buyer should know: Barcelona Appeal Court Judgment 640/2021 and Madrid Appeal Court Judgment 260/2025.
> 30-second summary. In an arras penitenciales contract (art. 1454 Civil Code), obtaining bank finance is a risk borne by the buyer, unless the contract expressly conditions the deal on the mortgage being granted. Without a financing clause, rejection of the loan does not release the buyer and the deposit is lost (Barcelona Appeal Court Judgment 640/2021). But where the contract does link the transaction to obtaining the loan, or where the refusal arises from causes beyond the buyer's diligence and good faith so requires, the courts order repayment (Madrid Appeal Court Judgment 260/2025). Practical lesson: never sign an arras contract without a resolutory financing clause drafted by your lawyer.
1. The typical scenario: €30,000 at stake
The mechanics are always the same. The buyer finds the property, the estate agent urges them to "reserve it" and an arras penitenciales contract is signed with payment of 10 % of the price. Article 1454 of the Civil Code allows the buyer to withdraw forfeiting the amount paid, and the seller to withdraw repaying double.
What almost nobody reads is what the contract does not say: what happens if the buyer wants to buy, does not voluntarily withdraw, but cannot complete the price because the bank rejects the mortgage. Is that withdrawal? Breach? Or a fortuitous event that unwinds the deal without penalty?
Tens of thousands of euros depend on the answer. And the answer, judgment by judgment, has been built as follows.
2. The general rule: financing is the buyer's risk
The majority doctrine of the Provincial Appeal Courts starts from a forceful premise: obtaining finance is a burden of the debtor, not a condition of the transaction.
The purchase contract obliges the buyer to pay the price (art. 1445 CC). How they obtain that money — savings, sale of another property, a mortgage loan — belongs to their own sphere of risk. If the bank rejects the loan, the buyer still owes the price and, if they fail to pay within the agreed period, they are in breach. And if they breach, they lose the deposit.