What is a purchase option in Malaga and how is it different from earnest money?

Purchase option in Malaga. A purchase option gives the buyer (the “option holder”) the right—but not the obligation—to buy a property within a fixed time and at an agreed price. To register the option at the Spanish Land Registry, the law requires: (i) an express agreement to register, (ii) the price of the future sale (and, if any, the option premium, or prepayment), and (iii) a maximum term of four years. A registered option warns third parties that the option holder can purchase during that term.

Earnest money (arras). Earnest money is a deposit. If the parties clearly agree on penitential arras (Spanish Civil Code art. 1454), the buyer may walk away losing the deposit; the seller may walk away by returning double the deposit. If this is not clearly written, courts often treat the deposit as confirmatory only (no walk-away right).

Example: earnest money vs. purchase option in Malaga

• María wants a flat in Malaga. She signs penitential earnest money for €10,000. If she changes her mind, she forfeits €10,000.

• Luis signs a purchase option in Malaga: €10,000 premium, €300,000 price, 6-month term. If he buys, the €10,000 is deducted from the price; if not, he loses the premium. Because the option is registered, the Land Registry alerts third parties that Luis can buy within 6 months.

Summary

• A purchase option is useful to “reserve” a property, but it must be properly drafted and registered to avoid issues (see Article 14 of the Spanish Mortgage Regulations—e.g., maximum term of four years).
• In horizontal property (condominiums), increasing a flat’s floor area or “adjusting the square metres” is not a mere formality: it requires amending the master deed (usually by unanimous approval), and it is not always solved by the simpler rectification procedures under Articles 199/201 of the Mortgage Law, which apply to specific scenarios. Otherwise, the Land Registry will block the transaction.
• When exercising an option, cancelling later-registered encumbrances usually requires depositing (consigning) certain amounts; and beware of purchase options used as disguised security (pactum commissorium): they may be refused.

Three frequent Land Registry blockers (and how we prevent them from day one)

1) Extra square metres in a condominium: not a minor fix

If a flat has more floor area than stated in the Registry, in condominium (Spanish horizontal property) that affects shares/quotas and common elements. The DGSJFP (Spanish registry authority) reiterates that you cannot simply “add metres” using a quick rectification file: you usually must amend the master deed (title)—often requiring unanimous approval—and sign a public deed to modify it. Without that, the Registry will suspend the new area.

Example (explained).
Buying a penthouse in Nerja: the cadastral plan shows +7 m² of enclosed terrace that do not appear in the title. The correct path is: call a Homeowners’ Meeting, obtain unanimous consent, grant a deed amending the title, and then file for registration. Trying to “add metres” with only Cadastre data or a 201 Mortgage Law file will not succeed.

2) Articles 199/201 Mortgage Law: when they help—and when they don’t

These rectification procedures are helpful to align description/graphical boundaries, but they have limits. They don’t undo old segregations or modify a condominium title: if the change affects the master deed/quotas, the Registry will reject it unless the community requirements are met.

Example (explained).
A rural plot near Malaga “doubles” its measured area in a private survey. An art. 199 file, based only on Cadastre, is filed to “add” land actually segregated years ago. Result: refusal. We must reconstruct the chain of acts and, if needed, process planning licences (segregation/aggregation) under the local plan.

3) Exercising a purchase option: later charges and consignments

When exercising a purchase option (e.g., a deed “in unilateral exercise of the purchase option”), to cancel charges registered afterwards the Registry may require consigning funds to protect those later right-holders. Also, registrars cannot assume your option is a disguised security (see pactum commissorium below) without clear evidence; but if it truly operates as a guarantee, it will be refused. Recent DGSJFP decisions refine these criteria.

Example (explained).
An option is exercised over a flat in Torremolinos. Some embargoes appear after the option’s registration. If the deed clearly states what payments are deductible from the price and the option was duly registered, the DGSJFP accepts certain deductions, but still requires consignment to protect later charges. All this must be explicit in the option deed and its registration.

In a condominium, increasing floor area requires amending the master deed (usually by unanimous approval of the community).

Beware the forfeiture clause (pactum commissorium): what it means in practice

Plain English. A pactum commissorium is a prohibited clause by which, if you don’t pay, the creditor keeps your property without an independent valuation or fair process. Spanish law forbids a creditor from automatically taking title to the collateral on default (Spanish Civil Code arts. 1859 & 1884).

How it shows up in real life. Sometimes, under a so-called purchase option in Malaga, the real intention is to secure a loan: if the debtor fails to repay, the “option holder” keeps the property for a price that doesn’t reflect market value and without an objective sale/valuation mechanism. DGSJFP and the spanish Supreme Court have repeatedly rejected this as null. We spot and fix these risks before you sign.

Red flags we review:

• unclear premium/price and “advance” payments,
• clauses that award the asset without objective valuation (independent appraisal/third-party sale), and
• templates that mix financing with an option without balancing the parties.

Checklist before you sign earnest money or a purchase option in Malaga (what we do for you)

1. Due diligence (registry & planning): title, charges, Catastre–Registry coordination (Mortgage Law arts. 9 & 10), planning and licences (segregation/division/aggregation).

2. Condominium (Horizontal Property): if there are area discrepancies, we assess whether you need to amend the master deed (often unanimity) or a different route applies.

3. Earnest money contract: we draft clear penitential vs confirmatory terms and consequences (walk-away rights and penalties).

4. Drafting the purchase option in Malaga (if suitable): we ensure art. 14 RH requirements for registration (express agreement, price/premium, ≤ 4 years), and we include tailored language on consignments and cancellation of later charges.

5. Notary and Land Registry: correct exercise of the option, payment trails, and formalities.

6. Taxes in Andalusia: calculation of ITP/AJD and filing within 2 months (Modelo 600) from the day after the taxable event (Andalusia’s rule since 2022). If a private individual grants the option, it is taxed under TPO; the tax base is the agreed premium or, if lower/absent, 5% of the property value (ITPAJD, art. 14.2).

7. Foreign clients: NIE, Spanish bank account, translations, power of attorney, and English-speaking support (real estate lawyer in Malaga).

Taxes: quick guide (Andalusia)

• Resale property: ITP (regional rates; we confirm your case). Filing deadline in Andalusia: 2 months (Modelo 600).

• New-build: VAT + AJD (notarial deeds).

• Purchase option in Malaga:

  • If granted by a private individual: taxed under TPO; tax base = higher of the premium or 5% of the future sale value (art. 14.2 ITPAJD).

  • If granted by a business: generally VAT; and, if recorded in a notarial deed and registrable, AJD on the deed (case-by-case).

Note: We verify Andalusia-specific reduced rates/bonuses and any municipal rules (case-specific).

More real-world situations (explained)

A) Well-designed purchase option in Malaga that avoids surprises

An overseas buyer (UK) reserves a flat in Malaga via a registered option. We specify which payments are deductible from price and when, anticipate possible consignments to cancel later charges, and keep the term ≤ 4 years. The Land Registry accepts the exercise without objections.

B) Vague earnest money that triggers a dispute

A draft says “art. 1454” but never states the deposit is penitential nor its effects. The seller tries to cancel by returning “part” of it. We rewrite the clause to define the type of arras, walk-away scenarios, penalties and timelines—preventing litigation later.

C) Condominium with “extra metres”

A ground-floor unit shows an enlarged patio not reflected in quotas. We propose: unanimous approval, deed amending the master deed, and then the sale. If you try to register the area increase before that, the Registry will block it.

How we help with your purchase option in Málaga (Malaga & Nerja, Spanish/English)

• Full pre-purchase review (technical, registry, planning) before earnest money or a purchase option in Malaga.

• Drafting/negotiation of earnest money and a registrable purchase option (art. 14 RH), with protections against later charges and avoiding pactum commissorium risks.

• Coordination with Notary, Land Registry, bank, appraiser and Cadastre (Spanish Mortgage Law arts. 9 & 10).

• Tax compliance: we calculate ITP/AJD and file Modelo 600 within 2 months (Andalusia).

• We speak fluent English and guide you end-to-end.

Call to action: Thinking of buying in Malaga or Nerja? Contact us before you sign. Avoiding a registry block can save months and money.

FAQ

Can I “add metres” with a simple file under art. 201 Mortgage Law?
Not in condominium: you generally need to amend the master deed (often unanimity).

How long can a registrable purchase option last?
Up to four years (maximum).

What exactly is a pactum commissorium?
A forbidden creditor wind-up clause: on default, the creditor keeps the asset without an objective valuation—invalid under Civil Code arts. 1859 and 1884.

When do I pay taxes in Andalusia?
You generally have two months from the day after the taxable event to file Modelo 600 (ITP/AJD).

Conclusion

If you’re considering signing earnest money (arras) or a purchase option in Malaga or Nerja, consult us first. We review the property’s Land Registry and planning status, eliminate risky clauses (pactum commissorium), arrange any required deposit (consignation) to cancel later encumbrances, and optimise your taxes within Andalusia’s two-month deadline. Our team is bilingual (English/Spanish) and supports you end-to-end: pre-purchase checks, earnest money, option, notarial deed and taxes.

If you want to buy a property, business premises, building or parking, or sell a property in Malaga, and you want to avoid problems following the purchase of a property in Malaga, in the Law Firm Pérez Parras Economists and Lawyers in Málaga we are expert lawyers in the purchase and sale of properties in Malaga and Nerja, with a team of lawyers and economists bilingual English / Spanish who can advise you to avoid surprises in the purchase of your property. We have offices in the centre of Malaga and Nerja. Do not hesitate to contact us and ask us for a quote to accompany you in the process of buying or selling your property. We will prepare and review your earnest money contract after ensuring that the purchase you wish to make is viable and secure, without hidden charges of any kind, and we will help you and deal with all the taxes associated with your property purchase and sale operation in Málaga, optimising for example the IRPF to pay if the property comes from an inheritance, advising you until the end of your purchase, or sale of the property, including the tax declaration, whether you are resident or taxed as a non-resident, and any other procedure with the Administration or Land Registry. Equally, if you have any difficulties following the sale or purchase of a property, please do not hesitate to contact us so that we can advise you and defend you in or out of court if necessary. If you are a highly qualified professional in Malaga and wish to purchase your property in Malaga, we will also advise you in every step of the purchase process, ensuring that the property you wish to buy and the investment you wish to make will not cause you any problems, protecting your interests, organising your taxes and taxation as a highly qualified professional, so that you can develop your professional career and settle your life and your future in Malaga with all the guarantees of the best legal advice.