Arras in the Promise of Sale in Colombia: Penitential, Confirmatory and Penal Clause

You published your farm, an interested buyer appeared and offers a deposit to "reserve" it. The question is whether, with that money, you can stop looking for a buyer, whether the interested party can back out, and what happens if you yourself back out. Short answer: the word "seña" (deposit) defines nothing. Between private parties, if the document does not say the money is "part of the price" or a "sign that the parties have agreed", the law presumes it is withdrawal earnest money (arras de retracto): whoever gave it forfeits it, and whoever received it returns it doubled. This text explains the general rule; it does not assess your property and does not replace a lawyer.

Three names, three effects

There is also a figure created by case law: penal confirmatory earnest money (arras confirmatorias penales). It has no article of its own in the code; the Supreme Court recognized it. It resembles the penalty clause because it looks at breach, but there is an actual, advance payment of money.

Why the money is agreed in the promise

The sale of real estate is not considered perfected until the public deed (Civil Code, art. 1857, paragraph 2, Senate text). That is why the deposit is negotiated beforehand, in the promise. And the promise is binding only if it is in writing, the promised contract is not void for lacking the requirements of art. 1511, it sets a deadline or condition for signing it, and it is so determined that only delivery or legal formalities remain (art. 1611, Civil Code).

That list, the property registration folio and notarization are already explained in the guide to the purchase promise agreement; I will not repeat them here. What I will tell you: the promise does not transfer ownership. Receiving money does not make the property "sold".

Withdrawal: who loses, who doubles, and the two-month clock

If the sale is made with earnest money, each party may withdraw: whoever gave it forfeits it, and whoever received it returns it doubled (art. 1859). Withdrawing this way is not "breach"; it is exercising a right paid in advance.

That right has a time limit. If no deadline was set, there is no withdrawal after the two months following the agreement, nor after the public deed of sale is granted or delivery has begun (art. 1860). A practical detail almost no one writes down: set an express withdrawal deadline instead of relying on the default one.

Beware of "I always return double": that only describes the withdrawal under art. 1859, within the deadline, when the agreement is truly a withdrawal pact. It is not a rule for any failed deal.

Confirmatory earnest money and the phrase that must be written

Only if the document says the earnest money is given as part of the price or as a sign that the parties have agreed does it count as confirmatory. If that is not stated, the withdrawal under arts. 1859 and 1860 is presumed by law (art. 1861). Writing just "advance", "deposit" or "guarantee" falls under that presumption. And even if they are confirmatory, the sale of the real estate is still not perfected until the public deed.

Friendly advice: the clear intention of the parties prevails over the literal meaning of the words (art. 1618), but do not bet that a judge will guess what you meant. Write it down.

Penalty clause alongside earnest money

The penalty clause secures performance through a payment if the main obligation is not performed or is delayed (art. 1592). Rules that surprise people:

• Once the debtor is in default, the creditor cannot demand both performance and the penalty, unless the penalty is for mere delay or there is an express agreement that paying it does not extinguish the main obligation (art. 1594).
• The penalty and damages cannot both be claimed unless expressly agreed; you must choose (art. 1600).
• The penalty can be demanded even if the debtor claims there was no harm (art. 1599).
• In a positive obligation, the penalty is not triggered until there is default (art. 1595). There is default if performance is not made within the stipulated term, if time was essential, or if there was a judicial demand; and in a bilateral contract no one is in default while the other has not performed or offered to perform (arts. 1608 and 1609).

Practical difference: the penalty does not require money to have been paid in advance; earnest money does. And if paying the penalty releases or does not release from the duty to sign the deed, that must be written down. A WhatsApp message does not put someone in default: arts. 1608 and 1609 define that.

When the main obligation and the penalty are fixed sums, art. 1601 allows requesting that the amount exceeding double the first be reduced. It is a power of reduction with exclusions, not a universal cap for every property deposit.

The error the Court saw in 2018

In the judgment SC3047-2018, of July 31, 2018, the clause said "withdrawal earnest money" and then regulated what happened "in case of breach". The Court accepted reading two agreements: the withdrawal label did not turn the second part into a power to back out, because the penalty was tied to breach, and it did not overturn that reading (Gaceta de Jurisprudencia). A penalty agreed for breach prevents treating that breach as simple withdrawal.

The lesson is not to copy a formula, but to separate: one stipulation for withdrawal and another for breach, each with its own name. That ruling does not promise the same outcome for your property; the drafting should be done by a lawyer or the notary's office. Whether one can choose between demanding the deed or keeping the doubled earnest money in penal confirmatory arrangements depends on the clause and on whether the contract is civil or commercial.

Private individual or merchant

In commercial contracts, earnest money under art. 866 of the Commercial Code allows withdrawal by forfeiting it or returning it doubled, and the right to withdraw ceases when the promised contract is concluded or the performance is carried out. If a performance is agreed for breach or delay, art. 867 understands that withdrawal is not allowed, and if the main performance is a fixed sum of money the penalty cannot exceed it (Commercial Code). That is the commercial regime: do not transfer it to a property between private individuals. If you sell as a merchant, the regime may change and you need a lawyer.

Do not confuse this with off-plan housing either: the penalty under a trust (encargo fiduciario) is a different regime, as explained in the guide on withdrawal from off-plan apartments. And art. 1932 (resolution for non-payment of price) does not authorize keeping the deposit of a promise just because the buyer did not show up at the notary's office.

What to put in writing before moving the money

The law does not set a percentage or amount for earnest money: the sum is whatever the parties write. Before sending or receiving anything, check that the promise states:

• The amount and who receives it.
• Whether it is part of the price or withdrawal money.
• The withdrawal deadline, or the penalty for breach, in separate stipulations.
• Whether paying the penalty replaces or does not replace the deed.
• The property, the date of the deed, and what happens if the folio shows an attachment, encumbrance or other impediment.

The costs of the deed are split between seller and buyer, unless agreed otherwise (art. 1862); the peso value comes from the notary and registry calculation, as detailed in the guide to notary and registry costs. If it is an urban lot, remember that the plusvalía tax is not the deposit either: see the plusvalía tax.

And the most basic point: do not send or receive the deposit by chat before a written promise that states the type of earnest money, the property and the date of the deed. A transfer receipt does not qualify the earnest money.

Listing the farm once the clause is clear

With the type of earnest money defined, the listing is easier to sell: price, folio number, status of the process and photos of the property (never of the contract or ID cards). Direct contact does not replace the notary's office, and the listing does not replace the promise. If you are looking for another type of property, there are also lots y country houses, within housing.

If there is an attachment, succession, family patrimony or a merchant party, consult a lawyer before signing.

Frequently asked questions

❓ If the promise only says "seña" or "arras", can I withdraw?

Yes, in a civil sale. Without the expressions "part of the price" or "sign that the parties have agreed", art. 1861 presumes withdrawal by law. However, without an agreed deadline the right lapses after two months, with the deed or when delivery begins (verify with the official source).

❓ How do withdrawal earnest money, confirmatory earnest money and the penalty clause differ?

Withdrawal earnest money pays for the right to back out; confirmatory earnest money confirms the deal and is credited to the price if the document says so. The penalty clause punishes delay or breach and is not, by itself, an advance payment already made (verify with the official source).

❓ Does a seller who backs out always return double?

No. Double is the effect of withdrawal under art. 1859, within the deadline of art. 1860 and when the agreement is truly a withdrawal pact. If the clause is tied to breach, SC3047-2018 prevents treating it as simple withdrawal (verify with the official source).

❓ How large should earnest money be? Is there a legal percentage?

The law sets no percentage or amount for earnest money, deposit or advance. The sum is whatever the parties write in the promise. Be wary of anyone who tells you there is a mandatory or "customary" figure (verify with the official source).

❓ Can I keep the earnest money and also claim damages?

Not both, unless the document expressly says so. Art. 1600 requires choosing between the penalty and damages. So it is best to make clear what each payment covers (verify with the official source).

❓ Is it safe to give or receive the deposit by chat?

No. Do not send or receive the deposit by chat before a written promise that states the type of earnest money, the property and the date of the deed. A transfer receipt does not qualify the earnest money. Be wary of receipts and checks sent by chat (verify with the official source).

❓ Where and how do I publish my property for sale?

Publish it in a listing with photos of the property, price and folio number, once the promise already states the type of earnest money. Direct contact does not replace the notary's office or the written promise (verify with the official source).