Earnest Money Deposit (Arras)

Arras, commonly called the deposit or sinal, is the amount the buyer gives the seller as an advance on the price and as confirmation of the contract. Under Brazilian law, arras serve two functions at once: confirming that the deal is serious and setting the financial consequences if either party backs out.

• Confirmatory arras (arras confirmatórias): the default type in real estate contracts. A buyer who backs out forfeits the amount paid; a seller who backs out must return double what was received. There is no right to withdraw: either party can be compelled to complete the deal.
• Forfeitable arras (arras penitenciais): used when the contract expressly reserves a right to withdraw. Backing out is then a right the buyer can exercise by forfeiting the deposit, or the seller by returning double. The parties may also agree to a supplemental compensation clause (Article 420 of the Civil Code).
• Typical amount in the Florianópolis market: between 5% and 10% of the property’s total price.
• Credit toward the price: unless the contract states otherwise, the deposit is deducted from the total price at final payment.
• When it’s paid: the deposit is due when the private instrument of promise to purchase and sell, or the purchase-and-sale contract, is signed.

In Florianópolis, especially for new developments and high-end properties, it’s common for the developer to set the deposit percentage in the standard contract. Buyers should review this figure carefully before signing.