Table of Contents
What a holding deposit contract is and why you need it
Reservation, deposit and earnest money: they are not the same
What a good holding deposit contract should include
How much deposit to charge
What happens when the buyer backs out
What happens when the dealership breaches the contract
Online and distance reservations
Frequent mistakes with holding deposit contracts
Conclusion
Frequently Asked Questions
Few documents generate as many conflicts in a dealership as a poorly drafted holding deposit contract. The customer leaves a deposit, the dealership takes the car off the market, days pass, and the customer decides they no longer want it. The question then is always the same: can I keep the deposit?
The answer depends entirely on how the contract is drafted. A well-designed holding deposit contract protects the dealership, makes it clear what happens if someone backs out, and avoids arguments that end in complaints or negative reviews. A vague or non-existent contract turns every reservation into a risk.
This article explains how to draft a holding deposit contract that works in practice, the difference between the various types of deposits (which are not the same legally), and how to manage common situations: the customer who disappears, the one who asks for a refund, and the one who wants to reserve without visiting the dealership.
What a holding deposit contract is and why you need it
A holding deposit contract is an agreement by which the buyer pays a sum of money to the dealership to secure the purchase of a specific vehicle. In return, the dealership undertakes not to sell that car to anyone else for a specified period of time.
It is not a sales contract. The sale is formalised when full payment is completed and the ownership of the vehicle is transferred. The reservation is the step beforehand: a mutual commitment with a sum of money as a guarantee.
For the dealership, the reservation serves three essential functions. First, it filters out buyers with real intent from those who are just browsing. Second, it justifies taking the car off the market (ceasing to advertise it on portals and show it to other interested parties). Third, it provides financial protection if the customer backs out, as the dealership has lost time and sales opportunities during the reservation period.
You can download our Vehicle Reservation Contract template, which helps you easily record, organise, and manage vehicle reservations, ready to use.
Reservation, deposit and earnest money: they are not the same
This is the point of greatest confusion, and also the one with the most legal consequences. The terms "reservation", "deposit", and "earnest money" are used interchangeably in everyday language, but legally they are different things.
Penitential earnest money (Article 1454 of the Spanish Civil Code). These are the most common in the sale of vehicles. They act as an "exit door" for both parties. If the buyer backs out, they lose the deposit. If the seller breaches the agreement, they must return double the amount received. These are the earnest money terms that best protect the dealership, because the consequences of backing out are clear from the start.
Confirmatory earnest money. They act as an advance on the price. If the buyer backs out, they do not automatically lose the deposit: the dealership would have to claim legally for the actual damages caused by the breach. They offer less protection for the seller.
Simple deposit (or advance payment). If the contract does not specify the type of earnest money, courts tend to interpret the deposit as a simple advance on the price. This means that if the buyer backs out, they can claim the return of the deposit, and the dealership would have to prove the damages suffered to retain it.
The practical difference is huge. With penitential earnest money, if the customer does not complete the purchase, you keep the deposit and that's it. With a simple deposit, you may end up in a consumer dispute or receive a negative review trying to retain money that, legally, it is not clear if you can keep.
For this reason, the recommendation is always to state expressly in the contract that the earnest money is penitential and refer to Article 1454 of the Civil Code. If the contract does not specify this, the protection you have is much lower.
What a good holding deposit contract should include
For a holding deposit contract to be valid, clear, and to protect the dealership, it must include at least:
Full details of both parties. Full name or company name, NIF/CIF (tax ID/registration number), and address of both the buyer and the seller (dealership).
Detailed description of the vehicle. Make, model, version, registration plate, chassis number (VIN), year of first registration, mileage, and colour. The more specific, the less room for subsequent arguments. The chassis number is the most important piece of information because it is the unique identifier.
Deposit amount and method of payment. The exact sum, how it is paid (cash, bank transfer, card), and the date of payment.
Type of earnest money. Express mention that it is penitential earnest money in accordance with Article 1454 of the Civil Code. This phrase is what protects you: without it, interpretation is left to a judge.
Total price of the vehicle. The agreed sales price, making it clear whether or not it includes VAT, transfer fees, and other expenses.
Validity period. Deadline to complete the purchase. The norm is between 7 and 15 working days. Longer periods (30 days or more) increase the risk of the buyer changing their mind or you losing out on sales opportunities.
Vehicle condition. The state in which the car is delivered, warranty included (if any), equipment, and any agreement regarding repairs or preparation prior to delivery.
Consequences of breach of contract. What happens if the buyer does not complete the purchase (loses the deposit) and what happens if the dealership does not comply (returns double the amount).
Signatures of both parties. With date and place. If done remotely, electronic acceptance recorded with IP and date is valid.
How much deposit to charge
There is no fixed amount, but there is a range that balances dealer protection and buyer accessibility.
The usual: between 5% and 15% of the vehicle price. On a 12,000 euro car, that means between 600 and 1,800 euros. Many dealerships work with a flat fee (300, 500, or 1,000 euros) regardless of the price of the car, for simplicity.
Too low (less than 3%). It does not represent a real barrier for the buyer. If they only pay a 100 euro deposit on a 10,000 euro car, it is easy for them to back out: they lose very little. For the dealership, the cost of having taken the car off the market for one or two weeks is greater than the deposit received.
Too high (more than 20%). It can deter the buyer from reserving, especially if they have not yet sorted out financing or are comparing options. Furthermore, a very high deposit may be challenged by consumer protection authorities as disproportionate.
The sweet spot depends on the price of the car and your customer profile, but between 5% and 10% is usually the most balanced range.
What happens when the buyer backs out
This is the most common situation and the one that causes the most problems if the contract is not properly drafted.
With penitential earnest money (well-drafted contract). The dealership retains the deposit. There is no argument: Article 1454 of the Civil Code clearly establishes this. The buyer loses the deposit as compensation for the breach, and the dealership can put the car back up for sale.
With a simple deposit or ambiguous contract. The buyer may claim a refund of the deposit, arguing it was not specified to be non-refundable. If it goes to consumer protection or a court, the dealership may have to prove the actual damages suffered (lost sales opportunities, stock costs during the reservation period). It is more complicated, slower, and riskier.
Practical example. A customer reserves a Seat León for 14,000 euros with a 1,000 euro deposit (penitential earnest money). The dealership takes the car off Coches.net, AutoScout24, and Wallapop. After 10 days, the customer says they have found another cheaper car. The dealership retains the 1,000 euros and lists the car again. Without a contract or with a simple deposit, the customer could claim the 1,000 euros back and the dealership would have lost 10 days of visibility without compensation.
What happens when the dealership breaches the contract
If the dealership sells the car to someone else or cannot deliver on what was agreed:
With penitential earnest money. The dealership must return double the deposit to the buyer. If the customer paid a 1,000 euro deposit, the dealership returns 2,000 euros to them.
With a simple deposit. The dealership must refund the deposit in full and the buyer may also claim compensation for damages.
The recommendation for the dealership is not to accept a reservation unless they are certain they can deliver on it. If there is a pending issue with the car (MOT, repair, paperwork), it is better to resolve it before signing the reservation or state clearly in the contract that delivery is subject to that condition.
Online and distance reservations
It is increasingly common for buyers to want to reserve a car without travelling to the dealership, especially if they are in another city. Distance reservations are perfectly valid, but they require a slightly more careful process.
Sending the contract by email. You can send the contract as a PDF to the buyer, who signs it digitally or prints, signs by hand, and returns it scanned. For greater legal certainty, use electronic signatures (there are free and paid tools that generate signature certificates).
Paying the deposit by transfer or payment gateway. A bank transfer leaves a record of the transaction and description. If you use a payment gateway (card), keep the proof of payment showing the amount, date, and payer details.
Written confirmation. Send the customer confirmation by email or WhatsApp with a summary of the reservation (vehicle, price, deposit paid, deadline). This reinforces the validity of the agreement and reduces claims.
Right of withdrawal. If the reservation is made at a distance (without physical presence at the dealership), the buyer may be entitled to the 14-calendar-day right of withdrawal recognised by the General Law for the Defence of Consumers and Users. This applies to sales to final consumers (individuals, not businesses). This is a point worth discussing with your legal advisor to include the appropriate clause in the contract.
To manage the entire paperless reservation process, we recommend our article on the benefits of having a website for your dealership, where we explain how to integrate online reservations into your site.
Frequent mistakes with holding deposit contracts
Not specifying that the earnest money is penitential. If the contract only says "deposit" or "reservation" without more, the default interpretation does not favour you. Always include the reference to Article 1454 of the Civil Code.
Not setting a validity period. Without a deadline, the reservation remains open indefinitely. The buyer could take weeks to decide and you have a car taken off the market without being able to sell it. Always establish a deadline (7-15 days) and make it clear what happens if it expires without the purchase being completed.
Accepting verbal reservations. A reservation without a written contract is a ticking time bomb. If the customer pays 500 euros in cash without signing anything and then backs out, you have nothing to justify retaining that money. Always a signed contract, always.
Not describing the car in sufficient detail. If the contract says "white Seat León" and it turns out you have two of them, there is a problem. The chassis number (VIN) is mandatory to identify the vehicle unambiguously.
Not including the total price or expenses. If the deposit is 1,000 euros on a price that has not been made clear, or if the buyer thought the transfer fees were included when they were not, you have a conflict. Get everything in writing: car price, VAT, transfer fees, warranty.
Refunding the deposit due to social pressure. If the contract specifies penitential earnest money and the customer backs out, you have the right to keep the deposit. Returning it because the customer gets angry, threatens a poor review, or insists a lot is a legitimate commercial decision, but it is not a legal obligation. Know your position before deciding. To protect yourself against this type of situation, we recommend checking our guide on how to avoid complaints after selling a used car.
Conclusion
A well-drafted holding deposit contract is one of the simplest and most effective tools to protect a dealership. The key lies in three points: specifying that the earnest money is penitential (Article 1454 of the Civil Code), setting a clear validity period, and describing the vehicle including the chassis number. With that, conflicting situations are resolved without ambiguity.
More than 500 dealerships are already using Dealcar to manage their business.
From the platform, you can record a car reservation, link it to the file with customer details and the amount, and generate the contract with the correct legal clauses. All in one place, without loose templates or lost paperwork. If you want to see how it works, you can explore Dealcar's sales file module.
Frequently Asked Questions
How much is usually charged as a deposit for a car?
Between 5% and 15% of the vehicle's price, or a flat fee of between 300 and 1,000 euros. The amount should be enough to ensure a real commitment from the buyer, but not so high as to deter them from reserving.
Can I keep the deposit if the customer backs out?
Yes, provided that the contract expressly specifies that it consists of penitential earnest money in accordance with Article 1454 of the Civil Code. If the contract does not clarify this, retaining it can be disputed.
Is it compulsory to sign a holding deposit contract?
It is not legally compulsory, but it is highly recommended. Without a signed contract, if a conflict arises, you have nothing to back up your position. The contract protects both parties.
What happens if I sell the reserved car to someone else?
If there is penitential earnest money, you must return double the deposit to the original buyer. Furthermore, the buyer could claim additional damages. Do not sell a reserved car unless the deadline has expired.
Can a reservation be made via WhatsApp or email?
Yes. A distance reservation is valid if there is a signed contract (it can be digital) and a recorded payment. The important thing is that there is a document outlining all the conditions (vehicle, price, deposit, deadline, type of earnest money) and acceptance by both parties. Bear in mind that distance sales to consumers may be subject to a 14-day right of withdrawal.
Does the holding deposit contract replace the sales contract?
No. They are different documents. The reservation secures the purchase commitment. The sales contract is formalised when payment is completed and ownership is transferred. Ideally, the sales contract should be signed at the time of vehicle delivery. To find out what to include in the sales contract, check our legal guide on sales contracts for professionals.
Table of Contents
What a holding deposit contract is and why you need it
Reservation, deposit and earnest money: they are not the same
What a good holding deposit contract should include
How much deposit to charge
What happens when the buyer backs out
What happens when the dealership breaches the contract
Online and distance reservations
Frequent mistakes with holding deposit contracts
Conclusion
Frequently Asked Questions
Few documents generate as many conflicts in a dealership as a poorly drafted holding deposit contract. The customer leaves a deposit, the dealership takes the car off the market, days pass, and the customer decides they no longer want it. The question then is always the same: can I keep the deposit?
The answer depends entirely on how the contract is drafted. A well-designed holding deposit contract protects the dealership, makes it clear what happens if someone backs out, and avoids arguments that end in complaints or negative reviews. A vague or non-existent contract turns every reservation into a risk.
This article explains how to draft a holding deposit contract that works in practice, the difference between the various types of deposits (which are not the same legally), and how to manage common situations: the customer who disappears, the one who asks for a refund, and the one who wants to reserve without visiting the dealership.
What a holding deposit contract is and why you need it
A holding deposit contract is an agreement by which the buyer pays a sum of money to the dealership to secure the purchase of a specific vehicle. In return, the dealership undertakes not to sell that car to anyone else for a specified period of time.
It is not a sales contract. The sale is formalised when full payment is completed and the ownership of the vehicle is transferred. The reservation is the step beforehand: a mutual commitment with a sum of money as a guarantee.
For the dealership, the reservation serves three essential functions. First, it filters out buyers with real intent from those who are just browsing. Second, it justifies taking the car off the market (ceasing to advertise it on portals and show it to other interested parties). Third, it provides financial protection if the customer backs out, as the dealership has lost time and sales opportunities during the reservation period.
You can download our Vehicle Reservation Contract template, which helps you easily record, organise, and manage vehicle reservations, ready to use.
Reservation, deposit and earnest money: they are not the same
This is the point of greatest confusion, and also the one with the most legal consequences. The terms "reservation", "deposit", and "earnest money" are used interchangeably in everyday language, but legally they are different things.
Penitential earnest money (Article 1454 of the Spanish Civil Code). These are the most common in the sale of vehicles. They act as an "exit door" for both parties. If the buyer backs out, they lose the deposit. If the seller breaches the agreement, they must return double the amount received. These are the earnest money terms that best protect the dealership, because the consequences of backing out are clear from the start.
Confirmatory earnest money. They act as an advance on the price. If the buyer backs out, they do not automatically lose the deposit: the dealership would have to claim legally for the actual damages caused by the breach. They offer less protection for the seller.
Simple deposit (or advance payment). If the contract does not specify the type of earnest money, courts tend to interpret the deposit as a simple advance on the price. This means that if the buyer backs out, they can claim the return of the deposit, and the dealership would have to prove the damages suffered to retain it.
The practical difference is huge. With penitential earnest money, if the customer does not complete the purchase, you keep the deposit and that's it. With a simple deposit, you may end up in a consumer dispute or receive a negative review trying to retain money that, legally, it is not clear if you can keep.
For this reason, the recommendation is always to state expressly in the contract that the earnest money is penitential and refer to Article 1454 of the Civil Code. If the contract does not specify this, the protection you have is much lower.
What a good holding deposit contract should include
For a holding deposit contract to be valid, clear, and to protect the dealership, it must include at least:
Full details of both parties. Full name or company name, NIF/CIF (tax ID/registration number), and address of both the buyer and the seller (dealership).
Detailed description of the vehicle. Make, model, version, registration plate, chassis number (VIN), year of first registration, mileage, and colour. The more specific, the less room for subsequent arguments. The chassis number is the most important piece of information because it is the unique identifier.
Deposit amount and method of payment. The exact sum, how it is paid (cash, bank transfer, card), and the date of payment.
Type of earnest money. Express mention that it is penitential earnest money in accordance with Article 1454 of the Civil Code. This phrase is what protects you: without it, interpretation is left to a judge.
Total price of the vehicle. The agreed sales price, making it clear whether or not it includes VAT, transfer fees, and other expenses.
Validity period. Deadline to complete the purchase. The norm is between 7 and 15 working days. Longer periods (30 days or more) increase the risk of the buyer changing their mind or you losing out on sales opportunities.
Vehicle condition. The state in which the car is delivered, warranty included (if any), equipment, and any agreement regarding repairs or preparation prior to delivery.
Consequences of breach of contract. What happens if the buyer does not complete the purchase (loses the deposit) and what happens if the dealership does not comply (returns double the amount).
Signatures of both parties. With date and place. If done remotely, electronic acceptance recorded with IP and date is valid.
How much deposit to charge
There is no fixed amount, but there is a range that balances dealer protection and buyer accessibility.
The usual: between 5% and 15% of the vehicle price. On a 12,000 euro car, that means between 600 and 1,800 euros. Many dealerships work with a flat fee (300, 500, or 1,000 euros) regardless of the price of the car, for simplicity.
Too low (less than 3%). It does not represent a real barrier for the buyer. If they only pay a 100 euro deposit on a 10,000 euro car, it is easy for them to back out: they lose very little. For the dealership, the cost of having taken the car off the market for one or two weeks is greater than the deposit received.
Too high (more than 20%). It can deter the buyer from reserving, especially if they have not yet sorted out financing or are comparing options. Furthermore, a very high deposit may be challenged by consumer protection authorities as disproportionate.
The sweet spot depends on the price of the car and your customer profile, but between 5% and 10% is usually the most balanced range.
What happens when the buyer backs out
This is the most common situation and the one that causes the most problems if the contract is not properly drafted.
With penitential earnest money (well-drafted contract). The dealership retains the deposit. There is no argument: Article 1454 of the Civil Code clearly establishes this. The buyer loses the deposit as compensation for the breach, and the dealership can put the car back up for sale.
With a simple deposit or ambiguous contract. The buyer may claim a refund of the deposit, arguing it was not specified to be non-refundable. If it goes to consumer protection or a court, the dealership may have to prove the actual damages suffered (lost sales opportunities, stock costs during the reservation period). It is more complicated, slower, and riskier.
Practical example. A customer reserves a Seat León for 14,000 euros with a 1,000 euro deposit (penitential earnest money). The dealership takes the car off Coches.net, AutoScout24, and Wallapop. After 10 days, the customer says they have found another cheaper car. The dealership retains the 1,000 euros and lists the car again. Without a contract or with a simple deposit, the customer could claim the 1,000 euros back and the dealership would have lost 10 days of visibility without compensation.
What happens when the dealership breaches the contract
If the dealership sells the car to someone else or cannot deliver on what was agreed:
With penitential earnest money. The dealership must return double the deposit to the buyer. If the customer paid a 1,000 euro deposit, the dealership returns 2,000 euros to them.
With a simple deposit. The dealership must refund the deposit in full and the buyer may also claim compensation for damages.
The recommendation for the dealership is not to accept a reservation unless they are certain they can deliver on it. If there is a pending issue with the car (MOT, repair, paperwork), it is better to resolve it before signing the reservation or state clearly in the contract that delivery is subject to that condition.
Online and distance reservations
It is increasingly common for buyers to want to reserve a car without travelling to the dealership, especially if they are in another city. Distance reservations are perfectly valid, but they require a slightly more careful process.
Sending the contract by email. You can send the contract as a PDF to the buyer, who signs it digitally or prints, signs by hand, and returns it scanned. For greater legal certainty, use electronic signatures (there are free and paid tools that generate signature certificates).
Paying the deposit by transfer or payment gateway. A bank transfer leaves a record of the transaction and description. If you use a payment gateway (card), keep the proof of payment showing the amount, date, and payer details.
Written confirmation. Send the customer confirmation by email or WhatsApp with a summary of the reservation (vehicle, price, deposit paid, deadline). This reinforces the validity of the agreement and reduces claims.
Right of withdrawal. If the reservation is made at a distance (without physical presence at the dealership), the buyer may be entitled to the 14-calendar-day right of withdrawal recognised by the General Law for the Defence of Consumers and Users. This applies to sales to final consumers (individuals, not businesses). This is a point worth discussing with your legal advisor to include the appropriate clause in the contract.
To manage the entire paperless reservation process, we recommend our article on the benefits of having a website for your dealership, where we explain how to integrate online reservations into your site.
Frequent mistakes with holding deposit contracts
Not specifying that the earnest money is penitential. If the contract only says "deposit" or "reservation" without more, the default interpretation does not favour you. Always include the reference to Article 1454 of the Civil Code.
Not setting a validity period. Without a deadline, the reservation remains open indefinitely. The buyer could take weeks to decide and you have a car taken off the market without being able to sell it. Always establish a deadline (7-15 days) and make it clear what happens if it expires without the purchase being completed.
Accepting verbal reservations. A reservation without a written contract is a ticking time bomb. If the customer pays 500 euros in cash without signing anything and then backs out, you have nothing to justify retaining that money. Always a signed contract, always.
Not describing the car in sufficient detail. If the contract says "white Seat León" and it turns out you have two of them, there is a problem. The chassis number (VIN) is mandatory to identify the vehicle unambiguously.
Not including the total price or expenses. If the deposit is 1,000 euros on a price that has not been made clear, or if the buyer thought the transfer fees were included when they were not, you have a conflict. Get everything in writing: car price, VAT, transfer fees, warranty.
Refunding the deposit due to social pressure. If the contract specifies penitential earnest money and the customer backs out, you have the right to keep the deposit. Returning it because the customer gets angry, threatens a poor review, or insists a lot is a legitimate commercial decision, but it is not a legal obligation. Know your position before deciding. To protect yourself against this type of situation, we recommend checking our guide on how to avoid complaints after selling a used car.
Conclusion
A well-drafted holding deposit contract is one of the simplest and most effective tools to protect a dealership. The key lies in three points: specifying that the earnest money is penitential (Article 1454 of the Civil Code), setting a clear validity period, and describing the vehicle including the chassis number. With that, conflicting situations are resolved without ambiguity.
More than 500 dealerships are already using Dealcar to manage their business.
From the platform, you can record a car reservation, link it to the file with customer details and the amount, and generate the contract with the correct legal clauses. All in one place, without loose templates or lost paperwork. If you want to see how it works, you can explore Dealcar's sales file module.
Frequently Asked Questions
How much is usually charged as a deposit for a car?
Between 5% and 15% of the vehicle's price, or a flat fee of between 300 and 1,000 euros. The amount should be enough to ensure a real commitment from the buyer, but not so high as to deter them from reserving.
Can I keep the deposit if the customer backs out?
Yes, provided that the contract expressly specifies that it consists of penitential earnest money in accordance with Article 1454 of the Civil Code. If the contract does not clarify this, retaining it can be disputed.
Is it compulsory to sign a holding deposit contract?
It is not legally compulsory, but it is highly recommended. Without a signed contract, if a conflict arises, you have nothing to back up your position. The contract protects both parties.
What happens if I sell the reserved car to someone else?
If there is penitential earnest money, you must return double the deposit to the original buyer. Furthermore, the buyer could claim additional damages. Do not sell a reserved car unless the deadline has expired.
Can a reservation be made via WhatsApp or email?
Yes. A distance reservation is valid if there is a signed contract (it can be digital) and a recorded payment. The important thing is that there is a document outlining all the conditions (vehicle, price, deposit, deadline, type of earnest money) and acceptance by both parties. Bear in mind that distance sales to consumers may be subject to a 14-day right of withdrawal.
Does the holding deposit contract replace the sales contract?
No. They are different documents. The reservation secures the purchase commitment. The sales contract is formalised when payment is completed and ownership is transferred. Ideally, the sales contract should be signed at the time of vehicle delivery. To find out what to include in the sales contract, check our legal guide on sales contracts for professionals.
