contrato privado (= Private contract)
This concerns the private, non-notarised contract, for the acquisition of property. This is possible in Spain unlike many other countries. It is theoretically even possible to seal a land purchase contract in Spain with a handshake. I strongly advise against, however, unless there are good reasons for it.
This Private contract is often called an options contract or held as such. Also the pre-payment contract recommended by us (Contrato de Arras) is a preliminary agreement. The private or preliminary agreement is used to cover the time between buying decision and notary date (escritura), to bind both parties to the agreement. Market prices are specified here, unlike values mentioned in the escritura. Also, other conditions may be agreed upon here, which a notary would not include in the escritura.
Do not confuse this with the hire-purchase agreement , whereby each instalment is guaranteed by the builder’s bank, according to progress in building.