Real estate article series Part 1:  What is a title deed for? Do we need it as buyers or is it just of a waste of time to check that?

Are we 100% sure that the person introduced as a seller is the real owner of the property? Is there an unexpected beneficial owner or a mortgage, a lien, ongoing enforcement procedure or other encumbrance on the property that hinders you from buying it? Has the property been listed as a flat but is actually listed as office space?

To prevent, detect or overcome these problems, as a potential buyer, it is recommended to obtain the title deed of your desired Real property before making an offer to buy.

In Part 1 of this series of articles on Hungarian Real Estates, we will explain the structure of the title deed and what you need to know about them, whether you are selling, donating or in any other form transferring a property. 

By following the 3 simple steps outlined in this article, we can clarify our concerns about the property. So come on let’s go step by step!

STEP 1: Request a title deed

Hungarian individuals who has an Ügyfélkapu account can download a title deed free of charge 2 times a year on the Land Registry’s online site. From 01 January 2023, only e-certified title deeds will be available on a standard basis (for a fee of HUF 3,000 per property). All you need is access to a client portal (Ügyfélkapu) or you may ask your lawyer to do so for you. However, it is worth deciding whether you need a full title deed or just an extract of the title deed. While the latter only includes the current data, the full title deed gives you the „history” (background history) of the property, e.g. the current and previous owners and any charges. 

STEP 2: Checking the contents of the title deed

Whatever type is the Real Property, the title deed is made up of three main parts (marked with a Roman numeral), so let’s see what exactly they contain:

PART I sets out the general (numerical) details of the property:

• the name of the municipality, the exact address of the Real Property 
• plot number, location of the territory of the property (site), which may be internal, external (outside of town) 
• the (floor) area of the property in m2
• the type of cultivation/designation (e.g. pasture, meadow, field, orchard, forest, etc. in the case of land, or uncultivated land, e.g. vacant land, road, dwelling house, farm building, etc., or condominium type e.g. flat, shop, garage, etc.)
• legal nature of the property (e.g. condominium, protected area, monument, etc.)
• in the case of a property classified as land, the quality class of the land, its area and its value in gold crowns (also known as cadastral net income)
• the extent of the land use right and easement over the property

PART II defines the basic data of the owners of the Real Property:

• owner personal data (name at birth, mother’s name, year of birth, address)
• title of acquisition (e.g. purchase, gift or inheritance)
• ownership proportion/share of ownership (e.g. 1/1, or 1/4, etc.) – for each owner separately by serial number (e.g. II/1, II/2, etc.)
• date of registration of ownership, its file number

PART III specifies the rights and facts or encumbrances affecting the property and the persons liable and entitled to them:

• registrable rights (most frequently occurring e.g. usufruct, mortgage, conduit, land use, execution, pre-emption, purchase, etc.)
• registrable facts (most common e.g. prohibition of alienation and encumbrance, sale with reservation of title, declaration of perfection, etc.)
• certain rights, e.g. mortgages and the corresponding prohibition on alienation and encumbrance, may not be transferred (e.g. sold or given away) or otherwise encumbered (e.g. usufruct or easement) without the consent of the holder

STEP 3: Summary of the contents of the title deeds:

In general, the most important thing to clarify from the contents of the title deed

requested is whether the information in Part I corresponds to the information provided in the advertisement of the listed Real Property or by the seller, whether or not the seller himself is registered as the owner in Part II and whether or not there is any encumbrance in Part III which would in any way limit or prevent us as a buyer from acquiring the property free of encumbrances?

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If you are about to purchase a property or have a problem with the interpretation of the title deed of the property, please contact our office and get in touch with us. We will assist you in the complete management of your property purchase transaction (from the making of the purchase offer, through the preparation and submission of the contract, to the registration of the title in the land registry), whether it is a sale or purchase by an individual or a company.

Authors:

Please note that the general information provided in this article is for informational purposes only and does not constitute as a legal advice. We do not assume any liability for any misinterpretation of the above information or for any changes in the law that may have occurred in the meantime. If you have a specific question or legal problem, we are able to provide individual advice after consultation with our office and after a full investigation of the case.