Real estate article series Part 7: Misconceptions – how to have a proper Sale & Purchase Agreement

Whatever the type of Real Property you are buying, it is essential that the parties have a contract in place to settle the transfer of ownership. In order to do this, it is essential that both the seller and the buyer are aware of the most basic requirements, i.e. the essential contents of a contract for the sale of real estate. 


In part 7 of our series on Hungarian Real Estates, we will fill you in on the key requirements for a Sale & Purchase contract and clear up some common misconceptions!


In general, the following must be included in a contract for the Sale & Purchase of a Real Estate:


– personal details of the seller(s) and buyer(s) (name, maiden name, mother’s name, date and place of birth, address, personal identification number, nationality)

– the exact identification of the real estate which is the subject of the contract according to the land register (municipality, parcel number, cultivation branch/designation, floor area, title in kind, we recommend part 1 of our article series for the interpretation of the title deeds)

– the percentage of ownership the buyer wishes to purchase (e.g. 1/1 or 1/2, etc.)

– the exact title of the transfer of the Real Property (in the case of a sale, this is a purchase, but in the case of other transfers of property it may be a gift, exchange, etc.) 

– the mutually agreed purchase price of the Real Property (specifying the amount and currency) 

– the time and method of taking possession of the Real Property

– a declaration of the seller’s unconditional and irrevocable consent to the buyer’s registration of the title 

– the place and date of the conclusion of the contract

– signature of the contracting parties


What other details, facts or clauses can/should be included in the Sale and Purchase Contract?


– any encumbrances on the Real Property at the time of the conclusion of the contract (e.g. usufruct, mortgage, execution, prohibition of alienation and encumbrance, etc., see Part I of the deed of title )

– in case of encumbrances, how the encumbrance is to be discharged (if the buyer wishes to obtain an unencumbered property, this is a basic requirement)

– the seller’s information (warranty) on the condition of the property and any defects 

– an undertaking by the seller (warranty of title) that the property is free from any legal claims, encumbrances or encumbrances and that no third party has any rights to it which would restrict or prevent the buyer from acquiring ownership (e.g. there is no owner of the property other than the owner of the property [not listed in the title deeds] – this could be the spouse, due to the special nature of a community of property)

– the time limit for payment of the purchase price (or the payment schedule for each instalment) 

– in the case of financing partly financed by a bank loan, the lending financial institution may impose special requirements (see Part 5 of our real estate articles)

– in the case of a proxy procedure, the inclusion of the proxy in the contract

– the amount of the deposit and/or penalty

– in the case of the purchase of a residential building or apartment, the number of the certificate certifying the energy performance of the building in accordance with the applicable regulations 

– a statement of the exemption or reduction of fees (for details, see Part 8 of this series of articles)


Do I need a lawyer to sign the contract for the sale of a property or is it enough to write it yourself and have it certified by two witnesses? 


A contract for the Sale and Purchase of a Real Property must be drafted in a notarial deed or countersigned by a lawyer. Therefore, in order to obtain ownership and to be registered in the Land Registry, it is essential to have a lawyer, since a contract without a lawyer’s countersignature is not suitable for registration of ownership. 


It should be noted that even in the case of a seemingly simple sale, there may be pitfalls (e.g. obtaining waivers of pre-emption rights, waiving usufruct rights, etc.) which recommends to engage a lawyer with specific experience in real estate law. 


I am unable to be present at the signing of the contract, so I have verbally authorised my friend to sign the Sale and Purchase contract on my behalf, could this be valid? Will he be the owner instead of me or will he registered on the deed of title?


Is it possible for either the seller or the buyer to have a proxy to act on their behalf when signing the contract. In such a case, a written power of attorney must be granted, which must indicate exactly what the agent is authorised to do (e.g. sign the contract) or what other acts (e.g. transfer of possession). It is therefore recommended to specify as precisely as possible the specific activities that the authorised representative may perform in the place of and on behalf of the principal. In this case, the agent will be designated in the contract, but not as a contracting party, but as the agent of the party he represents. A further requirement for the power of attorney is that it must at least be in the form of a document countersigned by a lawyer, so a power of attorney certified by two witnesses is not sufficient. The proxy acts only on behalf of and makes any declarations for the benefit of the proxy, therefore the proxy cannot acquire ownership of the property on behalf of the buyer and will not be recorded in the Land Registry.


Usufruct burdens the Real Property. Do I need the holder of the usufruct consent to sell the Real Property? Does the sale of the Real Property automatically terminate the beneficial interest?


If there is a right of usufruct over the property, this does not legally prevent the sale, the consent of the holder of the right is not required, but:

– the sale of the property does not terminate the right of the right holder as it is always personal

– the holder of the right can (also) exercise his rights under the usufruct against the new owner, e.g. he can own and use the property or rent it out, as long as the owner cannot access it

Such Real Property can be sold at a substantially lower price since in practice the new owner will be at the mercy of the usufructuary’s „goodwill”, so a certain consideration should be given to right holder to obtain a waiver of usufruct from the holder of the right (the waiver can be free or for a consideration).


What is important to check as a must before the signature of the contract?


– whether our personal documents are valid/not expired

– check the deed of title of the property on the day the contract will be signed

– check if there are any utility bills or other taxes owed in direct relation to the Real Property

– in case a wire transfer will be done, check whether there is any limit on the account that would prevent the transfer of a larger amount since it can be embarrassing if it fails due to such admin issue


Even before making an offer to buy, it is recommended to involve a lawyer with experience in Real Estate law to coordinate and manage the whole process.


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If you are considering buying a property, please contact our office and get in touch with us. We will assist you in the complete management of your real estate purchase transaction (from drafting 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.



dr. Farkas Szabolcs László

 dr. Bajcsay Gergely


Please note that the general information provided in this article is for informational purposes only and does not constitute 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.

Bajcsay Law Firm

We provide legal services with a project management approach in Hungarian, English, German and Spanish to help our clients achieve their business goals. In our work, we strive to provide solutions that are understandable, efficient, fast and useful, in line with our core values.

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