The question may arise: are there any special requirements in case we would like to buy a Real Property which transaction is partially financed by bank loan? The answer could be a simple yes and the case is closed and there would be no need to read on though, but it is not that black and white. Let’s see what need to be checked in such cases!
In part 5 of our real estate article series, we will deal step-by-step with the possible issues of buying a property with a bank loan.
1:
For a better understanding of the contents of the title deed, we recommend Part 1 of our series of articles on Hungarian Real Estates, which deals with the different parts of the title deed. If you are buying an apartment, we recommend Part 2 of our article series, and if you want to clarify the most important legal aspects of a detached house, we have already covered them in Part 3 of our article series.
2. Find out about the credit terms & conditions available from each credit institution:
This information can be obtained from the bank’s website or directly from the bank’s representative.
3:
Each bank may have different requirements regarding the required content of the sale and purchase agreement, therefore it is of utmost importance that all the content they require is properly included in the agreement in order to ensure a smooth loan process. This will ultimately also be the task of the lawyer acting on the transaction, but it is worth informing him or her in advance of the bank, the type of loan and the amount of the purchase price to be financed.
4. Make sure that there is no claim or charge on the property:
Whatever the bank will be, it is expected by the bank that the buyer should ultimately acquire the Real Property free of any encumbrances. If there is a charge on the property, the seller should arrange for the removal of the charge on the property, i.e. the discharge itself. Each encumbrance can be different in nature and we recommend that you seek the advice of a legal professional, for example to cancel a mortgage, a usufruct or a right of enforcement. If the property is also subject to a prohibition on alienation and encumbrance, it is necessary to obtain the authorisation of the holder of the prohibition to cancel the property and to comply with the conditions required (e.g. repayment of the mortgage). It is also possible for the property to be discharged from the amount of the loan that the buyer intends to take out, but the specific conditions for this are also imposed by the relevant financial and credit institution.
5. Bank requirements regarding the loan amount:
Whichever bank is approached, ultimately the purchase price of the Real Property will be scheduled so that the final instalment is the loan from the bank itself, but this will require proof of the purchaser’s own payment of the instalments and a lawyer’s certificate of escrow confirming that the seller has in the lawyer’s escrow the authorisation to register the title to the buyer’s name until the full purchase price has been paid. In practice, this means that once the final instalment of the purchase price has been paid to the seller, and thus the full purchase price of the Real Property, the lawyer is entitled and obliged to submit the seller’s title registration or registration permit to the Land Registry in order for the buyer to become the owner of the property. It should be noted that, if the buyer benefits from the Family Home Building Allowance (CSOK) in addition to the loan, the final purchase price instalment must be the amount of the CSOK, without exception. In the case of a CSOK, the property concerned must also meet a number of other conditions, which should therefore be clarified in advance with the bank providing the loan.
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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 property purchase transaction (from making the purchase offer, preparing and submitting the contract, registering the title with the land registry and handling any possible relief of encumbrances), whether it is a sale or purchase by a private individual or a company.
Szerzők:
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.
