Real estate article series part 10: Am I allowed to buy a Real Property in Hungary as a foreigner?

What to do if a foreign buyer is interested in buying a Real property that is for sale? Is it burdensome to enter into such Sale & Purchase agreement with him? Are there any other restrictions or additional procedures that may cause time or other administrative difficulties for foreigners buying property?   In part 10 of our real estate article series, we will look at the possibilities for foreigners to acquire real estate in Hungary.   Which foreigners can acquire Real Estate in Hungary?   Both natural persons (such as foreign citizens) and legal persons (such as companies established abroad) or unincorporated organisations can buy property in Hungary if they meet the legal requirements of Hungarian law. A further condition is that there must be no public interest risk – i.e. the foreign person must not have a criminal record or be subject to a restriction of activities measure, so obtaining an official certificate of good repute is essential. It should already be noted that foreign persons who are resident or established in, for example, EU Member States or EEA countries are treated differently for licensing purposes (they are not even considered foreigners in legal terms).   What type of Real property can be bought?   Only real estate that is not classified as agricultural or forestry land (thus excluding e.g. the acquisition of vines, ploughs, orchards, forests, pastures, etc.) can be acquired by foreigners – thus excluding all real estate that is subject to Act CXXII of 2013 on the Turnover of Agricultural and Forestry Land. Conversely, foreigners can thus mostly buy property that is included in the domestic property register (e.g. flats, houses, garages, business premises, etc.).   Do you need any permission?   In principle, according to the applicable legislation, yes. If a foreign person (please check below) wishes to purchase real estate in Hungary, a permit must be obtained from the competent government office of the capital city or county where the real estate is located, but foreign persons may be exempted from obtaining a permit if they meet certain conditions.   In which cases is no authorisation required?   We have indicated above that some foreign persons can acquire real estate in Hungary without a permit.    A permit from the government office is not required in the following cases:   a) a national or resident of a European Union (EU) member state (e.g. Germany, Spain) (note: the UK’s withdrawal from the EU means that UK persons are no longer exempt from the requirement to obtain a permit!) b) a national or resident in a European Economic Area (EEA) Agreement country (Iceland, Norway, Lichtenstein) c) a national or resident in Switzerland d) Dual citizens (if one of the citizens is a Hungarian citizen or a citizen of an EU member state or a Hungarian citizen living abroad) e) In case of inheritance of real estate   f) In the case of acquisition of real estate by refugees and protected persons   In such cases, it is a simple matter to conclude a contract of sale with the foreign buyer, since from a legal point of view, the foreign buyer is considered to be the same person as the domestic acquirer (not a foreign person).   What is the authorisation procedure? What must be enclosed?   The application for authorisation must be submitted to the competent government office where the real estate is located by post or electronically using the e-service, using the form provided by the government office.   In general, it must be accompanied by:   a) a (pre)contract of Sale & Purchase for the acquisition of the property (1 original copy) b) personal documents (passport) or foreign company certificate  c) an e-certified title deed of the property, not older than 21 days (in the absence of which, the government office will request it) d) if the foreign applicant is not acting in person, a power of attorney covering procedural representation (this can be included in the contract of sale and does not necessarily have to be drawn up in a separate document) (e) official certificate of good character to prove a clean criminal record (to be obtained by the government office upon special request at the time of authorisation)   In exceptional cases, other documents must also be attached, e.g. if the contract of Sale & Purchase was signed by the parties’ proxies instead of the parties, in which case the relevant power of attorney must be attached.   It is important to note that the contract for the acquisition of the real estate must comply with the requirements of the domestic legislation, so the use of a lawyer is not indispensable. For an overview of the content of the contract of sale, we recommend Part 7 of our article series.   Is the authorisation procedure free of charge?   Unfortunately not. You have to pay an administrative service fee for the authorisation procedure. This is normally HUF 50.000,- per Real Property. The fee can only be paid by bank transfer (e.g. no stamp duty).   How is the authorisation procedure carried out? What should we expect?   The Government Office will examine the application within 45 days and will contact other authorities (e.g. the municipality where the property is located or the ORFK) to grant the licence. It will then decide whether to reject or accept the application.   Should I do it myself or should I involve a professional in the process?   In our experience, the permit procedure is an additional burden for applicants (especially if they do not understand or speak Hungarian), so it is advisable to seek the help of a professional from the outset to facilitate this extra administration and procedure. In addition to drafting the purchase contract – even bilingually (English-Hungarian, German-Hungarian, Spanish-Hungarian) – our law firm also provides legal assistance in the licensing procedure and communication between the parties in the case of foreign citizens and legal entities acquiring real estate in Hungary.    *

Real estate article series part 9: „Pending status of transaction” or „retention of title” what, when and why?

Real estate article series part 9: „Pending status of transaction” or „retention of title” what, when and why?   In real estate sales contracts, it is often the case that the agreed purchase price is not paid in one lump sum but in instalments at a later date(s). A typical example of this is when the buyer wishes to pay the purchase price partly out of his own resources and partly out of a loan from a bank. But why is it advisable or (in some cases) expected to sell with a reservation of title?   In Part 9 of our series of articles on real estate, we will guide you through the maze of so-called „pending” and „reservation of title” types of transactions. Let’s see why they might be necessary and whether there is a legal difference between them other than the name or whether they are the same concept.   What is a deed of permit of transfer of title?   First of all, we need to be clear about the conditions under which a buyer can acquire ownership of the property. This requires two things:   the conclusion of a contract for the sale of the property, either in a notarial deed or a private deed countersigned by a lawyer registration of the transfer of ownership in the Land Register   For an overview of the rules governing the Sale & Puchase agreement, we recommend Part 7 of our series of articles.   If, for example, the buyer pays the purchase price of the property in one lump sum when signing the contract and the seller receives the money immediately, the buyer’s ownership can be registered with the Land Registry within 30 days of the date of the contract. The application for registration is contained in the contract itself: the seller must give his irrevocable and unconditional consent to the cancellation of his title and the registration of the buyer’s title in the Land Register. This consent is called the authorisation for registration of ownership. But there are also cases where the seller deposits the registration authorisation with the deed lawyer in case the full purchase price of the property is not paid until a later date, in order to „maintain” his title until the full purchase price is paid. Once full payment has been made, the registration permit is only submitted, and the buyer becomes the owner of the property.  This can be achieved by the pending sale method or by the retention of title method.   Is “Pending status of transaction” or „retention of title” the same or not? When if so and why it is of isn’t?   In the case of a pending registration, the contracting parties (seller and buyer) jointly request the land registry to suspend the buyer’s application for registration of the title until the seller has submitted his/her registration permit (but not later than 6 months), in accordance with the applicable rules. In this case, the buyer’s application for registration of ownership will be submitted to the land registry and the application for registration will be entered on the title deed of the property. In practice, this means that until the seller’s registration permit has been submitted or the 6-month period has expired, the land registry will not consider the application („pending” is the term), so the seller does not have to fear that the buyer will prematurely deprive him of his title to the property. In fact, if a new application for registration of a right of enforcement is received afterwards, e.g. because of possible unpaid debts of the seller, it cannot be processed (settled), as it is preceded in sequence by the application for registration of ownership. If the registration is granted, the buyer can acquire ownership of the property without any burden, since the subsequent application for registration of the right of enforcement will be rejected, as the property will no longer be the property of the seller but of the buyer. If the registration is not submitted within 6 months, the procedure for registration of the title will be terminated ex officio by the Land Registry and the title will be automatically deleted from the land register. It is therefore essential to respect the 6-month period, as a sale and purchase contract concluded earlier cannot be resubmitted and a pending registration cannot be requested (nor can it be extended).    In the case of retention of title, the seller expressly states in the contract that he retains title until full payment of the purchase price and requests the land registry to record this fact in the title deed (also Part III) of the property in favour of the buyer. This is called a deed of sale with retention of title. In this case, there is no legal time limit on how long the registration of the sale can be submitted, it will be encumbered by the property until then. Moreover, in such a case, this also entails a prohibition on alienation and encumbrance, which means that the property cannot be sold or donated to another person, nor can it be subject to a beneficial interest, for example, as long as it is registered. One thing it cannot prevent, however, is the registration of a right of enforcement on the property.   For more information on the title deeds, we recommend Part 1 of our series of articles.   Both methods therefore protects the seller’s interests from the buyer acquiring ownership of the Real Property before the purchase price has been fully paid, but we think it is important to illustrate the basic differences in the table below:   Pending reservation Reservation of title Until when it can be requested ? Up to 6 months No time limit Where does it appear? as a request in the margin of the title deed as a request in Part III of the title deed as a burden Why is it advantageous? it guarantees the purchaser’s acquisition of the

Real estate article series Part 8: When can I be exempted from paying duty and VAT?

Before you buy a property, it is important to clarify what other costs you will have to bear as a buyer in addition to paying the purchase price. As sellers, we should also remember that the proceeds from the sale of the property will normally be taxable.   In Part 8 of our series of articles on real estate, we will look at the rules on the payment of fees and taxes on the sale of real estate, the exemptions from paying them and other likely cost implications.   What costs incur in the course of a Sale & Purchase transaction of a Real Property?   Costs payable by the seller:   – the cost of obtaining an energy certificate (the energy certificate is valid for 10 years from the date of issue) – personal income tax on the amount of the purchase price received   Costs payable by the buyer:   – e-certified title deed fee (from 01 January 2023, HUF 3.000,- per property)  – our article on the content of the title deed is available here – fee for administrative services of the land registry for registration of ownership (HUF 6.600,- per property) – transfer duty payable on the purchase price of the property – lawyer’s fees (in compliance with the contract with a lawyer)   Do I always have to pay the duty with regards to purchase of a Real Property as a buyer?   Generally when buying real estate (whether a house, land, garage or flat), the buyer is liable to pay a reversionary transfer tax (or property acquisition tax) of 4% (the rate of the tax) on the purchase price of the property (in this case the taxable amount). The competent body of the NAV will notify the buyer of the imposition of the duty to be paid and the method of payment by issuing a payment order. The obligation to pay the duty arises on the day the contract is concluded. The maximum amount of duty payable per property is HUF 200 million.   However, there may be circumstances in which no or only partial levies are payable. According to the applicable legislation, there are legal conditions under which the buyer is exempt from paying the transfer duty on the transfer of property in rem – i.e. is entitled to exemption from the duty – or is only partially liable to pay the duty – i.e. is entitled to a reduction of the duty. As the law on duty may provide for a number of cases, the most common ones are described here without claiming to be exhaustive.   Examples when the Buyer is exempt from paying duty:   a) a transaction concluded applying the Family Home Building Allowance (CSOK) b) in the case of a so-called replacement purchase: in such case a purchase of a residential property we require the following if the buyer has sold another residential property within a maximum of 3 years prior to the purchase or undertakes to sell it within the next 1 year of the purchase and the purchase price of the residential property sold is higher than the purchase price of the purchased residential property c) transaction between direct relatives (e.g. between parent and child, but also including adopted children) d) transaction between spouses e) the purchase of a plot of land suitable for building a dwelling, if the buyer undertakes to build on it within 4 years of acquisition f) transaction between connected enterprises (see Section 4, point 23 of the Tao Act), if the main activity of the acquiring enterprise is the rental or operation of rented property owned by the enterprise itself or the sale of property owned by the enterprise itself   Cases of entitlement to a reduction of duty (partial levying):   a) in the case of a so-called replacement purchase: in such case of a purchase of residential property, if the purchaser has sold another residential property within a maximum of 3 years prior to the purchase or undertakes to sell it within the next 1 year of the purchase and the purchase price of the residential property sold is lower than the purchase price of the purchased residential property, in which case the 4% duty payable is payable on the difference between the purchase price of the residential property purchased and the purchase price of the residential property sold. b) In the case of the acquisition of the first residential property by a buyer under 35 years of age, the buyer is exempt from paying 50% of the duty payable if the purchase price (market value) of the entire residential property (1/1 share of ownership) does not exceed HUF 15 million c) in case of acquisition of a first residential property, an instalment rebate – for a maximum of 12 months, an equal monthly instalment rebate can be applied for   Please keep in mind that either a duty rebate or a duty exemption is not automatically granted but should be deliberately applied by the buyer via a separate B400 form provided by the tax authority. In most cases, the lawyer acting for the buyer in the sale and purchase transaction will already prepare this form and submit it to the competent authority together with the application for registration of ownership, so the buyer will no longer need to do this separately.   When should and when shouldn’t pay personal income tax on the sale of the Real Property?   As a general rule, the seller is liable to pay 15% personal income tax on the proceeds from the sale of the property on his taxable income, provided that the property sold was acquired within 5 years. If the seller acquired the property at least 5 years ago, he is no longer liable to pay personal income tax on the sale of the property. The date of acquisition is deemed to be the date of submission of the contract of sale to the Land Registry.    How should

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

Real estate article series Part 6: Legal pitfalls of buying a newly built Real Property

Real estate article series Part 6: Legal pitfalls of buying a newly built Real Property   In fact, it is relatively easier to buy a second-hand property than a property that is still under construction, because you can see an older property as it is, whereas a newly built property, it may not even be finished upon signature of the contract. This is essentially an assumption of risk on the part of the buyer, as any defects or deficiencies in the Real Property may become apparent much later.   In Part 6 of our series of articles on Hungarian Real Estates, we briefly list the most important things to bear in mind when buying a newly built Real Property.   1. It is advisable to check the building (construction) company, which in many cases is also the seller   If the company concerned is subject to liquidation or enforcement proceedings, it is not advisable to enter into a contract with them, as there is a good chance that it is in debt to one or more claimants/creditors, which may ultimately pose a problem for the sale or transfer of possession.    2. Check the title deeds of the land on which the new residential building will be built   This is to clarify the identity of the seller and whether there are any encumbrances on the land. If there are encumbrances, the seller will be obliged to ensure that the buyer subsequently acquires title free of encumbrances, but it may be worthwhile to use a lawyer from the beginning of the whole process. To help you understand the contents of the title deed, we recommend Part 1 of our Real Property article series.   3.   Clarification is needed on exactly what is included in the purchase price (e.g. whether or not it includes certain technical contents)   4. Preliminary agreement and the conclusion of the final contract   Until the Real Property is built and registered in the Land Registry, we cannot acquire ownership of it, but we can settle our intention to enter into a final contract at a later date by means of a preliminary contract, which essentially lays down in advance all the essential elements (payment of the purchase price, transfer of possession, force majeure, possibility of contract modification, deposit, penalty, etc.) that will be included in the final contract. The essence of the preliminary contract is therefore that the parties commit themselves to the essential terms on which they will conclude the final contract at a later date. The terms and conditions included in the preliminary contract can be enforced by judicial process in the same way as if it were an obligation in the final contract.   5. Authorization to use and transfer of possession   It is also essential to be aware of when a newly built Real Property is ready for occupation and when the buyer can take possession of it, i.e. when he can use it and when he has to bear the costs of its use. The legal use of the constructed residential building is only possible on the basis of a legally valid occupancy permit, which the builder must obtain and which the seller must provide to the buyer in a credible manner.    * * *   If you are considering buying a newly built Real Property, please contact our office. We will assist you in the complete management of your real estate purchase transaction (from making an offer to purchase, preparing and submitting the preliminary and final contract, and registering the title with the land registry), whether it is a sale or purchase by a private individual or a company.   Authors: 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.

Real estate article series Part 5: What should I pay attention when buying a Real Property with bank loan?

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.   * * *   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.

Real estate article series Part 4: Bumped into an undivided joint ownership, what should I ask for to protect my long-term goals?

Did we like one of the duplexes? Is there more than one house on a plot and we want to buy one of them?     In Part 3 of our series of articles on Hungarian Real Estates, we will look at the specific legal situation where a Real Property has several owners at the same time and each owner has a right to use it according to their ownership share. In legal terms, they exercise this right individually, since all the owners are entitled to use and occupy the entire Real Property. This is from where the special legal category of undivided joint ownership is arisen.   What does this mean in practice?   There is a plot of land with several buildings on it, but they are not registered in the land register under a separate plot number. In this case, the land is owned jointly by all the owners, but the use of the individual houses built as residential properties or even parts of residential properties is still shared in some way between them. It is therefore possible that there may be as many as 10 to 30 owners of such a property, but the ownership of the property itself is shared between them. The problem arises because the title deed does not (clearly) show who is entitled to use what and to what extent. In such a case, it must be borne in mind that all owners have the right to possess and use the Real Property, but that this must not infringe the same rights of the other owners.   It does not matter, therefore, that, for example, 4 residential buildings are occupied by different people, but that the individual residential buildings are still jointly owned, given that they are not listed as separate properties, and this particular legal situation should be covered by an agreement that determines the use of the Real Property, which should be drawn up with the assistance of a lawyer.   Why such an agreement that determines the use of the Real Property is important?   In the case where, for example, a detached house is physically divided into two parts (with at least 2 owners), legally not qualified as two separate sub-units of a condominium though, it is recommended to draw up a use (sharing) agreement for the residents to determine which part of the undivided common property (which residential building) can be used by which owner. If there is no such agreement, all owners are entitled to use the whole property (e.g. a semi-detached house or two separate houses registered under the same parcel number). A sharing agreement can avoid future disputes, i.e. which owner is entitled to a certain use of the garden on the plot, in what proportion, or which owner is entitled to use the cellar or garage, and who is entitled to use each part of the property on the plot (or even a particular floor or attic level in the case of a single dwelling house) and to what extent. The fact is, however, that this can often cause problems, which is why it is particularly important to regulate the ancillary issues involved in the use of the property, such as the relationship between the co-owners, the preservation of the property, the bearing of common costs, etc., in detail and in a compromise manner in the above-mentioned sharing agreement.   But why should we pay attention when we want to buy a property in undivided joint ownership?   To clarify ownership shares and possible charges, please download the title deeds of the property. For a better understanding of the contents of the title deed, we recommend you read Part 1 of our series of articles on the title deed.   As a general rule, you should ask the seller for the deed of occupancy, as the provisions of the deed will apply to you as the subsequent owner.    If such a property will be bought with a loan, it is essential to submit the agreement of use in the course of the loan application, and in many cases, it is required to be a well drafted one which could be ensured if it was drafted and countersigned by a lawyer.  In this case, it is essential that if the loan is granted, the mortgage will be registered only on that specific ownership of the Real Property in question and does not extend to the other owners.  In case of the sale of Real Property in which co-owners have pre-emption right, it is necessary to obtain a waiver of from all the co-owners, or at least notify them through certified mail otherwise they will be able to take legal action against us since they were excluded from applying their rights. The more co-owners there are, the longer it will take to inform them of their intention to buy, so this is also a factor to be considered with regards to this certain type of Real Property.   The rules on construction between the co-owners of an undivided jointly owned property are primarily determined by the use-sharing agreement, but it is essential that each co-owner can only use (build on) his/her share of the property, i.e. that he/she cannot encroach on the common use shares or the shares of the other owners. Otherwise, the mandatory requirements of the local building code must be respected.    The most important legal aspects of a detached house have already been covered in Part 3 of this series.   * * *   If you are about to buy a property or if you have any problems with the title deeds or a copy of the map and other legal requirements or with the interpretation of the sharing agreement, please contact our office. We will assist you in the complete management of your property purchase transaction (from making an offer to purchase, preparing and submitting the contract/Use Sharing Agreement and registering the ownership with the Land Registry), whether

Real estate article series part 3: Buying a family house wisely 

We bought our dream house, but later find out that it was built illegally. Is the building not even designated on the Land Register official map? Didn’t we buy the Real Property from the owner? To avoid these and other nightmarish circumstances and disadvantages, we’ll show you what to check as a must t for if you’ve decided to buy a house.   In Part 3 of our series of articles on Hungarian Real Estates, we set out the steps you should take to avoid the pitfalls and damaging situations mentioned above. If the pictures in the advertisement or sent by the seller show that you are attracted by the magnificent house, it is important to be careful and consult a lawyer before making an offer or entering into a contract, especially as legal representation is a legal requirement in a sale and purchase transaction.   But what can we ourselves, as potential buyers, do beforehand to ensure that our dream Real Property does not turn into a nightmare?    1:   – Is it really the owner from whom we want to buy the Real Property?  – Is it the sole owner of the Real Property that we are buying from?  – Is the Real Property owned by one owner or by further ones as well?  – Under what certain legal type is the Real Property registered?  – The legal category/name of the property may be different for detached houses, e.g. ‘detached house yard’ or even ‘detached land’ – What encumbrances are there on the property that may prevent or restrict us from acquiring ownership?   If there is more than one owner of the property, in order to become the sole owner, all owners should be listed as sellers in the contract or, if applicable, only a certain share of ownership/proportion of ownership can be acquired, but then (also) the legal right of pre-emption of the co-owners must be taken into account.   In the case of an legal deemed undivided commonly owned Real Property, there may be several owners of the property, but in reality each owner has a separate right to use the building built on the property. In this case, the ownership could be settled by an agreement determines the Use, the details of which are described in the article below.   It is important to clarify whether the property located in internal territory. Why? Real property located internal territory is not subject to the Land Registration Act, i.e. it is not deemed as an agricultural land from a legal point of view and can be built on, so the transaction can be completed relatively quickly. In the case of land outside the area, the Real property is  deemed from a legal point of view as a land, which implies a longer transfer of ownership procedure (subject to the approval of the agricultural administration) and it is not certain that you will end up owning it and, if you do, you will have to comply with other legal requirements (e.g. land use). Also if you’re a non-Hungarian citizen it could be more complicated for you with regards to an agricultural land.    For a more precise 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.   2. Download a copy of the map of the property. Why that could be useful?   The copy of the map will show whether a structure (i.e. not only the plot but also the house as a building) has been recorded for the property registered under the given plot number. If the Real Property seems to be in fact substantially different, it is necessary to ask whether there has been an extension or addition (if so, whether they have a building permit, otherwise it may result in the demolition of the structure and a fine if it is in breach of the relevant local building regulations or, if not, to ensure that a permit for the building’s maintenance is obtained and the building is indicated).    In the case of a possible loan application, the issue of building on/extension is also very important, as it can be a disadvantage in the valuation if it is not shown on the copy of the map.   3. Check local building regulations, heritage register:   In several respects, it is important to be aware of the building regulations adopted by the local municipality. Why? If you intend to build an additional building on the site in the future, it is a good idea to find out in advance about the building regulations (e.g. building permit, building size, etc.). Regulations may vary from one municipality to another. Alternatively, if there was a previous building on the property for which the seller did not have a building permit, it may be important to check whether the building complied with the local building regulations. If the property has been built on but no occupancy or maintenance permit has been issued for the structure, the legal status of this should also be clarified. If the property you want to buy is listed in the heritage register, it is important to take into account the specific rules that apply to it. By entering the details of the property, you can easily check on this link whether the property is a heritage protected property at all.   * * *   If you are about to buy a property or if you have any problems with the title deeds or copies of maps and other legal requirements, please contact our office and ask us. We will assist you in the complete management of your real estate purchase and sale transaction (from making the purchase offer, preparing and submitting the contract to registering the title with the land registry), whether you are a private individual or a company.   Authors: dr. Farkas Szabolcs László  dr. Bajcsay

Real estate article series Part 2: How not to fall into a failure when buying a home?

We have looked at the property we want to buy, we have paid the purchase price […] everything seems to have gone well at first, but the land registry has refused to register our title or it turns out that there was a co-owner who had a pre-emption right who was failed to notified though?  Could these issues be avoided with a due diligence procedure conducted prior to entering into an agreement?   In Part 2 of our series of articles on Hungarian Real Estates, we will cover the basic legal aspects that you should be aware of when buying a home:   1: – whether the Real Property is registered as a „flat” – whether the floor area of the Real Property in m2 is in line with what was declared by the seller – the address in the Land Registry matches the address published in the advertisement – whether the actual owner of the Real Property is the person from whom we intend to buy the property – i.e. whether the seller and the owner are the same (it is possible that the Real Property may have more than one owner, in which case all owners must be listed as sellers in the contract of sale if we intend to buy the whole property) – whether there is any encumbrance on the property which restricts or prevents us from acquiring ownership (a typical example is a mortgage and the mortgage encumbrance that secures it) – flats are normally part of a condominium, which means in practice that the flat is a separate Real Property (condominium sub-unit) belonging to the condominium, usually marked …/A/1 in the plot number (the number of sub-units may vary depending on the number of flats in the condominium) – in the case of a condominium, there are two things to do: firstly, we need to obtain the title deed of the sub-unit (apartment) (this is called the condominium separate deed) and the title deed of the property on which the condominium building itself stands (this is called the condominium master deed), which is important because the condominium master deed and the separate deed together form the whole legal picture of the legal status of the condominium  – if an encumbrance is registered on the title deed to the main deed of the condominium, it is treated as if it were also registered on the separate deed (i.e. the apartment)   For a clearer understanding of the contents of the title deed, we recommend Part 1 of our property article series, which deals with the various parts of the title deed.   2. Obtain the articles of association, by-laws and rules of the condominium:   Why is this good for us?   The contents of the articles of association will tell us whether the other residents have a right of first refusal when buying the apartment in question, which is important to bear in mind when concluding the contract/offering to buy, because A Sale & Purchase Agreement concluded in breach of the right of first refusal is void against the right of first refusal holder and can therefore be enforced against us later if the right of first refusal is entered on the title deed of the condominium. In this case, the holder of the pre-emption right could validly take action against the ‘new’ owner and even replace him, depriving him of his ownership rights.   From the deed it may also be important to clarify whether the flat has any other exclusive use premises (e.g. a cellar or storage room) or a parking place. Exceptionally, these may be registered as separate properties and the deed may contain other provisions for their purchase.   An Organisational and Operational Regulation (OOP) basically defines the organisation and functioning of the condominium, and it is good to know the rules of this regulation when a condominium general meeting is held.   And the rules of conduct themselves set out the rules of behaviour expected in a condominium (e.g. the conditions under which common areas can be used or the rules of coexistence that residents must observe).   * * *   If you are about to buy a property or if you have a problem with the interpretation of the title deed 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, 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 a private individual or a company.   Authors: 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.

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? * * * 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: 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 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.