• Due diligence report

The purchaser, usually through his/her lawyer, conducts due diligence with respect to the property being acquired before signing a sale and purchase agreement. This includes title and zoning searches and a review of any leases and surveys of the property. An independent environmental and archaeological assessment is often recommended and an independent engineering review of the property is common in case of sites with older buildings. The purchaser’s lawyer will also provide a title report to the purchaser. While a number of insurance companies offer title insurance for purchasers, it is not market practice in Hungary for purchasers to obtain title insurance due to high insurance premiums.

• Sale and purchase agreement

Once the purchaser has concluded the due diligence report and is satisfied with the findings, the purchaser and the seller will sign a sale and purchase agreement. This agreement should contain all necessary business terms relating to the transaction, including the description of the land, purchase price, deposit (if any), the closing date and any other special terms. This agreement also typically contains conditions for the benefit of the purchaser and representations and warranties by the seller.

• Preliminary sale and purchase agreement

If an unconditional sale and purchase agreement cannot be signed because (i) the seller must fulfill certain preconditions such as rezoning of the real estate or obtaining a permit for the reclassification of an agricultural land into a non-agricultural property; or (ii) there are third parties who have a right of first refusal in respect of the real estate, then the parties undertake in the preliminary sale and purchase agreement to conclude a final sale and purchase agreement once the pre-conditions are satisfied or the holder of the right of first refusal issues a declaration that it does not want to acquire the property. A preliminary sale and purchase agreement, which is a binding agreement, would include all main terms and conditions that will be included in the final sale and purchase agreement. According to the New Civil Code, the possibility to refuse to contract after a binding preliminary sale and purchase agreement is more restricted.

Sellers tend to give limited representations and warranties for the site/property condition. Therefore, a purchaser is generally responsible for conducting an extensive due diligence report with respect to the property to be acquired.

However, based on the law, the seller must issue legal warranties to the purchaser that the seller has a good title over the property.

Parties are legally bound when they execute the sale and purchase agreement or a preliminary sale and purchase agreement. The sale and purchase agreement must be made in writing and the final sale and purchase agreement, which is to be filed with the Land Registry Office, must also be countersigned by an attorney.

Title is transferred once the Land Registry Office registers the purchaser as the new owner of the real estate.

The purchaser usually pays for the following:

• Purchaser’s agent fees
• Legal costs 
• Due diligence costs for consultants who have prepared building condition reports, environmental assessments, archaeological assessments, valuation appraisals and real estate surveys
• Due diligence inquiries made to statutory and government bodies 
• Registration fees
• Transfer taxes

• Listing agent’s fees
• Legal costs
• Income tax on any profit made on the sale of the real estate