Under Hungarian law, the term “real estate” includes the following:
- Land
- Any buildings or structures located on the land
Real estate transactions are governed primarily by the New Hungarian Civil Code, which entered into force on 15 March 2014. However, several other legislative acts provide special provisions relating to the acquisition of agricultural lands and/or commercial leases. Zoning regulations are adopted and enacted by local municipalities.
There is a single, national land registry system where ownership can be verified and where interests in land are registered. However, since lease agreements cannot be currently registered in the land registry, one cannot verify from an independent source whether a lease agreement has been concluded in relation to specific real estate.
Within certain statutory limits, rights recorded in the land registry are effectively guaranteed.
The Land Registry Office in the national land registry system manages title registration.
The following rights are required to be registered:
- Ownership right
- Mortgages
- Usufruct
- Easements
Third parties without notice are not bound by unregistered interests over property. Subsequently, beneficiaries of the rights below usually record their rights in the land registry, including:
- Call options
- Repurchase rights
- Right of first refusals
- Right of enforcement
- Right of support
The Land Registry Office issues an official copy of the land registry sheet of the relevant property, verifying all rights registered in the land registry with respect to that particular property.
Either an electronic or a hard copy of the land registry sheet for a property can be obtained from the Land Registry Office for a statutory fee.
Citizens of the EU and legal persons incorporated in the EU may freely acquire any non-agricultural real estate.
Foreigners who are not EU citizens or legal persons who are not incorporated in the EU must obtain permission from the competent government agency before acquiring any non-agricultural real estate.
Foreign legal persons and private individuals outside the EU cannot acquire agricultural land in Hungary. According to the New Act on Arable Land, citizens of the EU, the EEA and countries equivalent under international treaties are allowed to acquire agricultural land with the same strict conditions as those for Hungarian citizens. Domestic natural persons and EU nationals, other than farmers, may acquire the ownership of land if the area of the land in their possession does not exceed one hectare together with the land proposed to be acquired. Legal persons of the EU and the EEA are not allowed to acquire agricultural land.
Government and quasi-government authorities can expropriate property, but appropriate, unconditional and immediate compensation must be paid and remedies, including judicial review, are granted to the owners.
- Limited liability company
- Privately held company limited by shares
As of July 2011, the real estate investment trust (REIT) regime has been introduced in Hungary with significant tax advantages and since then the REIT structure has been used by investors. Under the REIT legislation, a REIT may operate in the form of a public company limited by shares.
Most real estate financing is arranged through institutional lenders such as banks, pension funds and credit unions. Interest rates are generally fixed for a specified period of time or are variable based on a “prime rate” set by the lending institution on a periodic basis. The prime rate is based on either the base rate announced by the European Central Bank or the base rate set by the Hungarian Central Bank, depending on whether the loan has been denominated in euro or Hungarian forint. Typically, the borrower bears the responsibility to pay for all of the lender’s legal and other costs, such as commitment and processing fees in arranging property financing.
Lending institutions typically take a mortgage as security, registering it against the title to the relevant property at the Land Registry Office.
The purchaser’s lawyer generally prepares the transactional document and liaises with the Land Registry Office in connection with the registration of purchaser’s title to the real estate. However, the seller’s legal counsel is also usually involved in drafting the documentation.
Yes. The new owner can inherit liability regarding the site condition of a land (archaeological and environmental materials). However, in respect of environmental pollution, the owner may escape liability by proving, with substantial certainty, who caused the contamination, and the polluter can still be obligated to carry out the cleanup.
A seller can retain liabilities relating to the real estate even after it has disposed of it. However, the sale and purchase agreement may stipulate otherwise.
For properties held in leasehold, the tenant is not held liable for the obligations of previous tenants.