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PROPERTY LAW
Types of ownership
Ownership
Sole ownership (Freehold)
• The Civil Code defines ownership as the full and exclusive
right over the property within the framework of law and
without prejudice to any right of others. The owner has the
right to possess, use, utilize, receive the benefits of, and
dispose over the property.
• The transfer of ownership of real properties is implemented
through the conclusion of a sale and purchase agreement,
providing an effective legal title for the transfer of ownership
and further the registration of the change of the ownership
title with the Land Registry (ingatlan-nyilvántartás)
Co-ownership
• Defined by the Hungarian Civil Code.
• Joint ownership by two or more persons of the same property,
virtually divided to co-ownership portions (tulajdoni hányad).
• Each co-owner has the right to use and utilize the property;
however, they may not use their rights to an extent it
adversely affects the rights or rightful interests of other co-
owners of the property.
• The co-owners may claim the proceeds of the property
proportionate to their respective co-ownership portions; costs
and expenses related to the property, obligations originating
from the co-ownership and any damages to the property shall
generally be borne in the same proportion by the co-owners.
Rights affecting ownership
Easement (szolgalom)
• Is a lawful or contractual burden imposed upon a property for
a third party’s (at least partial) use and utilization thereof.
• The possessor of the beneficiary property (uralkodó telek)
may use the servient property (szolgáló telek) under the
easement to a determined extent, or may demand from the
possessor of the servient property to refrain from certain
conduct.
• Easements on real properties may be established generally for
the purpose of passage, supply and drainage of water, building
a cellar, installation of utility poles, buttressing a building or
other similar purposes.
• Easements are transferred with the ownership, and cannot be
transferred independently.
Mortgage (jelzálog)
• Is a security interest (collateral) encumbering the property
which shall be registered with the Land Registry, created by
the respective written agreement of the parties.
• Entitles the beneficiary to seek satisfaction from the
mortgaged property prior to other claims, if the obligor of the
secured obligation fails to perform.
• As a general rule, properties in Hungary may be mortgaged
and there is no limitation as to the number of mortgages
that may be registered upon the same property in the Land
Registry.
Statutory pre-emption right
• The most common statutory pre-emption rights are granted
for: co-owners of the real-property, the owner of the building
on the land, the owner of the land on the building, the
Hungarian state or the local governments. The acquisition of
arable land is also restricted by special pre-emption rights in
favour of the Hungarian state, the neighbours etc.
• Statutory pre-emption rights prevail over the pre-emption
rights established by the agreement of the parties.
ACQUISITION PROCESS:
KEY STAGES
• EU resident investors do not need any prior authorisation
to carry out real estate investments in Hungary. However,
acquisition of agricultural land and real estate acquisitions by
non-EU citizens are restricted by the current legal provisions.
Checking public records
• In case of asset deals, purchasers usually check in advance
the up-to-date (well developed and thus, reliable) Hungarian
land registry records to make sure the seller’s valid and
existing ownership title.
• In case of a share deal, purchasers typically inspect the public
records of the real estate holding company in the Company
Registry as well.
Negotiations
• As a preliminary step, a non-disclosure agreement is usually
proposed by the seller/agents in order to allow access to the
property, information and documentation.
• The potential purchaser issues a letter of intent which may
be indicative or binding (binding in case it is furnished with
the instruments and requirements of an offer; the letter of
intent shall be considered as non-binding if the parties agreed
respectively).
• Discussions are usually pursued within the frame of a letter
of intent signed by the transaction counterparties or of a
preliminary agreement concluded between the same parties
providing for an exclusivity period during which the due
diligence exercise is carried-out and at the expiry of which the
would-be purchaser is expected to confirm its initial offer.
Preliminary agreements
• Preliminary agreements provide for the main terms and
conditions of the future sale, whereas the conclusion of the
final sale and purchase agreement remains subject to the
fulfilment of certain conditions. If the conditions are met, the
conclusion of the final agreement may be enforced by judicial
means.
Call option (vételi jog)
• The holder of the call option has the right to acquire the
property from the seller with a unilateral statement, at the
agreed upon purchase price.
• The call option right is effective vis-á-vis third parties if it is
registered with the Land Registry.
Put option (eladási jog)
• Provides the owner the right, but not the obligation, to sell
the underlying property at a specific purchase price by way of
delivering a unilateral statement to the purchaser party.
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Investors Guide to Europe 2015