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• The put option is effective vis-á-vis third parties if it is
registered with the Land Registry.
Sale and purchase agreement/Deed of Sale
• Is the written agreement based on which the ownership of a
property transfers from the seller to the buyer; the agreement
must be notarised or prepared and countersigned by a
Hungarian attorney at law.
• It may either serve as the accurate fulfilment of and
completion with detailed terms of the preliminary sale and
purchase agreement or a different new agreement in case
the parties deviate from the preliminary agreement with
mutual consent (otherwise the terms and conditions of the
preliminary sale and purchase agreement are binding and
non-negotiable).
• The ownership title shall pass upon the registration of the new
owner with the Land Registry.
• The seller usually warrants for the effective legal title without
any non-revealed third party rights, further that the property
is free of any hidden/non-revealed defects. The seller of
a newly developed real estate shall be responsible for the
contracted and regulated technical parameters and qualities
of the real estate.
Off-plan sales
• Not covered by explicit Hungarian legislative provisions (i.e.
not a regulated instrument).
• May be implemented through a preliminary sale and
purchase agreement or a combination of a sale and purchase
agreement and a construction agreement. In the latter case,
construction fee is also payable.
• The seller is committed to develop and erect the property in
accordance with agreed specifications, price and deadline;
the seller provides the purchaser with completion and defects
guarantees.
• The purchaser may pay the purchase price and/or the
construction fee gradually along the construction steps until
completion.
• The seller, acting also as developer, remains liable for
construction defects under statutory guarantee periods.
COMMERCIAL LEASES
• Lease agreements for residential and business premises
are covered by specific provisions of the Civil Code and the
Tenancy Act.
• In general, the parties may deviate from the provisions of
the Tenancy Act, but some regulations are mandatory. Lease
agreements must be concluded in writing.
Term: definite term or indefinite term
• Lease agreements may be concluded for definite or indefinite
term.
• Different rules are applicable for the termination of lease
agreements concluded for definite term (as the usual case,
ordinary termination is only possible in case of indefinite term
lease agreements).
• Definite term lease agreements automatically terminate at
the end of the definite lease term.
Change of control
• In case of an asset deal the purchaser replaces the seller by
law and shall act as the new lessor of the property.
• In case of a share deal the acquisition generally does not
affect the lease, as there is no change in the lessor’s position.
• The transfer of the tenant’s right of lease (the business of the
tenant) requires the prior written consent of the lessor.
• The change of ownership of the tenant only requires the
lessor’s approval if it is expressively stipulated in the lease
agreement.
Energy certificate
• With a few exceptions, obtaining an energy certificate by the
seller is mandatory in case of the sale or lease out of a real
estate; the sale and purchase agreement shall refer to the
relevant energy certificate of the real estate.
• Energy certificates mainly focus on the actual qualification of
the energy consumption of the building.
• Energy certificates may set out objectives for the
improvement of the building’s energy consumption.
Indexation of the rent
• Usually there is an indexation clause specified in the lease
agreements that gives the opportunity to adjust the rent time
on the basis of an index without modifying the original lease
agreement. The most common indexes used as reference in
the lease agreements are the following:
–– the consumer price index published by the Hungarian
Central Statistical Office (KSH);
–– the Monetary Union Index of Consumer Prices (MUICP)
issued by Eurostat.
TAX
Direct acquisition of a property
• The acquisition of a property is subject to stamp duty.
• The rate of the stamp duty is generally 4% below the
transactional value of HUF 1 billion, while the amount in
excess is subject to 2% stamp duty. However, the maximum
amount of stamp duty may not exceed HUF 200 million.
• Lower stamp duty rates may be applied in case of several
special cases (e.g. the main business profile of the acquirer
is trading real property; the acquirer qualifies as a credit
institution; the acquirer entity qualifies as a regulated real
estate investment company (REIT); the acquirer entity is
engaged in financial leasing activities) as defined by the Act
on Stamp Duty.
• As a general rule, real estate acquisitions are not subject to
VAT. However, if the sale of the real property is made within
two years of the issuance of the final occupancy permit or the
sale is made before the first actual occupation of the property,
the sale may be subject of VAT. The current VAT is 27% of the
purchase price.
Asset deal vs. share deal
• Acquisition of the shares of a company owing a property
may generate tax savings in terms of stamp duty for the
acquirer, but it may also have other indirect tax consequences
(e.g. potential future tax liabilities, no possibility of the
depreciation).
50 Investors Guide to Europe 2015