Investor Guide to Europe 2014
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TYPES of oWnERSHIP
Î
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 propor-
tionate 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 gene-
rally be borne in the same proportion by the co-owners.
RIGHTS affECTInG oWnERSHIP
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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.
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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 mortga-
ged 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.
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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 Hunga-
rian 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
Foreign 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.
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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.
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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 prelimi-
nary agreement concluded between the same parties provi-
ding 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.
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Preliminary agreements
•
Preliminary agreements provide for the main terms and condi-
tions 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 pro-
perty from the seller with a unilateral statement, at the agreed
upon purchase price.
PRoPERTY LaW
