Sale and Purchase of Properties in Hungary
In Hungary the devolution of property when it comes to land and a building on it, contains two major steps.
Written and countersigned sale and purchase agreement:
First of all a written sale and purchase agreement has to be drafted and signed by the parties. There are a number of obligatory elements and formalities which the seller and the purchaser have to comply with. The contract has to be countersigned by a lawyer or a notary public. Before signing, the lawyers identify the purchaser and the seller through the system designed for this purpose and they also check their identities in person. It is essential that the signatures of the seller, the purchaser and the lawyer or the notary appear at every page in order for the agreement to be valid.
Information about seller, purchases and the property:
As of the substantive part, first and foremost the agreement has to include data about the seller, the purchaser and the property. In order to ensure the purchaser that there are no legal obstacles which prevents the acquisition of the land and the building, such as the seller is indeed the owner or there is no restraint on alienation and encumbrance, a certified title sheet folio (which is issued 30 days before the signing) has to be requested from the Land Registry Office. The title sheet folio also gives information whether there are encumbrances on the property for instance usufruct, dower, foreclosure or mortgage. In the sale and purchase agreement the parties also have to reach a settlement in these cases, meaning the purchaser has to buy out the obligee when there is no possibility for the devolution to go through without it. Apart from this the seller has to warrant that there are no utility debts on the property.
Another relevant fact is the purchase price which can be paid in parts. Usually if the price is not paid at the same time as the contract comes into force, the agreement is held pending for maximum 6 months which has to be provisionally registered, thus the land and the building remain in the property of the seller until such time as the whole sum is paid. Another possible solution is the sale and purchase with upholding the ownership which is registered as an encumbrance in the title sheet folio. There are certain securities which can be included in the agreement such as the deposit which constitutes as an advance in payment or the indemnity which comes into force upon breaching the contract. The agreement also disposes of the energy certificate and of the time when the property is turned over to the purchaser. At that time the utility meters have to be measured and in 15 days written over to the purchaser.
The second part of the procedure occurs before the Land Registry Office where a standardized form has to be submitted within 30 days after the contract was signed, together with the sale and purchase agreement in two original and one photocopy. Furthermore the consent of the seller on his/her release and the entry of the purchaser into the Land Registry has to be attached to the form. Generally the Land Registry Office reaches a decision in 30 days and only after that is the land and the building considered as the property of the seller.
The costs of the procedure contains the fee of the title sheet folio: the certified folio costs 6250,- HUF, the electronic land registry sheet is 3600,- HUF and the uncertified sheet is only 1000,- HUF /property. The costs of the identification of the parties is 1670,-HUF per person and the general duty rate on the transfer of the property is 4% of the sale value if it does not exceed 1 billion HUF. If it does, the part which is above this sum has 2% general duty. There are certain reducements, for instance if the purchaser is under 35 of age and the property is to be his/her first one and if the sale value is at the same time under 15 million HUF, the purchaser only has to pay the half of the general duty. An additional cost is the fee of the attorney which is to be regulated in the retainer agreement, in practice it is 1% of the property value. In the case of notaries no such freedom is given as in Hungary their fee is regulated in a decree of the Ministry of Justice. The cost of the main procedure before the Land Registry Office is 6600,- HUF/property although it costs more (10.000,- HUF/property) if a fast-track procedure is requested.
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