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[BUYING AND SELLING REAL ESTATE IN HUNGARY]
or its term expires or after 5 years, whichever occurs earlier. This option provides strong legal protection for the buyer throughout the payment period, especially in deferred payment or instalment transaction. b) Earnest money A typical real estate transaction is sealed with the payment of earnest money, a special form of advance payment, with a typical sum of 10% of the purchase price. lf the transaction is completed, the earnest money will be deemed as an advance payment. If the transaction is not completed, the party responsible forfeits the amount of the earnest money. If the seller is responsible for the failure to complete the transaction, it must pay the buyer an amount equal to twice the earnest money. It is common practice to place the earnest money or purchase price instalments in lawyer’s escrow until completion. Lawyer’s escrow is a highly secure and strictly regulated mechanism under Hungarian law, ensuring that the funds are released only when the contractual conditions are met. The escrow agreement clearly sets out the release terms, providing both parties with legal and financial protection. c) Transfer of possession Designating the date of transferring the possession is important, as normally the buyer takes over the burdens, the risk of damages, and all other relating liability for the property from the date of the possession transfer. The transfer of
possession typically follows the payment of the full purchase price.
5. Transfer of ownership As a general rule, the ownership is transferred with the registration into the Land Registry, but with retroactive effect to the date when the request for registration has been submitted. 6. Usual fees and costs 6.1 Transfer duty ln the case of the acquisition of a real estate, a transfer duty must be paid by the buyer. The rate of the duty is 4% of the value of the real estate up to the value of 1 billion HUF, and 2% of the exceeding part of the value (but maximum 200 million HUF per property). ln certain cases, the buyer can be entitled to a duty exemption or discounted duty. The most typical cases of duty exemption and discounts are the following:
transfer affiliated companies (no duty is payable); between buying a building site if the buyer develops a residential building thereon within 4 years after the purchase (no duty is payable); buying/selling between close relatives or spouses (no duty is payable); acquisition by real estate funds (the duty is 2% of the value instead of 4%). pursuant to new legislation, as of July 20, 2025, in the future the portion of the market value of a plot of land that corresponds to the market value of a solar power
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ILN Real Estate Group – Buying and Selling Real Estate Series
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