ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN HUNGARY]

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last for 6 months, so this can be a solution only if the transaction is closed the latest within 6 months after signing. The other option (especially used if the period between signing and closing is more than 6 months) is the sale of the property with the retention of title clause. This means that the Land Registry makes an entry into the Land Registry on the fact of the sale with retention of title, by also indicating who is the buyer, but will only actually register the buyer’s ownership once the full price is paid. This entry works similarly to a prohibition for alienation and encumbrance, meaning that until the entry exists, the property cannot be sold or encumbered without the consent of the buyer.

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 In 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). In 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 followings:

transfer

between

affiliated

(g) 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. If the transaction is completed, the earnest money will be deemed as an advance payment. If the transaction is not completed, the party being responsible for that loses the amount of the earnest money. (h) 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

companies (no duty is payable);

• buying a building site if the buyer develops a residential building thereon within 4 years after the purchase (no duty is payable);

buying/selling close relatives or spouses (no duty is payable); between

• acquisition by real estate funds (the duty is 2% of the value instead of 4%). 6.2 Procedural costs For making any entry or registration in the Land Registry, a procedural fee is to be paid, which is normally borne by the buyer.

ILN Real Estate Group – Buying and Selling Real Estate Series

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