Transfer of Property Act at Hungary
In Hungary, the transfer of property, particularly real estate, is governed by the Civil Code of Hungary (Act V of 2013), which contains detailed provisions regarding the transfer of property rights. Hungary does not have a separate "Transfer of Property Act," but the relevant rules for property transactions are integrated into the country's broader civil law framework.
Key Legal Framework for Property Transfer in Hungary:
1. Hungarian Civil Code (Act V of 2013)
The Civil Code of Hungary provides the primary legal framework for property transactions. The code addresses various aspects of property law, including ownership, transfer of property, and contractual obligations.
Real Property and Movable Property: The Civil Code distinguishes between movable property (such as personal belongings) and immovable property (such as land and buildings). The rules for transferring immovable property are more formal and require specific procedures.
Property Transfer: According to the Civil Code, property can be transferred through various forms of legal acts, including sales agreements, gifts, or inheritance.
2. Transfer of Real Property (Immovable Property)
The transfer of real estate in Hungary must adhere to specific formalities:
Sale Agreement: The transfer of immovable property typically begins with a written sale agreement (or contract), which outlines the terms and conditions of the sale, including the price, the identities of the buyer and seller, and a description of the property.
Notary Involvement: A notary public is required for the transfer of real property in Hungary. The sale agreement must be executed before a notary, and the notary ensures that the transaction complies with legal requirements. Notarization is crucial for ensuring that the transaction is legally valid.
Title Transfer: For the transfer to be legally effective, the transaction must be registered with the Land Registry. This step is vital for the buyer to acquire formal ownership of the property. Once registered, the buyer's name is recorded in the Land Register, which provides public notice and protection of ownership rights.
Land Registry: The Land Registry (called "Földhivatal") is responsible for maintaining records of property ownership in Hungary. Registration in the Land Registry is a mandatory step for the transfer of real estate, and this registration is what ultimately protects the buyer's title to the property.
3. Taxes and Fees
Property transfers in Hungary are subject to taxes and fees, including:
Property Transfer Tax: The buyer is typically responsible for paying the property transfer tax. The rate of this tax is generally 4% of the market value or the purchase price (whichever is higher) of the property. There may be exemptions or reduced rates for certain types of property, such as first-time homebuyers or properties used for agricultural purposes.
Notary Fees: Notary services come with a fee, which is typically based on the value of the property being transferred. These fees must be paid to the notary public who witnesses and authenticates the sale agreement.
Registration Fees: There are also fees associated with registering the property transfer in the Land Registry. The fee is generally modest but is an essential part of the process to ensure legal ownership.
4. Foreign Ownership of Property
Foreigners can own property in Hungary, but there are certain restrictions and requirements for non-EU/EEA citizens:
EU/EEA Citizens: Citizens of EU or EEA countries can buy property in Hungary without any special restrictions, provided they comply with general property laws.
Non-EU/EEA Citizens: Foreign nationals from outside the EU/EEA are subject to stricter rules. They may need to apply for a special permit to buy property, and in some cases, the property must be used for certain purposes (such as business activities). A non-EU national may need to demonstrate that their property purchase complies with Hungarian laws on foreign ownership.
Agricultural Land: The purchase of agricultural land by foreigners is subject to additional restrictions and may require approval from the Hungarian government. Agricultural land ownership is generally more regulated, and certain conditions must be met for foreigners to purchase it.
5. Inheritance and Succession
Property can also be transferred through inheritance in Hungary. The Civil Code governs how property is passed on to heirs, including real estate. Inheritance may occur according to a will or through statutory inheritance rules (intestate succession).
Testamentary Succession: If the deceased left a valid will, the property is transferred according to the terms of the will.
Intestate Succession: If there is no will, the property is transferred according to Hungarian intestate succession laws, which provide a hierarchy of heirs, including spouses, children, parents, and other family members.
Succession Agreement: In some cases, a succession agreement may be used to transfer property, which allows parties to arrange the division of property among heirs in a way that is legally recognized.
6. Leases and Property Rights
In addition to the transfer of ownership, the Hungarian Civil Code also covers other forms of property transactions, including leases, mortgages, and easements. These types of transactions may involve agreements that affect the use of property without transferring full ownership.
Leases: Lease agreements, especially for real estate, are governed by the Civil Code, and certain formalities must be followed to ensure the agreement is legally valid. Leases can be for residential or commercial purposes.
Mortgages: Property can also be encumbered with a mortgage or lien. The creation of a mortgage requires registration in the Land Registry to be enforceable against third parties.
7. Dispute Resolution
Property disputes related to ownership, boundaries, contracts, or inheritance are handled by the Hungarian courts. Disputes may also be settled through mediation or arbitration, depending on the nature of the case.
Land Registry Disputes: Disputes involving registration in the Land Registry can be taken to court if there are issues regarding the accuracy of the records or conflicting ownership claims.
Conclusion
In Hungary, the transfer of property is primarily governed by the Civil Code, specifically the rules surrounding the sale, transfer, and registration of real estate. The process typically involves a written agreement, notarization, payment of taxes, and registration with the Land Registry. There are also taxes and fees that must be paid during the transaction, including the property transfer tax. Foreign buyers can purchase property in Hungary, although there are some restrictions for non-EU nationals, especially concerning agricultural land.
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