Step-by-Step Guide to Hungarian Property Transactions

Quick Overview of the Property Purchase Process

The typical property buying process in Hungary includes:

• Negotiation: Buyer and seller agree on the intent to purchase and key terms.
• Deposit (Earnest Money): The buyer pays a deposit, ideally with a preliminary contract.
• Appointing a Lawyer: Ideally, both parties hire a real estate expert to assist with the real estate transaction.
• Due Diligence: Check the property title and any legal burdens.
• Verifying Documents: Ensure the energy certificate and electrical safety documents are in order.
• Drafting the Sale and Purchase Contract: The lawyer prepares the draft, allowing room for further negotiation if necessary.
• Signing the Contract: The contract is signed and certified, possibly even remotely via video call.
• Arranging Financing: Secure a mortgage, family loan, or other financing if required.
• Land Registry Processing: Submit the contract to the Land Registry for approval (within 60 days).
• Property Purchase Permit: This might be necessary for third-country nationals.
• Handover of Property: Transfer utility accounts and keys.
• Tax and Fees: Seller pays personal income tax; buyer settles property acquisition tax.

Early Preparation: What to Know Before the Sale

Finding the perfect property is exciting, but planning is crucial. A property purchase requires financial planning and self-assessment, ideally starting years before making an offer. Understanding your needs and financial capabilities is essential. If you're ready to buy, let's dive in!

Define Your Property Preferences

• What kind of property do you want?
• Is a new build preferable, or are you open to renovating an older home?
• Would you consider building from scratch?

Create a list of must-have features and deal-breakers. This will guide your property search and help you avoid emotional decisions on properties that don't suit your needs or budget.

Establish a Budget

Real estate prices and availability can change quickly. Stay informed by regularly checking listings, comparing prices, and familiarizing yourself with market trends in your desired area.

Check Document Validity

Ensure all your personal documents are up to date. Issues like expired ID cards or passports can delay the process. Review your bank account accesses, for any issues.

The Property Search & Viewing Checklist

If you have a clear idea of what you want and are already considering specific apartments, you should pay attention to the following details.

• Roof & Exterior Walls: Inspect for damage or leaks. Pay special attention to asbestos roofs.
• Windows & Doors: Test all openings and look for signs of water damage.
• Parking & Outdoor Space: Is there parking? Does the garage leak? Look for signs of pests in the garden.
• Fences & Boundaries: Understand property lines and shared responsibilities with neighbors.
• Interior Conditions: Walls should be free of moisture, mold, and cracks. Fresh paint may hide issues.
• Plumbing & Electrical Systems: Test for leaks, rusted pipes, and check the water pressure. Verify the state of electrical wiring and switches.
• Heating System: Check for proper functionality, particularly underfloor heating, which can be partially blocked.
• Utilities & Appliances: Ask what's included in the sale, ensure all appliances are in working condition, and note any special tariffs.
• Neighborhood: Try to learn about the local community and any potential noise issues.

The Negotiation & Purchase Agreement

Finding your ideal property is just the beginning. The next steps involve negotiating key terms, such as the price, handover date, payment schedule, and other essential conditions.

Negotiation Strategies

• Be patient: Negotiating the price of a property takes time. Don't rush into decisions. Take breaks during the process to reflect on your position.
• Be prepared to walk away: If the deal doesn't meet your criteria, be ready to walk away. There's always another property.
• Be realistic: While it's tempting to try to drive the price down, a seller is more likely to consider a well-researched offer supported by market data.

Key Terms of a Sale and Purchase Contract

Once you've reached an agreement with the seller, it's time to fine-tune the details. A well-drafted sale and purchase contract should clearly define key elements, including the identification of the parties, a detailed description of the property, and the payment terms. Additionally, it should cover essential clauses such as warranty provisions, terms for the transfer of possession, and conditions for handling disputes or contract modifications.

Financing

If you require a mortgage, be aware that banks require properties to be free of legal burdens and easily marketable in case of loan default. Familiarize yourself with property appraisals and your financial institution's criteria.

Even if you're paying in cash, it's generally safer to pay in installments. A common approach is to pay a significant deposit followed by staggered payments, with the final installment paid only after the Land Registry updates the ownership records.

The Role of the Lawyer

Your lawyer plays a crucial role, ensuring the contract covers all necessary legal points, including warranties, the transfer of utilities, and your right to withdraw. They'll also ensure the contract aligns with bank requirements if you're obtaining a mortgage.

Closing the Deal

Closing is the final step in the sale and purchase process where the ownership of the property is legally transferred from the seller to the buyer. During the closing, all necessary documents are signed, final payments are made, any outstanding fees or debts are settled, and the title of the property is officially recorded in the buyer’s name. 

This is when the buyer receives the keys to the property, and the transaction is considered complete.

Conclusion

Buying a property is a significant milestone in anyone's life, and Hungary is no exception. Whether you're looking for a new home or an investment opportunity, understanding the process is crucial for a smooth and successful transaction. As a real estate lawyer, I've guided countless clients through this journey, and I'm here to share my insights to help you navigate the Hungarian property market with confidence.

Want to consult with a property lawyer for personalized advice? Contact us!