Real Estate Sale And Purchase Contracts In Hungary: What to include?

  • 12 Mar 2010 1:00 AM
Real Estate Sale And Purchase Contracts In Hungary: What to include?
One of the biggest decisions and undertaking in life is purchasing a new property. The reason can be either moving to a new home or buying a property with the aim of investment. However only a few of us are aware of the necessary terms and conditions of a real estate sale and purchase contract required by law. In Hungary legal representation is obligatory in the land registry proceeding. Despite this fact many people sign offers and preliminary contracts for the desired real estate without legal advise.

It might be obvious, but it should be noted, that a written document is obligatory when concluding a real estate sale and purchase agreement. It is possible, that the contracting parties agreed in words about all the important details before, but the agreement can not be enforced in court in the future, because the lack of the written form results in the invalidity of the agreement.

It is also an important what to include in the contract, because the legal act in Hungary requires the „necessary elements”. Since the necessary elements can be different for each party, that’s why the decision of the Hungarian Supreme Court contains these elements, which are the following:

Indication of the contracting parties, subject of the contract (the property itself), the purchase price, and the intention on transferring the ownership. In case the document contains the above elements, the sale and purchase contract is validly concluded. This way it might be possible, that despite the place and date is missing from the contract it still shall be deemed as valid.

In a well-known Hungarian case, a court deemed a contract written on a beer-mat in a pub as valid because it contained all the above detailed necessary elements. On the beer-mat a drinker transferred his property to the owner of the pub in return for some credit.

However that type of contract can not be recorded in the land register. A public notary deed or a sale and purchase contract countersigned by a lawyer is required for the land registry proceeding. Its worth noting that a land registry record is extremely important, because only such registration protects against third parties’ acquisition of ownership based on the public data of the land register.

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