Buying real estate is not only one of the most significant financial decisions in life but also a complex legal process. Those who decide to purchase a property often don’t realize how many details must be considered to ensure the transaction is not only valid but also legally secure.

1. Title Deed – The First Legal Filter

The first step in purchasing property is reviewing the title deed. It includes:

• the identity of the owner,

• the exact characteristics of the property,

• possible encumbrances (e.g., mortgages, enforcement proceedings, easements),

• usage restrictions, pre-emption rights.

Correct legal interpretation of this document is essential, as certain entries (e.g., prohibition on alienation) may hinder or make the purchase risky. In the case of jointly owned properties, proper interpretation of the title deed is especially important to identify any parties with statutory pre-emption rights.

2. Preliminary Agreement, Letter of Intent, and Proper Use of the Deposit

The purchasing process often begins not with the final sale and purchase agreement, but with a preliminary agreement outlining the parties’ intentions and some basic terms.

This may take the form of:

• a preliminary agreement, where the parties undertake to later sign the final contract – this is legally binding,

• a letter of intent, which is a unilateral statement by the buyer – it has limited legal effect but is commonly used during negotiations or while arranging bank financing.

The deposit must always be recorded in writing, either within a preliminary agreement or a letter of intent.

3. Sale and Purchase Agreement – Valid Only if Countersigned by a Lawyer

In Hungary, a sale and purchase agreement transferring ownership of real estate is only valid if countersigned by a lawyer. The agreement includes:

• the purchase price and payment schedule,

• transfer of possession,

• release from encumbrances,

• the status of utilities and ancillary premises,

• conditions for land registry registration.

A well-drafted contract not only records the parties’ intentions but also prevents future legal disputes – particularly in cases involving undivided joint ownership, condominiums, or usufruct rights.

4. Land Registry Procedure – Registration of Ownership

Based on the signed sale and purchase agreement, the lawyer submits the ownership registration request to the real estate registry. Under Hungary’s new real estate registration rules, instead of a "pending" entry, retention of title is registered in the encumbrances section, providing the buyer with stronger legal protection.

This entry indicates that the sale has taken place, but according to the agreement, ownership is only transferred to the buyer after full payment of the purchase price.

The actual registration of ownership occurs once the conditions set out in the agreement – typically full payment – are certified as fulfilled.

5. Transfer Tax or Exemption

After the property purchase, the buyer is liable to pay a 4% transfer tax, based on a decision issued by the Hungarian tax authority (NAV). In certain cases, an exemption can be requested – for example, if the buyer commits to constructing a residential building on the land within 4 years. A timely and properly prepared application is required for this.

6. Transfer of Utilities, Tax Notifications

Following the purchase, the buyer has additional obligations:

• transferring water, gas, and electricity accounts to their name,

• notifying the local municipal tax authority (e.g., land tax, building tax).

Failure to do so may result in fines or disruptions in utility services.

7. Why You Need a Lawyer from the Start

An experienced lawyer doesn’t just “sign off” on the contract. They:

• conduct due diligence on the property, the sellers, and the buyers,

• identify and warn of legal risks,

• protect your interests during negotiations,

• and ensure that all legal conditions for acquiring ownership are met.

A good lawyer is the invisible safety net in any real estate transaction – ensuring that you not only buy the property but safely take possession of it with full legal security.

How We Can Help You?

Our law office provides comprehensive legal assistance throughout the entire real estate transaction – from the initial consultation to final registration of ownership. You only need to be present to sign the documents – we handle everything else.

We:

• prepare and countersign the sale and purchase agreement,

• submit the land registry application,

• track transfer tax exemption deadlines,

• assist with utility transfers,

• file municipal tax declarations.

And we keep you clearly and promptly informed about every step of the process, so you always know where things stand.

If you are looking for a reliable, transparent, and secure real estate transaction in Hungary, feel free to contact us.

Tel: +36 30 475 3115
Email: info@radvanszki.eu