Major legal steps of real estate acquisition in Hungary
Economically it is a great opportunity to invest in real property in Hungary. The legal condtions of acquisition depends on the type of real property and on the investor`s decision.
Legal due diligence on the real property
After evaluating the business opportunity of acquiring the real estate the first legal step is to check the ownership of the property. The Land Office holds the land registry that genuinely certifies the most important rights and facts related to a specific real estate. If a right is not registered at the Land Office it shall not be alluded to against benevolent successor.
Such rights and facts are ownership, mortgage, usufructuary right, easements, preemption right, option right, alienation ban, etc. If the purpose of the acquisition is development it is necessary to check the municipality`s decree on local building regulations and local development plan for future plan of the municipality. Some real estates are art relics under the Act LXIX. on protection of cultural heritage of 2001 and the Office of Art Heritage has pre-emption right, the Office infrequently exercise its right.
Buying the company owns the estate
If the owner of the real estate is a company it is worth to consider to buy the company. Buying the company much more cheap, because the stamp duty on registration the change of the ownership of business shares of the company has a fixed price. This fixed stamp duty payable for the company court procedure together with the due diligence costs on the company is dwarfed by the stamp duty on payable for direct acquisition of the ownership. For tax, liability and special licensing procedure reasons it is worth to form a company registered to Hungary to acquire the real estate.
Forming company for acquiring the real estate
For the abovewritten reasons most of the foreign owners decide to form a company registered in Hungary. The registration can be fast (2 working days in simplified procedure) and the requirements are not expensive to fulfill.
There are no restrictions on minimum members of a company to form, or citizenship of the members nor the managers. Minimum capital for limited liability company is 2.000 EUR or for company limited by shares is 20.000 EUR. A registered office is needed.
After closing the due diligence and structuring the transaction and negotiating the business conditions the contract can be drafted. Hungarian contractual law recognizes reservation of proprietorship, depositing registration licence or purchase price, option right, etc. Contracts registable by Company Court and the Land Office shall be countersigned by attorney registered at Hungarian Bar Association.
Registration at the Land Office or Company Court
Registration at the Land Office, in case of buying the estate holder company`s shares at the Company Court is essential element in Hungarian law. General period for registration at the Company Court for acquiring the shares of an existing company is 23 working days, at the Land Office is 30 days.
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