The biggest change in the Hungarian real estate market will be the entry into force of the new Real Estate Registry Act (NREA) in 2024. The NREA will replace the current Real Estate Registration Act and will also amend the rules of the Civil Code on real estate registration. It is therefore questionable which of the provisions that will enter into force on 1st of February 2024 (as things stand at present) will introduce innovations not previously applied in real estate law.
One of the aims of the NREA is to make the old real estate registration system competitive by its digitalisation. The legislator plans to achieve this by replacing paper-based administration with faster electronic management. This will be underpinned by the institution of extended automatic decision-making, a process which has so far been limited to the provision of copies of the land registry. However, once it enters into force, the new Act will be linked to other publicly available electronic registers, so that in certain cases all the information needed for automatic decision-making will be available. In principle, the authority will have up to 24 hours to make this decision, in accordance with the rules of the General Administrative Procedure.
The new law favours the use of electronic powers of attorney for legal transactions – such electronic signature software is used by our office, a leader in e-law in Hungary – as it allows for a faster and automatic decision-making procedure for applications submitted with electronic powers of attorney, without the need for human administrative activity. In order to speed up the process and to make it as convenient as possible (no need to leave home, as contracts can be signed by electronic signature from the comfort of your home), we also provide our clients with the software we use to generate qualified electronic signatures.
According to the provisions of the currently applicable Hungarian Civil Code, it was not possible to establish a separate restraint of alienation and encumbrance on the real estate, but only a restraint of alienation. Among the many other new provisions, it is a novelty that the Civil Code will be amended with the entry into force of the NREA, so that from 2024 it will be possible to establish such a right independently (while still maintaining the possibility of joint establishment). Thus, an encumbrance prohibition will also be newly registrable independently, under which the transfer of the property will not be impeded, but its encumbrance will be subject to the consent of the person entitled to the prohibition.
The change in the law also extends the institution of maintenance of ownership, which previously only included the seller’s right to maintain ownership until the purchase price was paid. Following the amendment of this section, the protection of the buyer’s right has now been given special attention. According to the text of the Act, during the period of maintenance of ownership, the seller may not infringe the buyer’s right to acquire the property without the buyer’s consent. Thus, the seller retains the right of ownership until the purchase price is paid, but has only a limited right to dispose of this retained right of ownership and cannot violate the buyer’s right without the buyer’s consent.
If you have any questions or need assistance in a real estate matter, do not hesitate to contact NZP NAGY LEGAL law firm using any of the contact details on our website.