Real Estate Sales
Frequently Asked Questions
We’ve compiled the most important information to help you understand the process and potential pitfalls of a real estate transaction. If you can’t find the answer to your question, please contact our knowledgeable and highly experienced attorneys, who will provide you with clear, easy-to-understand guidance.
What should you do before making a reservation?
If you like a property, you might want to reserve it quickly before someone else buys it. But if you don’t prepare for the sale in advance, you risk losing hundreds of thousands, since a purchase offer is already a preliminary contract. We’ve put together a list of what you should prepare in advance if you don’t want to take any risks.
The process of buying or selling real estate does not begin with the signing of the contract. The decision often depends on financial circumstances, practical considerations, and whether we have fallen in love with the property we wish to purchase. But can the decision be a well-considered one if you are unaware of the property’s hidden characteristics? The legal characteristics of the property fundamentally influence whether:
Not sure what to look for on the title deed? Have our attorneys review it, and we'll analyze it for you.
When we find the home of our dreams, we want to sign a contract quickly, and we usually put down a deposit. However, we can easily lose that deposit if it turns out that we can’t get a loan, the property doesn’t provide sufficient collateral, or—even through no fault of our own—the bank’s processing takes a very long time. In such cases, it may turn out that, due to the property or our income, we can only qualify for a smaller loan. Another serious risk is that the property may not qualify for a bank loan or government subsidy (CSOK) because, for example, the floor area, the type of property, or the building’s outline and lot boundaries are not accurately recorded in the property registry. One such case is when there is no division of usage rights for a property held in undivided joint ownership. If you plan to take out a loan when purchasing a property, choose a bank while you’re still searching for a property—or even before—and find out about the terms and conditions in advance! If you contact the bank early enough, you can find out how long the loan processing will take; a preliminary credit assessment will reveal whether you are creditworthy and the minimum value of the property required as collateral for the loan you wish to take out.
A real estate agent can take the burden of buying a home off your shoulders, but not all real estate agents offer the same services. Real estate agents are typically hired by sellers, who pay their commissions, but this isn’t always the case—even though it may seem like you aren’t entering into a contract with the agent, but are simply signing a viewing agreement. That’s why most of us don’t even read the fine print. These days, even with a viewing agreement, you can be charged a brokerage fee or a penalty—all without any benefit to you—and the document was made out to be signed right in the building’s entryway. A good real estate agent doesn’t just advertise the property online and have you sign „viewing” agreements; they’re well-prepared, know the property’s technical and legal status as well as its actual value, and assist you throughout the buying and selling process. If you’re unsure about what they’re asking you to sign, seek legal advice. If you’re ready to make an offer but don’t want to sign the real estate agent’s purchase offer filled with fine print, download our FREE, lawyer-drafted sample purchase offer—with no fine print.
If you’re financing the purchase price with proceeds from a property you’re about to sell, it’s a good idea to agree that the deadlines for the payment installments from that sale will be well before the deadlines for the payment installments on the property you intend to buy. That way, if your buyer falls behind on payments, they’ll have time to catch up, and you won’t miss out on the property you intend to purchase. Since it’s possible that, despite the signed contract, your buyer may still be unable to purchase your property, it’s a good idea to stipulate a deposit for your buyer that’s roughly the same amount you’d have to pay on the property you’re buying. That way, if your sale falls through and you’re therefore unable to purchase the property you want, at least you won’t lose the deposit.
How do you enter into a sales contract?
A real estate purchase agreement is essential for acquiring ownership of a property.
A good contract reflects the intentions of the parties, facilitates the smooth completion of the sale, and provides for unexpected situations in advance. It is also important that the contract be understandable and enforceable for the parties.
A fundamental requirement of a good sales contract is that it give effect to the parties’ intentions; therefore, it is important that it govern the sales process from start to finish in accordance with the parties’ agreement, and that the contracting parties understand its contents.
If we have a thorough lawyer, it is best for the performance of the contract to take place largely without the involvement of the seller and the buyer, through an escrow account. This way, despite the fact that the payment of the purchase price and the transfer of title do not occur simultaneously, the interests of both parties are protected.
In addition to the basic contractual terms, it is important that the contract also specify the following:
If you'd like to learn more about real estate purchase and sale agreements, please ask our attorneys and we'll be happy to answer your questions.
The seller is protected by the practice of retaining title to the property in the contract until the full purchase price has been paid. If the seller requests that title be retained, the buyer is listed on the title deed as the buyer, but not yet as the owner. This also means that the property may not be disposed of (sold, gifted, etc.), but it does not prevent the seller from encumbering the property (with a mortgage, lien, etc.). A sale with retention of title may remain on the title deed for an unlimited period; therefore, the seller must also consider that if the contract falls through, the buyer must be removed from the real estate registry. It is best for the buyer to provide written consent to this in advance and to have their statement placed in escrow with an attorney.
The other option is to request a suspension of the title registration process; in this case, the buyer has 6 months from the date the request is filed to pay the full purchase price and submit the application for title registration. Until then, the land registry office will not process any applications submitted after ours; in other words, the property cannot be sold, encumbered, or subject to enforcement proceedings.
If you'd like to learn more about how to protect your property rights, ask our attorneys and we'll be happy to answer your questions.
If the buyer has not paid the full purchase price at the time the contract is signed, the seller will not provide consent for the registration of title. The seller will do so only upon payment of the final installment. To prevent any problems arising from the seller’s negligence, unavailability, or bad faith, the seller should sign the statement of consent at the time the contract is concluded; however, to protect their title, they should not give it to the buyer but should place it in escrow with an attorney. The attorney is obligated to safeguard the escrow funds and, in accordance with the provisions of the escrow agreement, either submit them to the land registry office or destroy them. The attorney may not deviate from the escrow agreement; therefore, it is very important to specify the contractual conditions for the release of the escrow funds. A well-drafted escrow agreement protects the interests of both parties and does not grant the parties or the attorney any discretion—that is, it is automatically enforceable.
If you're wondering what a deposit agreement is for, ask our attorneys and we'll answer your question.
The seller’s purpose in entering into the purchase agreement is for the buyer to pay the purchase price of the property, while the buyer’s purpose is to acquire ownership of the property. Deadlines for fulfilling these obligations must be specified in the contract. If the deadline passes and one party has not fulfilled its obligation, the other party is entitled to terminate the contract.
Either party may unilaterally withdraw from the agreement. Since minor delays (even due to the lending bank) can easily occur, and termination carries serious consequences, it is recommended that the contract specify an additional grace period beyond the payment due date during which termination is not permitted.
Withdrawal terminates the contract as if it had never been entered into (with retroactive effect). Thus, any purchase price already paid or real property already transferred may be reclaimed, and any rights or facts already registered (such as title to property, sale with retention of title, etc.) must be canceled. If the contract is not performed and the parties mutually agree to terminate it retroactively, they rescind the contract. Rescission has the same consequences as withdrawal.
With us, contracts can also be countersigned online. You don’t have to sign at the same time and in the same place; either party can sign from anywhere, even from abroad. The signed contract must be mailed to the next signatory and, finally, to our office. The countersigning takes place via video call; all you need is a smartphone and internet access.
How much does the sale cost?
Buying real estate is expensive; in addition to the purchase price, you need money for renovations and furnishings, and there are costs associated with the sale itself.
The largest expense may be the transfer tax. The transfer tax is paid by the buyer of the property. The transfer tax is 4% of the purchase price, but there are exceptions.
If you have not only purchased but also sold real estate in the previous 3 years, or even in the next 1 year, you are required to pay stamp duty only if the property you purchased is more expensive than the one you sold, and only 4% of the difference in purchase price.
You do not have to pay a fee if you purchase a lower-priced property, take advantage of government assistance (CSOK, CSOK Plus), or if you purchase only a buildable lot and agree to build on it within 4 years.
Are you curious about other fee discounts or would you like to calculate the exact fee? Ask our attorneys, and we’ll answer your questions.
If you sell real estate, you may also have to pay personal income tax. You must pay personal income tax on every property sold if five years have not yet passed since the calendar year in which you acquired it.
The tax base is calculated by subtracting the value at the time of acquisition (purchase price, estate value, etc.) from the sale price. The tax base (15%) is the personal income tax due, which decreases over the years.
If you sell the property in the year of acquisition or in the first year following it, you must pay the full tax; in the second year, you pay only the 90%; in the third year, 60%; 30% in the fourth year, and 10% in the fifth year.
You can further reduce your taxable income by deducting the costs associated with acquiring the property (attorney’s fees, stamp duty, etc.) and the amount of value-enhancing investments, provided you can substantiate these expenses with receipts. For an accurate calculation, please consult our experienced attorneys.
A title deed is always required to sign a sales contract, and it should be as recent as possible. The fee for the title deed is 4,800 Ft, but everyone is entitled to request it twice free of charge through the client portal.
Under the terms of the purchase agreement, ownership is registered with the land registry office; the fee for this procedure is 10,600 Ft per property. In addition to the apartment, other properties may include, for example, a garage, a parking space in a parking garage, or a storage unit.
If you also take out a loan, the land registry fee for registering the mortgage is 20,000 Ft per property.
If there are encumbrances on the property, the seller is obligated to have them removed; the fee for removal is also 10,600 Ft per property.
If you’re looking for a lawyer to handle a real estate purchase agreement, it’s a good idea to get several quotes, as fees can vary significantly. Law firms traditionally set their fees as a percentage of the purchase price; it is common for the attorney’s fee to be 0.4–0.5% of the purchase price. For a property worth 50 million forints, this amounts to 250,000 forints.
However, the actual work involved for an attorney does not depend on the value of the property. A high-value purchase and sale agreement can be straightforward if the property—which is free of encumbrances—is purchased with the buyer’s own funds. Conversely, a low-value sale can be complicated if there are encumbrances on the property, a bank loan or CSOK is used, there is a right of first refusal, or agricultural land is being purchased.
What’s simpler for us is cheaper for you. Our law firm’s fees are proportional to the work performed. The simpler the case, the lower our legal fees. For a property worth 50 million, this means a discounted fee of 183,000 Ft at our firm, provided the purchase is made with your own funds and there is no right of first refusal.
How long does it take to buy a property?
You’ve surely thought it through and planned it out in your head a hundred times—what kind of property you’ll buy and how you’ll furnish it. It’s worth planning the buying and selling process just as meticulously, because timing matters.
How quickly and easily a sale can be completed depends on many factors. The fastest sales can be finalized within a matter of days, and the only thing left to wait for is the land registry’s registration of ownership, which takes up to 60 days.
Taking out a loan or applying for government assistance will extend the process by a few months, so it’s a good idea to do your research in advance. You can request a preliminary credit assessment at any bank, where they’ll estimate how much you can borrow based on your income and the value of the property you intend to purchase. This doesn’t bind the bank to anything, but since it’s prepared according to their own guidelines, it’s a reliable estimate.
If there is a lien on the property, it takes time to have it removed. It may take some time for the bank or the enforcement officer to confirm the exact amount of the debt and issue the cancellation authorization after the debt has been paid. You don’t have to wait very long for the land registry office to remove the lien; for example, the land registry office will remove a mortgage within 8 days.
Understanding the title deed is essential for planning the sale in a predictable manner. If you don’t understand the title deed or have any questions, please send it to us, and we’ll analyze the risks.
How quickly and easily can a real estate transaction be completed? The fastest it can be done is within a week, and the easiest way is at our law office, but it’s also possible to sign the contract remotely using online solutions—even from home.
You can also provide the details of the sale online, and we’ll send you a draft contract within 3 business days. Once you approve the draft, you can sign the contract as early as the next day—either at our office or from home.
If you'd like to sign the contract online, each signatory can sign it from home, and as soon as it arrives at our office, the countersignature will take place via video call—all you need is a smartphone and internet access.