Hungary
- Can I, as a foreign national,
set up a Hungarian company?
- What
are the most important differences between the companies?
- What
happens if the seller decides to pull out after I have given
him my deposit?
- Can
the seller sell the property to somebody else after I have
given him my deposit?
- How
much is the usual deposit?
- What
is the difference between a precontract and a final contract?
- Are
contracts translated into English?
- When
do I get the Title Deeds of the property?
- What
is the procedure if there is a burden on the property?
- What
is the procedure if I buy as a private person?
- How
does Power of Attorney work in Hungary?
- What
are the solicitor’s fees and when are they payable?
- What
is the company setting up procedure?
- Are
Hungarian lawyers registered at a local chamber?
Can I, as a foreign national, set up a Hungarian company?
Yes, you can. According to the Hungarian regulation there
is no difference between the companies registered in Hungary
on the grounds of the nationality of their members: they have
the same rights and obligations and have to meet the same
duties. The only difference is that if a foreigner does not
have a Hungarian resident address he needs a delivery proxy.
Official letters are posted to this proxy and he is obliged
to forward them to the foreign national.
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What are the most important differences between the companies?
The commonly used types of companies in Hungary are
(i) the “Betéti Társaság”
or Bt. and
(ii) the “Korlátolt Felelõsségû
Társaság”(limited liability company) or
Kft.(Ltd.). Both of these are private companies. The members
of the Kft. have no personal liability for the debts of the
company with their own personal assets. However a minimum
capital of HUF 3.000.000 must be deposited. In case of setting
up a Bt. there is no minimum capital (according to standard
practice the deposit is usually 10.000,- to 30.000,-HUF) but
at least one of the members –who is called the general
partner- has full personal liability for the debts of the
company. To set up a Bt. at least two members are needed:
one general partner (who has full liability) and one limited
partner. If the company has two or more general partners all
of them have full liability. One or more members can set up
the Kft. but where there is only one member the company has
to meet stricter regulations e.g. an authorized auditor is
needed, etc. The Bt. is represented by the general partner(s).
The limited partner is not entitled to sign in the name or
act on behalf of the company. The Kft. is represented by the
manager(s) who can be one of the members or even a third party.
The power of representation can be individual or joint. The
costs of registration are lower in case of setting up a Bt.property
sheet).
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What happens if the seller decides to pull out after I have given him my deposit?
The seller has to pay back the double amount of the deposit.
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Can the seller sell the property to somebody else after I have given him my deposit?
This cannot be done legally however two elements secure the
buyer’s position:
(i) this is a breach of the contract which means that the
seller has to pay back double the amount of the deposit;
(ii) if the parties have concluded the final purchase contract
but the total purchase price hasn’t been paid yet, the
buyer is entitled to claim for the registration of the fact
of concluding the purchase contract. This is not equivalent
to the registration of the ownership title but it results
an obstacle to selling the property to somebody
else..
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How much is the usual deposit?
10-20% of the purchase price.
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What is the difference between a precontract and a final contract?
The pre-contract contains the commitment of the parties that
they are obliged to conclude the final purchase contract by
the end of a certain period or at a certain time. In the pre-contract
the parties define the important elements of the final purchase
agreement e.g. data of the real estate, purchase price, time
of payment, etc., but the pre-contract doesn’t result
in the transfer of the ownership title.
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Are contracts translated into English?
Yes, they are.
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When do I get the Title Deeds of the property?
First of all we have to make clear that we don’t have
that kind of “deed” in Hungary as it is known
in the Anglo-Saxon legal systems. The buyer obtains the ownership
title when it is entered on the land register. From that time
the owner verifies the ownership title with the extract of
the Land Registry (which is commonly called: the property
sheet). The Land Registry Office releases the extract and
you can get as many as you need for HUF 3.000,-/copy. The
registration procedure takes one to six months from the time
of filing the necessary documents at the Land Registry Office.
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What is the procedure if there is a burden on the property?
The exact procedure depends on the type of the encumbrance
(e.g. mortgage, right of usage, etc.), but the cancellation
of the encumbrance is always the seller’s obligation
and cancellation is always the pre-condition of payment of
the purchase price.
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What is the procedure if I buy as a private person?
You can obtain the ownership title only upon the approval
of the Metropolitan Administration Office. The procedure of
this Office contains practically two procedures:
(i) obtaining an official valuation of the real estate from
the Municipality of the relevant district and the representation
of the mayor;
(ii) de facto procedure of the Office. In this procedure
the Office checks the price of the real estate and investigates
whether there is any security reason to refuse the approval.
In this procedure you have to declare the purpose of the purchase,
if you are going to live there or not, how much time you are
planning to stay here yearly, who will pay your utility costs
and how, who is your proxy in Hungary, you have to authorize
the Office to check you in the criminal records, etc. The
whole procedure takes at least 60 days.
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How does Power of Attorney work in Hungary?
We use two types of Power of Attorneys:
(i) ad hoc Power of Attorney which ensures the right of representation
in a certain, defined case;
(ii) general Power of Attorney ensures the right of representation
in all of the principal’s businesses. Through the attorney’s
activity the principal will be entitled or obliged. The important
rule that in case a contract is valid only in written form
and the signatures have to be countersigned by a solicitor
or certified by a public notary (e.g. the purchase contract,
the Articles of Association) then the Power of Attorney must
be drafted in written form as well, and the signatures have
to be countersigned by a solicitor, certified by a public
notary or by the Hungarian Embassy.
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What are the solicitor’s fees and when are they payable?
For drafting the purchase contract and acting in the registration
procedure: 1 to 1.5% of the purchase price + VAT. The buyer
is invoiced simultaneously with the signing of the purchase
contract with a usual eight-day payment period (in case of
transfer). The purchase contract will be filed at the Land
Registry Office upon payment of the solicitor’s fee.
For drafting the company documents and acting in the registration
procedure: 300EUR+VAT in case of a Bt. and 1000 EUR+VAT in
case of a Kft. According to our practice the solicitor’s
fee is payable in cash simultaneously with the signing of
the company documents.
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What is the company setting up procedure?
The three steps of setting up a company:
Step 1: Signing the company documents at the solicitor who
countersigns them; with the countersigned Memorandum and Articles
of Association the representative(s) of the company will go
to the public notary and sign the specimen signatures.
Step 2: Company documents are filed at the registration court. Simultaneously the company gets its registration number, tax number, statistical number and from that moment the company is entitled to start its business activity e.g. buy real estate.
Step 3: In Hungary every company document is checked by the
court before registration. (Because there is no fixed form
of these company documents, every solicitor uses his own documents).
If everything is correct the company will be registered. The
procedure takes about 30 days.
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Are Hungarian lawyers registered at a local chamber?
Yes, they are. You can check e.g. the members of the Budapest
Bar Chamber on this website: www.bpbar.hu
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