General
Data on Real Estate Sale and Purchase Agreements
Content
requirements:
For
being able to conclude an agreement the parties should agree on the
following: who (Purchaser) is buying what (real estate) from whom
(Seller) and for how much (purchase price).
Who –
Buyer
The
Buyer makes a written purchase offer, secured by earnest money in
the presence of a real estate agent. Purchase offer is a unilateral
declaration creating a binding offer from the Bidder (buyer), which
means that he/she cannot unilaterally rescind his/her purchase offer
without legal consequences. The purchase offer shall include the
essential conditions such as the purchase price and payment
conditions, deadlines, etc.
From
whom – Seller
The
Seller is the owner of the real estate having the title to and
possession of the real estate, which rights shall be certified by the
data of the title deed and the simultaneous proof of his/her
identity.
In
case of condominiums the declaration of the condominium
may contain important restrictions.
Various
restrictions may
be indicated on the title deed,
such as usufruct, court execution procedure, mortgage connected to a
loan, restraint on alienation and encumbrance, lawsuit note,
easements etc.
In
case of multiple sellers
or a seller wishing to sell an undivided share it should be clarified
whether it is about undivided joint ownership, whether there is an
agreement on the division in kind and if yes, whether it has been
filed with the Land Registry.
It is
the Seller’s obligation to have the real estate’s energy
quality certificate. The Seller should
provide the Buyer with it prior to the conclusion of the Deed of Sale
furthermore the Seller shall bear the costs of such certificate.
Remark:
it is expedient that the Seller makes a statement regarding that
there are not any other owners or any other third persons beyond
those registered in the Land Registry who have any rights under the
title of matrimonial property or any other title whatsoever regarding
the real estate.
The
Deed of Sale enters into force with the acceptance of the offer (see
the clause hereinabove).
Seller
and Buyer collectively – Parties
The
following documents are required for the conclusion of a Deed of
Sale: valid identity card, residence card and tax card or, in case
of a corporation, certificate of incorporation and specimen of
signature, in case of foreign persons e.g. passport. It is
expedient to draw the attention of the Parties to the expiry of such
documents.
What –
Real Estate
The
Land Registry registers all relevant data relating to the real
estate..
The
ownership portion and topographical lot
number of the real estate constituting
the object of the sale shall be exactly indicated.
The
Seller shall inform the Buyer of any lawsuits, encumbrances, other
rights and circumstances beyond the Land Registry concerning the real
estate.
For
how much – Purchase Price
The
purchase price is the consideration for which the title to the real
estate is transferred, under the title of sale and purchase, on the
basis of an onerous
agreement.
If
there are multiple sellers (or there is a seller having usufruct or
another entitled person)
it is expedient to clear what portion of the purchase price each
seller will receive, possibly differing from the ownership portion
and whether they wish separate payment.
It is
advisable to inform the Buyer that if he/she wishes to pay the full
purchase price or a part of it from a
loan, he/she shall indicate the
creditor bank.
Individual banks provide similar requirements on the whole in
connection with the sale and purchase agreement and the process of
the payment of the purchase price, which, however, may differ from
each other considering the details.
Formal
requirements – Proceeding of the attorney-at-law:
A
document suited for registration of the real estate sale and purchase
is required for the registration by the Land Registry, which is
practicably a sale and purchase agreement, prepared and countersigned
by the attorney-at-law. By preparing the document, the
attorney-at-law assumes full responsibility for that the document is
of high professional standard, while by countersigning it, for that
it corresponds to the will of the Parties and it complies with the
relevant legal regulations furthermore, he/she undertakes full
responsibility for verifying the identities of the Parties. His/her
responsibility covers the representation of
the Parties and the Land Registry proceeding, but it does not cover
representation before the Tax Authority .
The
acting attorney-at-law should have mandatory liability insurance.
The
attorney-at-law preparing the Deed of Sale shall represent both
Parties. Any of the Parties may deviate from this provision and
separately authorise an own attorney-at-law. However, in the absence
of such stipulation the attorney-at-law shall represent both Parties
and takes the interests of both Parties into account during the
course of his/her proceeding.
The
attorney-at-law is obliged to perform client screening in the event
of contributing in a real estate sale and purchase. This means that
the attorney-at-law is obliged to identify the client (Seller and
Purchaser), their attorneys and persons entitled to acting,
furthermore the representatives, as well as to carry out the document
control of their identities (copy of personal documents).
In the
event of a real estate sale and purchase it is required to use the
personal identification number. In the case of a Hungarian citizen it
is not allowed to conclude any agreements in the absence of valid
documents certifying personal identity and personal identification
number (residence card).
Stamp
duty – Taxation
Stamp
duty-transfer tax
By
convention, the Buyer shall pay the stamp duty (duty on onerous
transfer of property), however, the Parties may deviate from this in
their agreement.
Rate
(flat):
- 4% up to HUF 1 billion, above that 2% for the part exceeding that of the sales value, but no more than HUF 200.000.000
Stamp
duty reduction:
Newly
constructed home – free
of stamp duty
In the
event of a newly built flat the sale is free of stamp duty up to the
value of HUF 15 million. Between HUF 15 and 30 million stamp duty
shall be paid regarding the amount exceeding HUF 15 million. In case
of a sales value exceeding HUF 30,000,000 no stamp duty reduction may
be applied.
The
Purchaser has sold a flat – he/she certifies the sale of another
flat of own property
If a
Purchaser being a private individual has sold or sells another flat
within one year
prior to or following the purchase, the difference between the two
sales values will constitute the basis for duty imposement. In this
case the value of usufruct shall not be deducted. Attention! Only a
flat and only one flat may be taken into account upon the current
sale, and only in the case of a private person.
It is
expedient to certify the sale by a sale and purchase agreement.
Taxation - personal income tax - Seller
The
purchase price is considered as income for the Seller, thus he/she as
a private individual shall pay personal income tax (15%). The same shall
apply to the person waiving usufruct or any other rights for a
consideration.
IN
CASE OF A NON-RESIDENTIAL REAL ESTATE:
(4) The income deriving from the transfer of a
real estate shall be the amount calculated according to the
provisions of Clauses (1) and (2), if the transfer takes place in the
year of acquisition or within the subsequent five years (for the
purposes of this §: “calculated amount”). After that, the income
shall be fixed in such a way that the calculated amount shall be
decreased
a) by 10 percent of the
calculated amount, if the transfer takes place in the sixth year,
b)
by 20 percent
of the calculated amount, if the transfer takes place in the seventh
year,
c)
by 30 percent
of the calculated amount, if the transfer takes place in the eighth
year,
d)
by 40 percent
of the calculated amount, if the transfer takes place in the ninth
year,
e)
by 50 percent
of the calculated amount, if the transfer takes place in the tenth
year,
f)
by 60 percent
of the calculated amount, if the transfer takes place in the eleventh
year,
g)
by 70 percent
of the calculated amount, if the transfer takes place in the twelfth
year,
h)
by 80 percent
of the calculated amount, if the transfer takes place in the
thirteenth year,
i)
by 90 percent
of the calculated amount, if the transfer takes place in the
fourteenth year,
j)
by 100 percent
of the calculated amount, if the transfer takes place in the
fifteenth
year.
reckoning
the year following the acquisition as first year.
In
case of HOMEs (any residential area real estate: flat or house) this means:
1.
100
percent in the year of acquisition and in the following year,
2.
90 percent in the second year following the acquisition,
3.
60 percent in the third year following the acquisition,
4.
30 percent in the fourth year following the acquisition,
5.
0 percent in the fifth
year and further years following the acquisition.
No
tax shall be paid in case of a sale taking place in the 5th
year following the acquisition of the flat (or later).
