My previous articles examined why a golden visa is not required to buy property in Hungary, which Budapest districts define the capital’s premium segment, and how the purchase of a discreet home regarded as a trophy asset unfolds. The question I am then asked most often is far more practical: all right, but how does the property purchase itself actually work?

Guest article for Daily News Hungary readers – written by Széll Emese, Hungary-based Private Real Estate Adviser to Premium Clients

This article follows the process from the first offer, through the handover of possession, to registered ownership. It is not limited to Budapest: the legal mechanism described operates in the same way throughout the country, whether the property is a Danube-side apartment, a villa on Lake Balaton or a country estate.

Buying property in Hungary is neither particularly difficult nor exotic, but it follows its own sequence and legal logic. The security of a smooth, well-prepared purchase depends almost entirely on a handful of decisions made before the first substantial movement of funds: who represents the buyer, where the money is held, what the up-to-date land registry extract shows, how existing encumbrances will be discharged, and when each document begins to protect the buyer’s position in practice.

The offer: even the first document matters

The process usually begins with a purchase offer. It may be a short, even one-page document, but it is unwise to assume that anything short of a sale and purchase agreement has no legal consequences. The substance of the document always matters: the purchase price, the payment deadline, the binding effect of the offer and any security arrangements can create obligations even at this stage.

When buying through an estate agent, there may be a short booking or reservation agreement accompanied by payment of an amount equal to 1–2 per cent of the purchase price. Its purpose is to take the property off the market while the initial legal checks are carried out. It is not, however, a separate legal instrument regulated in detail, which makes it particularly important for the document to state clearly when the money is refundable, when the seller may retain it, and what happens if due diligence reveals a legal problem.

In practice, I consider it safest for the amount to remain modest at this early stage, for the buyer’s lawyer to review the document, and, wherever possible, for the money to be paid into a lawyer’s escrow account rather than directly to the seller.

A lawyer is neither optional nor a formality

In Hungary, a real estate sale and purchase agreement must be made in writing. For the instrument to serve as the basis for registration of ownership by the land registry, it must be a private document countersigned by a lawyer or legal counsel registered with the Bar, or a notarial deed; legal representation is mandatory in land registry proceedings. Ownership passes not merely upon signature but upon registration in the land registry. The lawyer therefore does not simply “formalise” an agreement reached elsewhere: they design the transaction’s legal structure and carry it through to completion.

Independence is what matters when choosing the lawyer. The buyer’s interests are best protected by a lawyer appointed by the buyer, although a genuinely neutral lawyer jointly accepted by both parties can also work well. It is essential, however, to clarify from the outset whom the lawyer represents, what due diligence they will perform, and which issues – such as the property’s technical condition or the tax structure – require a separate specialist.

Many international buyers are surprised that a standard cash purchase of a home in Hungary is not conducted by a civil-law notary, as they may be accustomed to in some Western European legal systems. The lawyer is the central figure in the process. A notary is most commonly involved in bank financing, enforceable undertakings and the authentication of certain powers of attorney.

The purchase can also be completed without the buyer being physically present, but the form of any power of attorney executed abroad must be agreed with the Hungarian lawyer before it is signed. Depending on the country of origin, an apostille, diplomatic legalisation or an exemption under an international convention may be required. Under the current system, using a power of attorney issued abroad for a real estate transaction may also involve additional electronic and notarial requirements, so this should not be left until the last minute.

The land registry extract: read it, then read it again

Every serious purchase begins with an up-to-date land registry extract. It reveals the property’s official legal description, the identity of the owner or owners and their ownership shares, and the rights and encumbrances registered against the property, including mortgages, enforcement rights, usufruct, prohibitions on alienation and encumbrance, and pending proceedings.

In a properly managed transaction, the current status is checked not only during the initial due diligence but again immediately before the contract is signed and filed. This is not a matter of distrusting the seller. The land registry is a live system, and a new application, encumbrance or enforcement measure can appear within just a few days.

A marginal note (széljegy) deserves particular attention. It shows that an application or other filing concerning the property has already been submitted and is awaiting determination. As a general rule, applications are decided according to the priority attached to the time of filing, so the substance of any earlier marginal note must always be understood. Not every marginal note signals a problem, but it may reflect a claim by another buyer, a bank, a bailiff or a public authority.

The same applies to usufruct. It does not necessarily prevent the purchase, but if it is not removed from the register, it may continue to bind the new owner. The buyer therefore needs to know not only what appears on the land registry extract, but also when, on the basis of which document and subject to what financial condition each encumbrance will be discharged.

For a detached house, villa or country estate, the cadastral map and the property’s actual condition should also be compared with the land registry extract. An extension built without permission, an unregistered outbuilding or a discrepancy in the plot boundary may later cause financing, insurance and resale problems.

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Preliminary agreement, earnest money and advance payment: three separate issues

A preliminary agreement is not a compulsory stage in every purchase. It can, however, be useful when important matters still need to be resolved before the final contract is concluded, such as the discharge of a mortgage, obtaining bank financing or the issue of an acquisition permit for a non-EU buyer. It is important to remember that a preliminary agreement is not merely a statement of intent: once concluded, it can give rise to legally enforceable obligations.

The distinction between earnest money and an advance payment is one of the most frequently misunderstood points of Hungarian property law. Earnest money is an amount securing performance of the contract. It operates as earnest money only if that purpose is clear from the agreement. If performance fails for a reason for which the buyer is responsible, the buyer may lose the earnest money; if the seller is responsible, the seller must repay twice the amount received. If neither party is responsible, or both are responsible, the earnest money is returned. An advance payment, by contrast, is simply a portion of the purchase price paid in advance and does not, by itself, carry this system of sanctions.

In practice, it is common to pay around ten per cent of the purchase price as earnest money, but this percentage is not prescribed by law. A lower amount may be justified for a high-value premium property or while important conditions remain uncertain.

For a foreign buyer, it is particularly important that the contract addresses the consequences of financing, the acquisition permit and any right of pre-emption. It is not enough to assume that the earnest money will automatically be returned if the bank ultimately refuses to disburse the loan or the authority does not grant the permit. The contract must state clearly which party bears those risks.

The safest arrangement is for the earnest money and larger instalments of the purchase price to be paid into a lawyer’s escrow account. The escrow agreement specifies precisely which document must be available, which official decision must have been issued, or which condition for discharging an encumbrance must have been met before the funds may be released to the seller or the seller’s bank.

The contract’s real purpose: setting the sequence of payments and risk

A well-drafted sale and purchase agreement does more than state the property’s address and the purchase price. It determines the order in which each step of the transaction occurs and when each party assumes actual risk.

Among other matters, it must set out the payment schedule, the currency to be used, how conversion and bank charges will be handled, how any outstanding mortgage will be repaid, the delivery of the seller’s consent to registration, the conditions of handover, the settlement of utility charges and the consequences of delay.

Exchange-rate risk also matters in an international transaction. If the purchase price is stated in forints but the buyer holds funds in euros or another currency, even a movement of a few per cent can make a material difference. The contract should therefore also make clear what amount must be credited to which account, and by what date.

The seller usually signs the consent to registration of ownership at the time the contract is concluded, but the lawyer holds it in escrow. The lawyer submits or uses it only once the payment and other conditions specified in the contract have been fulfilled. This protects both seller and buyer.

If you missed it – Quiet wealth: why Budapest’s finest homes change hands behind closed doors?

Retention of title and the buyer’s right: how the buyer’s position is preserved

Where the purchase price is payable in instalments, the seller generally retains title until the full amount has been paid. The buyer is then protected not only by the signed contract, but by registration in the land registry of the buyer’s right linked to the retention of title.

Under the system currently in force, once the buyer’s right has been registered, the land registry suspends the determination of later applications affecting the property until the buyer’s application for registration of ownership has been decided, but for no more than six months from the filing of the application to register the buyer’s right. This helps preserve the buyer’s priority and materially reduces the risk that the seller will meanwhile sell the property to someone else or subject it to a further encumbrance.

A marginal note and a buyer’s right are not the same. A marginal note shows that an application is pending; a registered buyer’s right provides more specific protection regulated by statute. If payment of the purchase price is expected to take longer than six months, the transaction must be structured accordingly and with particular care.

Non-EU buyers: the acquisition permit is part of the timetable

Citizens of EU and European Economic Area Member States, as well as citizens of states accorded the same treatment under an international treaty – including Switzerland – are not regarded as foreign buyers for permitting purposes when purchasing property that is not classified as agricultural or forestry land.

As a general rule, third-country nationals require permission from the Budapest or county government office with jurisdiction over the location of the property. The statutory time limit for the procedure is 45 days, and the current procedural fee is HUF 50,000 per property.

In practice, this is usually a manageable and predictable administrative step, but it should not be treated as a mere formality. Missing documents, necessary consultations with authorities or the particular circumstances of the case can extend the transaction as a whole.

The contract should therefore make obtaining the permit an express condition. It should also state what happens to sums already paid if the authority refuses the permit and by how much the payment and handover deadlines may be extended.

Municipal pre-emption rights and local regulation

The legislation on the protection of local identity adopted in 2025 introduced a new checkpoint into Hungarian property transactions. Under the Act, municipalities may introduce various legal protection measures in local decrees, including rights of pre-emption, conditions on establishing a registered address, or a settlement contribution payable by newcomers.

This is not a restriction that applies automatically nationwide: it is relevant only where the municipality concerned has adopted such a decree. Nor is it aimed specifically at foreign nationals. The Act starts from the concept of a “newcomer”, asking whether the buyer already owns property or has a registered permanent or temporary residence in the municipality.

Rather than worrying about it in the abstract, the buyer should ask their lawyer a specific question: is there a local decree currently in force in the relevant municipality or Budapest district that affects this purchase?

Where a right of pre-emption exists, the holder may step into the original buyer’s place on the same contractual terms. The contract should therefore address how and when the earnest money, advance payment and other costs paid by the original buyer will be returned in that event.

What comes next? Where to buy property in Budapest: A district-by-district guide to the city’s best addresses

What the land registry extract does not reveal

The land registry extract is indispensable, but it is not a complete due diligence review. It does not reveal the condominium’s finances, the building’s technical condition, conflicts within the owners’ community, or how an apartment bought as an investment can actually be used.

When buying a condominium apartment, the buyer acquires both the separately owned unit and a share of the common property. It is therefore worth obtaining and reviewing the deed of foundation, the organisational and operational rules, the house rules, minutes of owners’ meetings, annual accounts, and decisions on planned renovations. Arrears in common charges, the impending replacement of the roof or lift, a substantial extraordinary contribution, or ongoing litigation involving the condominium can affect the property’s value just as much as the condition of the apartment itself.

An energy performance certificate is an important document, but it is not a technical survey. In an older building, the heating system, electrical wiring, plumbing, damp, insulation, windows and doors, as well as the condition of the roof, façade and other common structures, all warrant separate examination. In a premium purchase, technical due diligence is not an awkward part of the negotiation; it is one of the tools for preserving value.

Short-term letting should not be taken for granted either. The permitted use may be affected simultaneously by national rules, municipal or district regulations, and the condominium’s own provisions. A purchase intended partly as an investment should therefore be structured so that it remains viable under long-term letting. Daily or weekly letting may offer additional income potential, but it should not be priced in as a guaranteed base case.

Closing costs: the purchase price is not the total acquisition cost

The largest ancillary item is usually the property transfer duty. Its general rate is 4 per cent up to a market value of HUF 1 billion per property, and 2 per cent on the portion above that threshold, subject to a maximum of HUF 200 million per property. NAV, the National Tax and Customs Administration, assesses the duty in a separate decision, so the payment obligation often arises only after the transaction has closed.

In addition, lawyers’ fees are often around 1–1.5 per cent of the purchase price plus VAT, although this is not a statutory tariff. The amount depends on the property’s value, the financing, existing encumbrances, foreign documents and the complexity of the transaction.

The budget should also allow for land registry and other procedural fees; the cost of certified translation, interpreting, apostille or legalisation; the permit fee for a non-EU buyer; and, where a loan is involved, valuation, bank administration and notarial costs. A technical survey or more complex tax advice may add further expense.

As a general planning framework, it is prudent to allow ancillary costs equal to 6–9 per cent of the purchase price before renovation and furnishing. This is not a tariff applicable to every transaction, but a cautious budget reserve. For a high-value property, the cap on transfer duty may reduce the percentage, while a smaller purchase that is legally or technically complex may carry a higher proportion of ancillary costs.

Estate agency commission in Hungary is traditionally paid by the seller. If, however, a foreign buyer separately engages a property search, advisory or buyer-representation service acting exclusively for them, its fee may appear as a separate cost.

Realistic timing: distinguish completion from registration

In a cash transaction involving a property with a clean legal status, an EU buyer or a buyer receiving equivalent treatment can often progress from an accepted offer to payment of the purchase price and handover within six to twelve weeks. Final registration by the land registry may take longer. The two should not be confused: financial completion, handover and formal registration of ownership do not necessarily occur on the same day.

For a non-EU buyer, the entire process typically takes three to five months, or longer, because of the acquisition permit. With bank financing, the valuation, credit assessment, notarial deed and conditions for disbursement also extend the timetable.

The buyer’s legal protection, however, begins well before ownership is finally registered. A carefully drafted contract, a properly managed lawyer’s escrow arrangement, prompt filing of the application, protection of the buyer’s priority and, where necessary, registration of the buyer’s right all provide substantial safeguards earlier in the process.

Read also – Behind visible value: Strategy, security, and discretion in the Hungarian real estate market

The transaction does not end at signature

The final practical stage of the purchase is the handover of possession. Its date and conditions should be agreed in the contract in advance. This is when the keys, remote controls, access cards, alarm-system details and documents relating to the property are handed over. The meter readings, the property’s current condition, any fixtures or furnishings remaining in place, and any outstanding works must be recorded.

The handover report should be accompanied by photographs, meter readings and an itemised list of keys. Documents confirming settlement of utility charges and common charges can also be checked at this point and, if the contract so provides, the final instalment of the purchase price can then be released from the lawyer’s escrow account.

This brief document helps prevent minor disputes arising later from developing into serious conflicts.

The essence of a safe purchase

A property transaction is not safe because it generates many documents, but because each document begins to protect the buyer at the right moment. That protection comes from the land registry extract before the offer, the lawyer’s escrow when funds move, the buyer’s right when the purchase price is payable in instalments, and the handover report when the keys are delivered.

The legal framework for buying property in Hungary is predictable once the buyer understands the order of the process. Patience, thorough due diligence and the right advisory team are worth more than haste – especially when the buyer is acquiring not merely a property, but an asset whose value is intended to be preserved over the long term.

Széll Emese, expert on Hungary’s premium property market – premiumingatlanok.com

The information in this article is provided for general information on market, economic and legal matters and does not replace legal, tax or technical advice tailored to the circumstances of a specific transaction.

Legislation and official references

1. Act C of 2021 on the Land Registry – documentary requirements, priority, the buyer’s right and the registration procedure

2. Act V of 2013 – Civil Code – rules on earnest money

3. Government Decree No. 251/2014 (2 October) – authorisation for foreign nationals to acquire property in Hungary and the 45-day administrative deadline

4. Act XCIII of 1990 on Duties – the HUF 50,000 fee for proceedings to obtain a foreign property acquisition permit

5. Act XLVIII of 2025 on the Protection of Local Identity – local rights of pre-emption and other legal protection measures

6. NAV – Property transfer duty – the 4 per cent rate and the 2 per cent rate on the portion above HUF 1 billion

As we wrote about the quiet truth about Hungary’s “golden visa” — and why foreign buyers do not actually need it