Hungary adopts new land registry law

On 15 June 2021, the Hungarian parliament adopted the new land registry act, which will introduce comprehensive changes in the Hungarian land registry system. Most provisions of the new land registry act are scheduled to enter into force on 1 February 2023.

The main goal of the new legislation is to upgrade the land register to an electronic database and fully digitalise the land registration procedures, reducing the time and costs of land registry procedures and the administrative burden on public administration.

The new legislation will modernise procedures for real estate (i.e. the paper-based procedure will be replaced by an electronic online procedure), making it possible for attorneys to draw up real estate-related agreements as an electronic document with digital signatures and online authentication. Applications and contracts can then be submitted to the Land Registry Office in digital form.

Land-registry reform will connect the land registry with other public electronic registers, enabling data from the land registry to be automatically updated and for information and communication to flow electronically. In many cases, automated communication will be possible and authorities, courts and other authorised parties will have easier access to the system.

The general reasoning behind the New Land Registry Act includes the following conceptual changes in the land registry system:

• Codex nature: The scope of rights, facts and data that can be registered in the land register cannot be determined by sectoral legislation, but exclusively by the land register.
• Principle of completeness: The rights, facts and data regarding real properties, which are the subject of the land register, may be enforced if a given right, fact or data point has been entered in the land register.
• Priority of the land registry: The new legislation aims at providing the fullest availability of rights, obligations and data from the land registry regarding each property. However, the legislation should not deprive sectorial authorities form keeping records of technical matters. The law requires that the land register be updated with this technical data, which would also have priority over sectorial registries.
• Automated decision making: It is expected that most of the land registry decisions will be passed by automated decision subject to certain conditions having been met according to the statement made as part of the application. These conditions include if all data and information is at the authority’s disposal at the time the application is submitted; the decision requires no deliberation; and if there is no adverse party, the decision will be made within 24 hours and cannot be appealed. Nevertheless, within five days following the delivery of the decision, the client may request the authority to re-assess an application in a full process including consideration by an official.

The new land registry act also introduces a three-dimension database, which would also enable the illustration of underground and above-ground structures instead of the current two-dimension land registry maps.

In addition, parties no longer need to request that the Land Registry Office keep their application for the registration of title pending until the release of the consent to registration for a maximum of six months (in Hungarian: “függőben tartás”). If the seller retains its title until the payment of the purchase price, the parties can now request the registration of the purchaser’s right (in Hungarian: “vevői jog”) for six months. If this right is registered, the Land Registry Office will suspend (in Hungarian: “felfüggeszti”) all subsequent applications until the purchase is completed.

For more information on the new rules of the land registry act, contact your regular CMS client partner or local CMS experts.

Article co-authored by Márk Molnár.