HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
injury, property damage and economic loss in the amount that is standard for their business. Landlords must maintain all-risk property insurance covering the building and the landlord’s property, in addition to maintaining liability insurance. 6.13 Restrictions on the Use of Real Estate The permitted use of the leased premises is usually agreed in the lease and is subject to the respective zoning, as well as the construction and occupancy permit of the building. Any change to the permitted use is usually subject to the landlord’s prior written consent. The “Plaza Stop” framework also governs the con - struction, alteration and change of use of certain large commercial premises. Therefore, change in function of over 400 square metres may be subject to a special authorisation process. Hungarian law protects neighbours against distur - bances caused by, for example, activities resulting in excessive noise, smell, sound effects or air pollution. In such cases, other tenants may request possession protection from the notary. 6.14 Tenant’s Ability to Alter and Improve Real Estate Tenants’ rights to make alterations to the leased prem - ises will depend on the parties’ agreement. Usually, such tenant requests must be submitted to the land - lord for prior approval. The landlord may grant fit-out or refurbishment-related contribution to the tenant – ie, the works are thus partially covered by the landlord. In some cases, the tenant may change decorative ele - ments not affecting the structure. 6.15 Specific Regulations Act LXXVIII of 1993 contains specific rules for the leas - ing of residential buildings and premises. In general, the same legislation applies to the leasing of office spaces, commercial premises or logistics parks. The main source of provisions is the lease agreement itself. 6.16 Effect of the Tenant’s Insolvency It is common for the landlord to be entitled to termi - nate the lease if liquidation proceedings or involuntary deregistration proceedings are ordered with binding
force against the tenant or if the tenant files a request for voluntary winding-up (or even if such proceedings are threatened). Under Hungarian law, liquidators may terminate any contract concluded by the debtor (including leases), except for leases of natural persons related to resi - dential properties. In addition, if a tenant files for bank - ruptcy, the landlord is prohibited from terminating the lease during the bankruptcy moratorium. Tenants are generally required to provide landlords with a cash deposit, a bank guarantee or a parent/ group company guarantee, or to ensure a suretyship. The amount of security is usually equal to three to 12 months’ (gross) rent plus service charges. In order to satisfy claims of unpaid rent and additional costs, landlords also have statutory lien over tenants’ assets located within the leased premises. It is also common to request a so-called eviction dec - laration from tenants issued in the form of a notarial deed, under which tenants may be forced to leave the leased premises without a court procedure if the lease agreement terminates for any reason. 6.17 Right to Occupy After Termination or Expiry of a Lease According to the Hungarian Civil Code, if the tenant continues to use the leased premises after the expiry of the definite term and the landlord does not chal - lenge this, the term of the lease becomes indefinite and may be terminated by ordinary termination. How - ever, this possibility is usually excluded in commercial leases. If the tenant does not leave the leased premises by the effective termination date, the landlord is entitled to a so-called usage fee in addition to general compensa - tion claims under the Civil Code. According to the law, the usage fee equals the monthly rent. However, the parties usually stipulate two to three times the amount of the rent in commercial leases. As a final solution, landlords may enforce the eviction declaration pro - vided to them by the tenant.
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