HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
Registration (Act CXLI of 1997) and the law on the implementation of the Act on Real Estate Registration (Act 109 of 1999). Specific rules exist for the transfer of agricultural and forestry lands (Act CXXII of 2013 and Act CCXII of 2013). 2.3 Effecting Lawful and Proper Transfer of Title Title may be transferred by virtue of law (eg, inheritance), by an agreement (eg, sale and pur - chase agreement) or by court judgment (eg, liti - gation by adverse possession). Owing to the stability of the Hungarian land registry system and the limited opportunities to challenge ownership, purchasers can effectively rely on publicly available land registry data. Title insurance and W&I insurance products have been recognised more and more in recent years, and are typically used by institutional investors. After COVID-19, it has become common to sign sale and purchase agreements (and other trans - action documents) in front of lawyers via remote signing (Teams, Zoom, etc), without the physical Real estate due diligence involves inspecting publicly available data (eg, land registry) and requesting additional documents available only to the seller (eg, lease agreements). Due diligence in an asset deal usually covers the following main areas: • title (including encumbrances and ease - ments); • permits; • zoning; • leasing and operating agreements; presence of the contracting parties. 2.4 Real Estate Due Diligence
• environmental and real estate-related litiga - tion. If the transaction is a share deal or if financing is involved, the areas to be reviewed are more extensive (eg, corporate, employment, financing and tax matters). 2.5 Typical Representations and Warranties Representations and warranties depend on the business practice and strength of the parties. However, certain warranties are generally found in any contract relating to real estate, such as: • the performance of the agreement is not restricted; • the seller is the owner of the property; • the property is free of encumbrance or litiga - tion; • there are no environmental issues; and • there are no hidden defects. In commercial real estate transactions, it is cus - tomary for the seller’s representations and war - ranties to expire after a certain period. Funda - mental warranties (eg, relating to ownership title) are granted for at least 60 months, while others are usually limited to 24 to 36 months. Sellers usually provide tax-related warranties up to 84 months, including the reviewed tax year. It is also customary to limit the seller’s maximum exposure to warranty liabilities to the amount of the purchase price for fundamental warranties. For other warranties, a cap of 10–30% of the purchase price is usually applied. In the case of misrepresentation, the buyer may allege a breach of the contract and the Civil Code, and claim damages. Please see 2.3
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