HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The most common form of use of real estate for a limited period is a lease or a leasehold. In a lease, the tenant is entitled to use the leased premises, whereas in a leasehold the tenant is also entitled to collect the benefits of the prop - erty. Further arrangements include right of use, right of use of a land, right of use for public pur - poses and usufruct. 6.2 Types of Commercial Leases There are specific rules for the leasing of resi - dential buildings and premises (with specific rules on properties owned by municipalities). However, the same legislation generally applies to the lease of different types of premises – for example, office spaces, commercial premises, residential buildings or logistics parks. As of August 2023, if the Hungarian State has a majority stake in a company, the company will require prior approval from the Minister of Public Administration and Development to enter into a lease for any property located in Hungary if the annual gross rent exceeds HUF20 million. 6.3 Regulation of Rents or Lease Terms The general rules for leases are contained in the Hungarian Civil Code. However, these are not mandatory rules and may be deviated from in the lease, including rent and term. During COVID-19, specific regulations were enacted – for example, a moratorium restrict - ing the termination of non-residential premises in certain sectors (such as tourism, catering and entertainment). In addition, landlords were not entitled to increase the rent, even if the given
lease agreement would have otherwise allowed. However, these regulations and governmental actions ceased to apply from 1 July 2022. The market reacted to COVID-19 and landlords provided some rent-free periods to tenants that were active in specific sectors significantly affected by COVID-19. 6.4 Typical Terms of a Lease A lease may be concluded for a definite or an indefinite period. Commercial leases are typi - cally concluded for a definite period, with a term of between five and 15 years. Extension rights are also common – usually for an additional five years. In some cases, a break option is provided, allowing the tenant to unilaterally exit the lease by paying a certain agreed termination fee. The landlord is usually obliged to maintain and repair the building, its structure and the common areas, while the tenant must maintain and repair the facilities within the leased premises. Rent is usually paid monthly or quarterly in advance. Hungarian law does not regulate “force majeure”, but epidemics are recognised in Hungarian juris - prudence and are generally considered force majeure events. A force majeure event may have the effect of a so-called “frustration” under the Hungarian Civil Code, provided that it renders the performance of an agreement impossible. Before COVID-19, leases contained general force majeure rules. Since COVID-19, the parties usually acknowledge that COVID-19 cannot be considered a force majeure event, as they were already aware of its existence during negotia - tions.
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