HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
ue of such items. Tenants must take out liability insurance for personal injury, property damage and economic loss in the amount that is stand - ard for their business. Landlords must maintain all-risk property insurance covering the building and the landlord’s property, in addition to main - taining liability insurance. 6.12 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 construc - tion and occupancy permit of the building. Any change to the permitted use is usually subject to the landlord’s prior written consent. If the tenant uses the leased premises in a manner contrary to the permitted use, the landlord is usually enti - tled to terminate the lease. Hungarian law protects neighbours against dis - turbances 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. 6.13 Tenant’s Ability to Alter and Improve Real Estate Tenants’ rights to make alterations to the leased premises will depend on the parties’ agreement. Usually, such tenant requests must be submitted to the landlord for prior approval. The landlord may grant fit-out or refurbishment-related con - tribution to the tenant – ie, the works are thus partially covered by the landlord. In some cases, the tenant may change decorative elements not affecting the structure. 6.14 Specific Regulations Act 1993 of LXXVIII contains specific rules for the leasing of residential buildings and premises. In general, the same legislation applies to the
lease of office spaces, commercial premises or logistics parks. The main source of provisions is the lease agreement itself. 6.15 Effect of the Tenant’s Insolvency It is common for the landlord to terminate 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 procedures are threatened). Under Hungarian law, liquidators may terminate any contract concluded by the debtor (includ - ing leases), except for leases of natural persons related to residential properties. In addition, if a tenant files for bankruptcy, the landlord is pro - hibited from terminating the lease during the bankruptcy moratorium. 6.16 Forms of Security to Protect Against a Failure of the Tenant to Meet Its Obligations Tenants are generally required to provide land - lords 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 addi - tional costs, landlords also have statutory lien over tenants’ assets located within the leased premises. It is also common to request a so-called evic - tion declaration 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 termi - nates for any reason.
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