What every lawyer needs for every contract:
– Documents of the parties: identity, address and tax cards, which are used to identify the parties.
– In the case of a company, company certificate, specimen signature, documents of the managing director
– Property parcel number
– Parties’ agreements:
Purchase price amount, method of payment, schedule,
- in the case of a bank loan, the name of the bank from which the client is taking the loan
- date of taking possession of the property (handover of keys)
- remaining fixtures and fittings
- other agreements
– Energy certification is also required for residential property
The Parties must be present at the conclusion of the contract either in person or by proxy, or may sign by remote identification if their presence in person is not possible, for which they must have SKYPE access.
In general practice, the lawyer is chosen by the buyer in the case of sale and purchase contracts, and the buyer bears the costs of the contract, which consist of the lawyer’s fees, the land registry fee (HUF 6,600 per property and per procedure) and the fee for obtaining the title deeds. The seller may incur costs if the property is not free of encumbrances.
Very often, when selling or buying a property, the question arises as to what taxes and duties are payable. When a property is sold, the question of tax, specifically personal income tax, arises. It is best if you have owned the property for 5 years, which is being sold, because then there will be no tax. If you sell the apartment or house for MORE than you bought it for within 5 years of the purchase, then you will have income and you will have to pay tax. To calculate your income accurately, you have to take into account how much you bought it for, how much you sell it for and you can also take account of your borrowings. There is a calculator on the NAv website to help you work out the amount:
https://nav.gov.hu/ugyfeliranytu/kalkulatorok/ing_kalk
You will also have to pay property tax, also known as property acquisition tax, when you buy a property. The rate is 4% of the purchase price.
There are discounts, the most common of which is that if the buyer sells the other property within 3 years before the purchase or within 1 year after the purchase, the basis of the levy is the difference between the values of the two properties. So if I sell my flat for 50M and buy another one for 60M, I pay the 4% levy on the difference of 10M, not on the 60M purchase price.
It is possible to buy a property even if there is some kind of encumbrance on the property. Typically this is a mortgage, a right of execution, which is a debt. In this case, the buyer’s purchase price is used to discharge the property by asking the eligible bank or bailiff for the exact amount of the charge and the buyer makes a payment directly to the beneficiary on the basis of this declaration. In this way, we can be sure that the discharge will be made and the buyer can safely transfer the remaining purchase price to the seller.
Finally, let’s talk about the difference between a deposit and a down payment. A deposit is a simple part of the purchase price, which is returned to the buyer if the contract is not fulfilled. A deposit, on the other hand, is a contractual security, a sign of commitment, typically set at 10% of the purchase price. If the contract is fulfilled, the amount owed is reduced by the amount of the deposit. If the contract fails for reasons for which neither party is responsible or both parties are responsible, the deposit is returned. However, if the contract fails due to the fault of one of the parties, the party responsible for the failure shall forfeit the deposit and shall be obliged to repay twice the deposit received.