On 15 June 2021, the Hungarian Parliament passed Act C of 2021 on Land Registration that was supposed to enter into force on 1 February 2023. As this deadline neared, it became evident that neither private citizens, companies, lawyers nor authorities were adequately prepared for the change.
This was why the legislator delayed the entry into force of the new law three times. The new act will finally go live on 1 October 2024. In the meantime, Governmental Decree No. 179/2023 was also passed. It includes detailed implementation rules, eliminating most uncertainties about the future everyday use of the new law.
The changes implement a fully electronic procedure into the real estate registration process that until now was paper based. In addition to several practical novelties for private citizens and companies, there will be major changes for lawyers.
Proven solutions under the previous regulation will remain, while a brand-new electronic database will be developed. The land registry procedure will thus be fully electronic, reducing procedural times and costs.
"Probably the newest change is that there will be automatic decision-making. In simpler cases this will enable the registration of ownership within only an hour."
The complete land registry administration will be digitised and finally brought in line with modern requirements. Users will be provided with an additional service in relation to real estate data. There will be a so-called technical data sheet compiled from the data in the National Register of Buildings, which will provide specific technical and digital information. Another novelty is that certain data can be searched for, grouped and extracted in a non-formalised version for several properties at the same time according to the client's request.
While the implementation phase of the new regulation will certainly pose challenges for all users, professional users eagerly anticipate the benefits of the new law. Real estate lawyers are currently talking about how the new system will affect those who deal with real estate daily. The new law establishes a 21st century land registry procedure in Hungary, supported by a 21st century IT system.
The new system addresses the following issues:
Speed
The current procedure is extremely slow, unless the applicant submits the application to the land registry where the property is located. Following the switch to the electronic procedure, the submission is registered immediately and can be arranged by any land registry in the country regardless of where the property is located.
Ranking
The relationship of an entry relative to others is determined by its rank. When submitting a land registry application, a rank is established with a document on which the registration is based (e.g. sale and purchase agreement). It is possible that, despite an initially unnoticed formal defect, the administrator registers a side note and any potential deficiencies may only become apparent during the subsequent verification process. According to the new regulation, the application data are immediately verified by an IT system. Only appropriate and formally complete applications will be automatically side-noted.
Priority
In terms of order of priority, problems were caused by applications signed on the same date. Since they related to the same property, they were submitted on the same day and to the same land registry. In an electronic procedure, priority will no longer be based on the same day, but on the same second. Since the IT system will register the receipt of files to the second, it will exclude the possibility of files being submitted at the exact same time.
Pending procedure
In most cases, the registration application is handled by a pending procedure, for a period not exceeding six months from the submission of the application. Under the new legislation there will no longer be a pending procedure, but the purchaser's right will be recorded on the title deed. If the purchaser's right was registered on the title deed, the land registry will automatically suspend the ranking of any upcoming submissions.
Data updates
The owner's and other rightsholders' data are often out of date on the title deed, making it difficult to identify the property and the rightsholders. Under the upcoming regulation, the IT system connected to the land registry will automatically update the data on the property and the rightsholders.
Recording of lawsuits
Transaction safety requires that lawsuits must be recorded on the title deed. Under the new rules, the courts will notify the land registry at the same time as the application is sent to the defendant.
Land registries have already distinguished themselves positively compared to other public administrative bodies in Hungary, particularly when it comes to the operation and efficiency of Capital Land Registries. After the new regulation comes into effect, procedural difficulties will be a thing of the past and the land registry will enter the 21st century.
"After the new regulation comes into effect, procedural difficulties will be a thing of the past and the land registry will enter the 21st century."
By Laszlo Krupl, Partner, Schoenherr Hungary
