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Act on the Termination of the Undivided Joint Ownership

Act on the Termination of the Undivided Joint Ownership

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At the beginning of July 2020, the act on the termination of the undivided joint ownership on lands and the clarification of the data of the rightholders of properties deemed agricultural land in the land registry was published and will enter into force on 1 January 2021.

The new act ensures the possibility to terminate the undivided joint ownership on the properties considered as agricultural and forestry land. Any of the owners may initiate the termination of the undivided joint ownership. The initiating owner must notify in writing, in a verified way, all other owners having ownership ratio in the land and its registered users. The administrative fee of the proceeding is HUF 15,000. The owners must determine in an agreement the properties to be created in the course of the division and their owners. The decision of the simple majority of the owners calculated on the basis of their ownership ratios is required for the validity of the agreement and its scope will cover all owners. The agreement must be countersigned by an attorney and its inseparable part is a draft map and an area sheet.

The new act also defines the size minimum in respect of the lands in different types of use, and the properties to be created as a result of the termination of the undivided joint ownership may not be smaller than the applicable size minimum.

In case it is not possible to form at least two properties complying with the size minimum from the land, the land may not be divided, but only one owner may acquire the ownership of the whole property by paying an amount equaling to the value of the property part at least, as consideration, to the other owners of the land. Otherwise, in certain conditions, any owner of the property may initiate the expropriation of the property by the Hungarian State.

In addition, by introducing a new proceeding, the act attempts to identify those persons registered as owner in respect of the properties deemed agricultural land whose data are defective in the land registry.

By Lidia Suveges, Attorney at law, KCG Partners Law Firm

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The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

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