The new Real Estate Registration Act that came into effect in January restructured the system for registering properties purchased in installments or subject to conditions, and introduced the so-called buyer's right. However, since January, there has been considerable debate regarding whether the buyer's right can be registered on properties involved in bank financing (and therefore under alienation and encumbrance prohibition). A recently enacted amendment to the law, however, resolves this issue.
What was the situation before?
Under the old Real Estate Registration Act (in Hungarian: “régi Inytv.”), which was in effect until January, if someone entered into a property sale and purchase agreement, it was possible to request a so-called "suspension" (in Hungarian: “függőben tartás”) until the full purchase price was paid. The buyer would be recorded with a “side note” (in Hungarian: “széljegy”) in relation to the property the buyer intended to purchase, and until the buyer submitted another application (such as a registration request after the full purchase price had been paid), the land registry would not process any other applications related to that given property. The suspensions tatus lasted for six months: during this time, the buyer was essentially protected, and was required to submit all necessary documents for the change of ownership (such as the registration permit) to the land registry within this period.
What has changed with the new Real Estate Registration Act?
On January 15, 2025, a completely new real estate registration system came into effect. Among other changes, the new Act abolished the previous suspension status system and introduced the buyer's right linked to ownership retention (in Hungarian: “tulajdonfenntartás”). From now on, if someone purchases a property but does not pay the full purchase price at the time of the signing of the agreement, the buyer will receive a separate right, known as the buyer's right, which can be recorded on the property's title deed. As a result, any potential resale of the property by the seller is not just prevented by a suspension application recorded with a side note, but by a well-established, registered buyer's right that is enforceable against all third parties.
Where did the interpretational issue arise?
If the property was previously purchased by its seller with the use of bank financing, it is likely that a mortgage and a prohibition on alienation and encumbrance in favor of the financing bank were registered on the property. In such cases, the standard solution is that the outstanding loan is repaid —and the property thereby cleared of encumbrances—using the second installment of the purchase price (the first installment is generally the earnest money, which is directly received by the seller). This means that by the time the buyer’s right could be registered (following the signing of the contract and payment of the earnest money), the property is typically still encumbered by the bank’s prohibition on alienation and encumbrance.
After the new Real Estate Registration Act (in Hungarian: “új Inytv.”) came into effect, a question arose as to whether the registration of the buyer’s right requires the consent of the beneficiary of an already registered prohibition on alienation and encumbrance. From this perspective, the legislation was explicit: it stated that any additional rights based on a contract could only be registered with the consent of the beneficiary of the prohibition. However, this made the application of the buyer’s right in such cases practically impossible, as the financing bank’s consent would have been required at an earlier stage of the transaction—at a time when the bank would not yet be in a position to make a substantive statement on the matter.
Law enforcement bodies struggled to reconcile the contradiction between the legislative purpose and its actual wording. In the period following the enactment of the new Act, contradictory written opinions emerged on the issue. For example, the Ministry’s position, which referred to the legislative intent, stated that the prohibition on alienation and encumbrance should not prevent the registration of the buyer’s right. In contrast, the Land Registry of Budapest took the opposite stance, arguing that the law was clear, and that the consent of the entitled party was essential. Unsurprisingly, during this period, practicing lawyers had to seek individual clarification from the respective land registry offices to determine the appropriate course of action in their specific case.
The Problem is Solved
It is likely that the legislator became aware of this ongoing interpretative uncertainty, and the resolution of the issue did not take long. A recent amendment to the implementing regulation of the Real Estate Registration Act (Inytv.) explicitly states that the registration of the buyer’s right does not require the consent of the beneficiary of the prohibition on alienation and encumbrance. This new amendment entered into force on 14 March, 2025.
This means that the buyer's right can now function as originally intended, even on properties encumbered by a prohibition on alienation and encumbrance due to bank financing. In other words, the parties may enter into a sale and purchase agreement, the buyer may register the buyer’s right in relation to the property (without the consent of the beneficiary of the prohibition), and once the full purchase price has been paid and the bank loan has been settled, the prohibition should be removed from the property—allowing the buyer’s ownership to be registered.