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Hungary: New Regulations on E-Land Registration, the Right To Construct, and Completely New Construction Code Expected in 2023

Hungary: New Regulations on E-Land Registration, the Right To Construct, and Completely New Construction Code Expected in 2023

Issue 10.3
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 Act C:2021 on the land registry (E-Land Registry Act) was announced on June 28, 2021. It was expected to take effect in February 2023, but it will come into effect on February 1, 2024.

The new E-Land Registry Act intends to switch the land registry procedures to electronic, so the intention is that procedures relating to any real property would be digitalized. The aim is that no paper-based documents be filed with the land registry, rather all applications and communication would be done electronically (digitalized).

The enforcement rules of the E-Land Registry Act will be introduced by a new government decree (enforcement decree) that is expected in 2023, so that all stakeholders can prepare for the February 2024 start of the new regime. The enforcement decree will specify the rules relating to (1) electronic applications, when and how the communication will be done electronically; (2) automatic registrations; (3) the data of the property that can be registered; and (4) rights and facts that can be registered. It is likely that a new 3D property register will also be regulated by the enforcement decree.

Practicing lawyers are most anxious about the automatic procedure because such automatization will be strictly regulated, and only specially licensed lawyers will be eligible to keep working with the automatized procedure.

The Right To Construct – A New Right Created by the Civil Code

According to the draft explanation of an amendment to the current Civil Code (Act V:2013) a new right will be created in the Civil Code, the “right to construct” (epitmenyjog), that was known in the Hungarian legal regime in the past, at least from German and Austrian examples. According to the draft explanation, there is currently an obstacle to economic development where financing the creation of various buildings, constructs, or technical equipment (for example solar power plants, tunnels, or bridges) is difficult without proper financing securities. This type of investment could be enhanced with proper financing if such financing could be secured with a tradeable and chargeable right, the ‘right to construct,’ implemented in the Civil Code. This right will be registrable in the land registry and will be a basis for a mortgage and/or pledge, which can also be registered in the land registry. The expectation is that the country’s competitiveness will increase due to this new legal right.

New Construction Code, New State Construction Investment Law 

The government also intends to introduce a new Construction Code and a new law on state-participation construction developments. While the first exists only as a concept for now, the government having published the concept of the Act on the Hungarian Architecture (Construction Code) in March 2023, the latter law was already published earlier as draft legislation. Both legal texts will address sustainability, environmental impact, energy efficiency, good (public) taste, protection of architectural heritage, and other issues.

The new Construction Code will replace (1) the law on the chambers of engineers and architects; (2) the Act on Built Environment; (3) the Act on the Protection of the Visual Environment of Towns; and (4) the Act on Cultural Heritage. The new Construction Code intends to strengthen the roles of the chambers of engineers and architects, reform the system of general architects (foepitesz) in construction, and pay more attention to the qualification of designers and other participants in the construction process. Also, the new Construction Code will more rigidly regulate the role of designers: the designer will have a veto right with respect to the occupancy permit, for example. The mandatory insurance of both designers and construction companies will be re-addressed. There will be a clarification with regard to the activities that are subject to licensing and those activities that are subject to notification only. 

The above are only examples from the substantial new legislation that will require a careful review once published as a law. It will have an impact on almost all fields of architecture and construction; thus, all stakeholders will need to put in a tremendous effort in familiarizing themselves with it. 

By Peter Berethalmi, Managing Partner, Nagy es Trocsanyi 

This article was originally published in Issue 10.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here

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