Updated: 30/08/2022
If you plan to buy real estate – either for habitation or as an investment – in both cases you may need to add bank loan to your own funds. If you can finance your buy with your own funds and you made a deal with the seller you only need a lawyer who puts your consensual will into a written agreement in compliance with the regulations of the law.
If you need a bank loan the bank will be a third-party of your deal. In this case your agreement has to be written not only in compliance with the law but the lending practices and expectations of your bank. Part of these practices cannot be read out from the regulations of the law, therefore the banks publish their demand system regarding the real estate sale & purchase agreements in which they indicate their own drafts of certain stipulations of the sale & purchase agreement along with the legal regulations to be incorporated. Even though to draft your sale & purchase agreement in compliance with the bank’s demand system is the countersigning lawyer’s task, it is recommended for you to be aware of the legal aspects of your bank’s lending practices because you have to conclude your sale & purchase agreement first and only after that will the bank conduct your credit review in order to decide on lending.
- First you have to pay your own funds to the sellers, the bank loan comes last. I had a client who thought that the bank should pay first, and the for the remaining months he will invest his own funds. Excellent financial plan but not possible, unfortunately.
- If the subject of the sale & purchase agreement is not only the real estate itself but also includes other goods like furniture the bank may require to separately indicate the price of the real estate and the price of other goods.
- If a party doesn’t speak Hungarian – or if the agreement is written in more than one language speaks none of them – cooperation of a translator is required. In this case the bank may require the translator to also undersign all documents as the parties.
- The bank’s demand system may contain specific recommendations on the stipulations of the sale & purchase agreement which are recommended to be incorporated into your sale & purchase agreement.
- Before the payment of your loan you have to prove that you paid your own funds to the seller according to your agreement. Certain banks only require a “credible way” to prove the payment of own funds to the countersigning lawyer, but stricter banks may require the countersigning lawyer to prepare and countersign a separate receipt on payment of own funds which should be signed by the seller after such payment was performed.
- You also have to prove that the seller deposited her final declaration of transferring the ownership at the countersigning lawyer. After signing your sale & purchase agreement ask for one copy of deposit certification!
- Your undersigned sale & purchase agreement is submitted to the land registry by your countersigning lawyer. You have to prove your bank that this submission took place by sending them one copy of your sale & purchase agreement and one copy of land registry request, both sealed by the land registry.
- The bank will not pay the loan for you, but for the seller.
- After the payment you or the other party is not able to cancel your sale & purchase agreement without the written permission of the bank. If the agreement would be cancelled by any reason with the bank’s approval, the seller is obliged to pay back the loan to the bank.
Incorporating the bank’s demands into your sale & purchase agreement, I will guide you in the maze of lending practices. For further information or offer contact me below:
📞+36304572289
📧drszalai@drszalailegal.hu
After sending your data we contact you by phone or e-mail and give you a preliminary legal opinion and information on the common processes of similar cases and the foreseeable costs. First contact and consulation is not charged.