How should you read the title deed of the property?
Updated: 2023.10.30.
If you are interested in buying an apartment or a house, you should not only check its technical and aesthetic condition before buying, but also its legal status. By downloading the title deeds of the property, you can check that, among other things:
- the owner(s) are actually entitled to sell the property to you, i.e. whether they are registered on the title deed;
- whether there are any encumbrances on the title deeds of the property and whether you need to unencumber the property as part of your purchase;
- and whether the property has any special status or legal situation that requires a special procedure when you buy it.
Since the legal status of the property is so decisive for your purchase that in an unfavourable situation it may override your perception of the property based on its technical or aesthetic condition - and it may even be a realistic outcome that the legal status of the property is so unfavourable that it is not worth taking the risk - you should check the title deed before signing any document or transferring any money.
Download the title deed online
1. Visit a www.foldhivatal.hu website and click on the "Földhivatal Online" icon:
2. Log in with your state gateway account:
3. Click on "szolgáltatások indítása" tab:
4. Click on "ingatlan keresése" tab:
5. Search by address or parcel number (if you search by address, it is often the case that the property is not exactly as the owner(s) or the real estate agent gave it to you, so you should search by parcel number first):
6. Choose the "e-hiteles tulajdoni lap másolat", and within that, the "szemle" (it only contains the current entries for the property; it is worth downloading the "szemle" instead of the "teljes" - which is a full copy - because the full copy contains all the past entries for the property and is therefore relatively opaque. Entries that have been deleted are not relevant to a purchase anyway):
The fee for downloading the title deed is HUF 3.000,-, which you can pay immediately by credit card. The first two downloads in a given year are free of charge.
Structure of the title deed
The title deed header includes the page number, the date of downloading the title deed, the location, parcel number and address of the property, and the land registry office where the property is registered. If applications for the property are pending but have not yet been processed by the land registry at the time of downloading the title deed, they will also appear as a 'marginal note' in the header, indicating who the applicant is and what the application is about. As the title deed contains information about the property for that date, it is also necessary to download a title deed on the day of signing the contract of sale and to make sure that the known legal status of the property has not changed since the last title deed was downloaded.
Part I of the title deed shows the type of property (type of cultivation or exempted), its size, the value of the common property in the case of a condominium, the value in golden crown in the case of agricultural land, and the special status of the property, e.g. if it is located in a nature reserve or is under monument protection. Part I of the title deed will determine whether a special procedure under a specific law is required (e.g. a notice in the case of the sale of agricultural land).
Part II of the title deed tells you who the owner(s) are by indicating the details. In addition to the details, it also provides information on the legal title of the owner (sale, inheritance, dissolution of a matrimonial property, etc.) and the proportion of the property owned by the owner.
Part III of the title deed lists the encumbrances on the property. Encumbrances can range from usufructuary rights to bank mortgages, purchase rights and prohibitions on alienation and encumbrance, and in most cases, as part of your purchase, these encumbrances will need to be deleted and the underlying ownership debt or other legal relationship terminated. There are exceptions in this respect, e.g. the electric-wire rights does not have to be and cannot be cancelled, as it is registered by operation of law and belongs to the electricity supplier.
Checking the title deed: what to look out for?
Now that you are familiar with the structure of the title deed, it is also important to know how to read the data and what you can infer from it.
In the header section, you need to check the parcel number of the property and identify from the information in Part I that you have downloaded the title deed for the property you are viewing. If the answer is yes, you can also check whether there are any notes in the header and what they contain. If a request for cancellation of encumbrance is included as a header, this is probably good news and indicates that the owner is voluntarily settling the legal status of the property before the proposed sale. The situation is different if a title registration application is in draft: you should always check with the owner or the landlord about the details of this, and then with a lawyer. You will also need to consult a lawyer if Part I of the title deed of the property contains any special features, as you will need the help of a specialist to determine what special procedure is required to purchase the property.
In Part II, you need to check the ownership and establish that the persons who are entitled to sell the property according to the title deed are the owners of the property. Your registration of ownership can only legally take place on the basis of a contract of sale with the owners listed on the title deed.
In Part III, you should check the encumbrances on the property and, if there are any, discuss with a lawyer and the owner the process of how they will be deleted. As you have a vested interest in having a title deed free of encumbrances before registering your title, this is the most important step in preparing your sale and purchase agreement. In the case of undivided common property (semi-detached house, garage), it can be tricky to determine which of the encumbrances in Part III applies to which of the owners in Part II. This is the purpose of the so-called 'reference' entry. The reference is shown in Part III under the relevant encumbrance, e.g: 'reference: II/5'. This means that the charge in question is charged to the owner's share of the property listed in Part II under entry No 5. If there is no reference to a charge, the whole property is encumbered. In practice, the quickest way to check whether the property you want to buy is encumbered by one of the charges listed in Part III:
- check the number of entries in Part II of the title deed for the part of the property you want to buy;
- For the sake of example, let it be II/5;
- For example, for example, for the example in Part II.5, check all the references to the encumbrances in Part III;
- if there is no reference to II/5, and under each encumbrance there is a reference to a different number, the II/5 is free of encumbrances, otherwise it is encumbered by the encumbrance that points to it and/or the encumbrance under which there is no reference.
Examination of the title deed by a lawyer
The above solutions make it easy to detect situations that already indicate an unresolved property status that could even prevent the purchase. However, if the title deeds are in order based on the above analysis, the next step is to have a lawyer confirm the ideas and the results of the analysis. This is especially true if the owner or the property owner is pressing for money to be handed over or for some kind of document to be signed. If it is only after the down payment or part of the purchase price has been paid that it is discovered that the property is still legally unsettled, this can lead to unintended complications.
To download the title deed and have it checked by a lawyer, for further information or to request a quote, please contact me at any of my contact details:
📞+36304572289
📧drszalai@drszalailegal.hu