Paying real estate purchase price: cash, bank transfer...crypto?
If you buy real estate you have to decide how you plan to pay the purchase price and pre-negotiate it with the seller. It is important to figure out the payment form of all parts of the purchase price in order to have an accurate and detailed agreement. Payment forms are regulated by section (1) of paragraph 6:42. of the Civil Code stating “performance of payment is transferring ownership of money by handover of cash or deposit on bank account or bank transfer.” Cash or bank transfer, basically. If you finance your buy with bank loan or state support the bank will pay these instalments to the seller via bank transfer. Are these your only options? Let’s take a closer look!
Paying real estate purchase price in cash
If you agree to pay the purchase price in cash the most important is that you should have a receipt on cash payments with the seller’s signature on it. Without such receipt you have no protection against if the seller maliciously states that she didn’t receive cash payment. If you pay cash simultaneously with the signing of your agreement your agreement should contain the seller’s declaration on receiving the cash payment. If you pay the purchase price in cash at another time, the seller should sign a receipt with the signature of two witnesses stating that the cash payment was delivered to the seller and the cash was paid as the purchase price of the real estate. Without such receipt it is difficult, sometimes almost impossible to prove that your cash payment took place.
Paying real estate purchase price via bank transfer
If you pay the purchase price via bank transfer your sale & purchase agreement should contain bank account number(s) and the payment deadlines of the respective amounts. Before conducting the transfer, you should verify the correctness of the bank account number using two different sources if possible in order to correct typos. It is recommended to incorporate in the sale & purchase agreement that payment should be deemed performed not when the transfer is started but when the crediting of the amount took place on the seller’s account.
Paying real estate purchase price via set-off
If the seller owes you money and that debt has expired, section (1) of paragraph 6:49 of the Hungarian Civil Code allows you to perform the purchase price of the real estate by set-off which is a unilateral statement towards the seller. In this case it is important to phrase the set-off statement as it cannot be attacked later at court.
Paying real estate purchase price via crypto
Crypto? The Hungarian Civil Code does not acknowledge the term of “cryptocurrency”, only knows the term of “currency”. However, it does not mean that it is prohibited to pay real estate purchase price via crypto. “Currency” is phrased by section (1) of paragraph 6:45 of the Civil Code, which states that „money transactions should be performed in the currency which is in effect on the date and at the location where such transaction is performed”. Still you can deviate with mutual consent from the regulations of the Civil Code.
In this case why wouldn’t it be possible to pay the purchase price in cryptocurrency? It is recommended to stipulate such payment with considering that conversion to other currencies should be calculable based on the wording of your agreement. Therefore, you should determine the cryptocurrency of the purchase price and another currency to which the cryptocurrency can be converted to. You also have to choose a cryptocurrency exchange which rate will govern the conversion (and also a fixed date if you would like to fix the rate). Your agreement also has to contain the address of the digital wallet to which the transfer of the cryptocurrency should be performed. If the payment fails for some reason (i.e. transfer to false address) recovery proceedings are not regulated yet in Hungary. Still, parties who pay attention to detail and trust each other can conduct successful crypto-transactions. Paying purchase price via crypto does not interfere with land registry proceedings and registration of your ownership.
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