The Hungarian Parliament recently passed a legislative amendment introducing a new legal framework to improve the condominium market for properties under construction. The aim is to significantly reduce buyer risks and increase transparency when purchasing properties that are not yet completed. Previously, buyers could only rely on contractual promises until the construction was completed, and project delays or the insolvency of the developer could pose serious threats.
Essentially, the buyer now receives a registered right in the land registry during the construction phase. Once the condominium is legally established, after completion, this right automatically converts into ownership. This ensures that buyers have a strong, legally protected position throughout the development process.
From the buyer’s perspective, the main advantage of this is enhanced security for the purchase price already paid. For example, if enforcement proceedings are initiated against the developer or it goes bankrupt, the buyer’s payments are protected by separate collateral. This significantly reduces the risk of the buyer suffering serious losses in the event of an unfinished project. Additionally, the right is also transferable and if the beneficiary dies, the right reverts to the developer, who must repay the amount paid, plus interest, to the heirs.
This regulation benefits not only buyers, but developers as well. Greater security for homebuyers facilitates project financing and pre-sales. As buyers receive a pre-registered right, the financial processes relating to under-construction condominiums become more transparent and confidence in the market is bolstered.
Overall, the new condominium building right is a modern, risk-mitigating solution that protects the interests of homebuyers while supporting stable real-estate investment. Buyers obtain rights during the construction process that automatically become ownership later on, and the regulation helps to make pre-sales more transparent and secure for both parties.
