Buying property in Europe

According to Hungarian law a preliminary contract is not required. The parties can freely decide to sign a sale/purchase agreement without a preliminary contract. 

If the parties decide to sign a sales/purchase agreement, they must go to a notary or a lawyer or, if one of the parties is a company, to the company’s legal advisor, since Article 6:73 of the Civil Code states that the preliminary contract must always be established in the same form as that required for the main contract. The preliminary contract, as well as the sales/purchase contract (see below), must be written in the form of a notarised authentic act or in the form of a private deed countersigned by a lawyer or by the company’s legal advisor.

The preliminary contract is not necessary, but if the parties decide to set up a preliminary contract, they are required to establish the sales/purchase contract at a later date. If they fail to set up a sales/purchase contract, the buyer or the seller can appeal to a court of law. In such a case, the contract will be prepared by the judge in the form of a legal decision, taking into account the provisions of the preliminary contract and bearing in mind the exceptions listed in Article 6:73, paragraph 3, of the Civil Code, which must be strictly interpreted. These exceptions include, among others, a change in the circumstances after the signing of the preliminary contract or harm to the interests of one of the parties. 

In general, the preliminary contract only states that the parties agree to enter into the main contract at a later date, but nothing prevents the parties from agreeing in the preliminary contract on the prepayment of the price, in whole or in part, of the transaction. If the main contract is not established, the sums paid must be returned.

To demonstrate their firm intention to sign the contract, the parties may freely stipulate in the preliminary contract the payment of a deposit. If the sale/purchase contract is indeed signed and fulfilled, the deposited sum will be deducted from the price to be paid by the buyer. If the contract is not signed and fulfilled and no party is responsible or if the two parties are both responsible for failing to sign and fulfil the contract, the deposited sum must be returned. However, if the sum is not returned to the responsible party and s/he is the one who had received the sum, then that party must pay double the amount.

Under the provisions of the preliminary contract, the parties are required to sign the main contract. Hungarian law contains no special consumer-protection provisions, such as a cooling-off period, right of withdrawal, etc., for real estate sales/purchase transactions.