Bad surprises
What can go wrong when buying property in Budapest?
If you are planning to buy property in Budapest and are not familiar with the local specifics, you could face some costly problems. Our job is to make sure that this doesn't happen to you. The following stories are anecdotal in nature, but are not isolated cases.
The elevator promise
Shortly before we pant and climb the last steps on the way to the apartment on the third floor, the agent happily explains to us that the fourth floor has been bought by an investor and that a brand new elevator will be installed as part of the planned renovation.
In other words: the disadvantage of the apartment (steps, steps, steps - far more than one would think possible in Budapest's period properties) will be transformed into a monetary advantage in less than a year, and the apartment will therefore experience a jump in value. Money, given.
With this vision in mind, the crumbling plaster and the shabby-looking inner courtyard no longer seem so dreary, the old-fashioned convector gas heating with an additional monster tiled stove is justifiable, and the thought of negotiating the price here gives rise to pangs of conscience. What are we waiting for?
The problem: The investor didn't exist, and the elevator idea was, well, an idea that had been around for a long time, but was regularly rejected by the older owners on the lower floors. Who wants to pay significantly higher additional costs for their ground floor apartment so that a few young, wealthy AirBnB hipsters can take the comfortable elevator?
How to avoid? You could initially ignore the advice and explain to the agent that you only believe what you see. On the other hand, what if the hint is true? What if another interested party dares more, gets the contract and wins?
If such an apartment is in the inner selection, let's get to the bottom of the matter and ask the owners' association about the decision. Management companies are obliged to provide truthful information, and if the lift were really planned, a corresponding resolution would have to exist. Even if the project is later delayed, we at least know that the ownership community is positive about the project.
With this knowledge in the background we can make better decisions together – and also negotiate much better.
The debt trap
A deal had been reached because the price for the apartment was simply too good to delay any longer. In any case, the buyer was satisfied and secretly happy that he had searched on one of the real estate platforms but then selected a private offer. In Hungary, the seller usually pays the agent and that means you gain a few percent more room for negotiation when the agent disappears from the equation.
Now quickly contact a trusted lawyer – at least for the seller. The contract was only in Hungarian, but a friend of the seller translated the most important passages on site.
Everything is going well until notices arrive from various authorities informing the new owner of payments due - tax debts, unpaid special levies, unpaid electricity bills.
The problem: As a private buyer, you have no way of viewing the necessary data to rule out any old debts. You could request an extract from the land register, but in case of doubt it will not reveal the whole truth.
How to avoid? It is the lawyer's job to ensure this security. It is common practice in Hungary for the BUYER to bring the lawyer with them, and it is therefore always advisable to hire a lawyer who is as neutral as possible and has no connection to the seller. Finally, it is negligent to sign a contract that is simply translated verbally and in rough outline. We make no compromises in this regard - written and oral negotiations must always be conducted or translated in German.
Budapest is not just made up of high-gloss real estate.
There is also the neglected, dark side. Sometimes exists
both on the same street.
A short sale
The viewing appointment was pleasant, the seller was courteous despite his rather rudimentary knowledge of English, and haste was necessary because: in order to get this apartment in a good location and with amenities, a deposit must be paid, a proof of seriousness.
The fact that there was even a chance of a bargain was supposedly only because the original buyer had difficulties with financing, and there was a small window of time before this could be resolved. No big deal, a deposit of one million forints (around 3,000 euros) would be enough to seal the deal and get ahead of the other prospective buyer.
But after the transfer has been made, there are no more signs of life and it turns out that the tenant posed as the owner before his impending move out (due to eviction) in order to collect a few deposits.
The problem: Private advertisements on real estate portals are always a risk because sometimes the owners don't even know that their property can be found there. And it is not always immediately clear whether you are calling an agent, the owner, or perhaps just the tenant or another person who is primarily targeting foreigners who he or she knows may even buy sight unseen.
How to avoid? No matter how great the opportunity may seem, a deposit should only be made if all information has been verified by yourself or by a trusted local authority. Identity of the seller, a current extract from the land register, perhaps the involvement of a lawyer with a trust account. This does cost a fee, but you can be sure that the lawyer will only release payment when essential criteria, e.g. a watertight preliminary contract was fulfilled. At the same time, the seller knows that you are serious and you can take the next steps in peace.
Unintentional landlord
The purchase has been successfully completed and the new owners now have the land register entry in their hands. No doubt about it, the apartment is in your possession, and without any contamination. Well, that wasn't entirely true. The tenants' promised move out did not take place and it was now unclear whether and when the new owners would be able to dispose of their newly acquired apartment.
The problem: If a buyer discovers after the conclusion of the contract that the property is rented, although this was not mentioned in the purchase contract, he can assert claims based on the defect of title, but he does not have an extraordinary right of termination. In any case, a time-consuming process now awaits, and depending on the type of tenant (families, for example, are particularly protected for good reasons, and there are winter eviction bans), the chances are slim.
How to avoid: First of all, make sure that it is the owner who currently lives in the apartment. And if a real estate agent shows you through the apartment, address the issue head-on. On the other hand, if the conditions are right, renting can be completely in your interests. It therefore varies from case to case and must be considered individually. If in doubt, contact your own lawyer BEFORE concluding the contract in order to include relevant passages in the purchase contract, including a security deposit that is only paid if you move out on time.
This price is too hot
Cheers ring out from the next room - while researching real estate in downtown Budapest, my wife came across a truly incredible apartment: 100 square meters of period property, a bit old-fashioned but still beautifully decorated, equipped with central heating, on the edge of a really good residential area and within walking distance of the metro. And then the price: well under 100,000 euros. Too good to be true?
The problem: Unfortunately yes. The sale is legal and you acquire something, but on closer inspection this “something” turns out to be real inheritable tenancy rights out of here. The apartment belongs to the city, and you can then live in it for very little rent during your lifetime. Recently, such offers have also appeared for very sought-after districts and are inconspicuously (but attractively priced) mixed in with the offers. This sometimes means that an apartment in the 2nd district with a “normal” price can be one of these cases. In the worst case, the circumstance is not mentioned at all in the ad and only comes up at the lawyer's appointment.
How to avoid? Read very carefully! As soon as the word “Bérleti jog” appears in an ad, you can use the euphoria caused by the ad to do something else, perhaps a walk. And in the event that the information has been concealed, you should consult a lawyer before making any payment. He will notice it very quickly and be able to protect you from it.
