The Company Formation Process

The first and most important step is to contact me. You can do this by phone, email, or right here through the website. You let me know that you would like to establish a company. In my experience, in 90% of cases, the business entity to be formed is an LLC (Kft. – Korlátolt Felelősségű Társaság).

At this point, I will ask the members and managing director to send photos of both sides of their ID card, address card, and tax card by email, or, in the absence of photos, the following details:

name, birth name, personal identification number, place and date of birth, mother's name, address, tax identification number, ID card number, address card number, phone number, email address.

In addition, the following information is required:

• Company name (usually a few options are needed due to the principle of corporate name exclusivity, which I pre-screen with the Company Court)
• Registered office, site, and branch office addresses
• Email address
• Amount of share capital
• Distribution of capital among members
• Business activities, agreeing on the primary business activity
• Official company email address
• Other details required to draft the Articles of Association

Furthermore, it is important to discuss tax-related questions either with you or your accountant.

At this stage, I will also provide detailed information regarding legal fees.

The Second Phase

Ideally, I prepare a statement of facts and engagement agreement, send it via email for signature, and await the scanned copy. This is primarily necessary to avoid any disputes regarding legal fees or the scope of engagement. If contract execution does not take place for reasons not attributable to me (e.g., one of the parties withdraws) after the draft contract has been prepared and sent, an amount equal to 80% of the legal fee will be invoiced, as the work has been performed.

Step-by-step company formation process:

• Drafting: Preparing the draft documents and sending them to the client via email for review.
• Feedback: Awaiting your feedback on whether everything is correct or if any modifications are required. If changes are needed, I update the documents and resend them for approval.
• Scheduling: Setting an appointment for the signing session.
• Signing: I welcome clients with the printed, pre-agreed contract. The client reviews the documents, or they are read aloud prior to signing. Simultaneously, a JÜB (attorney identity verification) check is conducted, and anti-money laundering (AML) forms are completed and signed. The company receives one original copy of each document, and the legal fee is settled in cash or by transfer based on the invoice.
• Company Court submission: I assemble the electronic file (e-akta) from the scanned documents and application, and submit it to the competent Company Court. The court sends the decision directly to me, which I forward electronically in certified form to the client along with the electronic file. With this, the client can go to the bank to open a corporate account, and the accountant can file the required tax notifications.

It's not that complicated, is it? In the next post, I will cover the process of company modification.

Book an appointment, and I will establish the company of your dreams!

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Initial Contact

As a general rule, you can get in touch with me by phone, email, or by sending a message through the website, indicating that you would like to purchase real estate. It is also standard practice that the buyer usually selects the attorney.

Following this, we clarify whether you wish to purchase residential/commercial real estate (belterület) or agricultural land subject to special land regulations (termőföld). The procedure differs depending on this classification. If agricultural land is involved, the required 30-day public notice posting period (kifüggesztés) must also be taken into account.

Details and Substantive Work

I will request copies of both sides of the seller(s)' and buyer(s)' ID cards and address cards, as well as copies of their tax cards via email. In the absence of these copies, I will require the following information:

• Full name
• Birth name
• Personal identification number
• Place and date of birth
• Mother's name
• Address
• Tax identification number
• ID card number
• Address card number
• Client phone number and email address

Additionally, the following details are required: parcel/land registry number (helyrajzi szám), purchase price, property condition, available utilities, deposit/advance payment/installment amounts, deadlines and payment methods, breakdown of personal funds/bank mortgage (specifying the bank)/state subsidies (type and amount), and hand-over date. Furthermore, we address potential duty discount or exemption options (including requesting a copy of any residential property sale contract executed within the past 5 years).

I provide clear information regarding legal fees (a concrete quote can be provided once the purchase price, payment method—cash or mortgage—and any encumbrances on the property are known) as well as official administrative costs (HUF 10,600 per property for the land registry procedure fee, and HUF 4,800 per property for the title deed fee).

Ideally, I then draft the statement of facts and engagement agreement, send it via email for signature, and await the scanned return. This is primarily to prevent any future disputes regarding legal fees or the scope of engagement.

Should contract execution fail for reasons not attributable to me (e.g., if one of the parties withdraws) after the draft contract has been prepared and sent, an amount equal to 80% of the legal fee will be invoiced, as the work has been completed.

Step-by-step procedure:

• Drafting: Preparing the draft agreement and sending it to both the seller(s) and buyer(s) via email for review.
• Feedback: Awaiting feedback from the client on whether the contract is acceptable as sent or if modifications are required. If changes are needed, I update the draft and resend it for approval.
• Scheduling: Setting an appointment for the signing session.
• Signing: Clients are welcomed with the printed, pre-agreed contract, which they review, or I read aloud to them. Simultaneously, a JÜB (attorney identity verification) check is conducted, and anti-money laundering (AML) forms are completed and signed. Each party receives one original copy of the contract. The parties hand over or transfer the deposit/advance/installment/purchase price amount as stipulated in the contract, pay the legal fees against an invoice, and reimburse official administrative costs.
• Submission: I submit the signed agreement along with the land registry application to the Land Registry Office and, if needed for bank financing, issue the stamped copy of the contract to the client.
• If a reservation of buyer's rights is stipulated and ownership is not yet transferred due to non-payment of the full purchase price, five original copies of the ownership transfer declaration are signed concurrently with the contract, along with an escrow agreement governing the attorney's custody of these declarations. The escrow agreement provides that once the full purchase price has been paid to the seller, I will proceed with registering ownership at the land registry office and release the declaration to the buyer upon receipt of an email sent from the seller's specified email address.

Following all of this, the Land Registry Office sends the decision to the clients within the 60-day procedural deadline, either via Ügyfélkapu or by post.

And that's all there is to it! I look forward to your call if you are looking to purchase real estate.

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Legal status of the minor; parental custody rights and obligations

A minor child is under parental custody or guardianship.

The scope of parental custody includes the right and duty to determine the minor child's name, care, upbringing, determination of residence, management of property, and legal representation, as well as the right to designate a guardian or exclude a person from guardianship.

The Civil Code primarily regulates parental custody for situations where the parents live in the same household and both exercise parental custody. A separate agreement between the parents is required when the parents no longer live together. The law specifies that in the case of joint exercise of parental custody, the parents' rights and duties are equal, and the parents must exercise parental custody in cooperation with each other, in the interest of the child's proper physical, intellectual, and moral development. Parents must properly involve their child in decisions—taking into account their age and capacity for discernment—and give appropriate weight to their opinion in light of their age and maturity.

Parental custody rights comprise the following scope:

Determination of the child's name

The child bears the birth or married family name of either the father or the mother. The child may also bear the hyphenated/joined family name of both parents, even if the parents do not bear their family names in this manner after marriage, or if they are not married. A child's family name may consist of a maximum of two elements. All common children born during a marriage must have the same family name—unless the parents changed their own family names during the marriage. The child's given name is determined by the parents.

Care and upbringing of the child

Care of the child and determination of residence: It is the right and duty of parents to care for the child and to ensure the conditions necessary for the child's livelihood and upbringing. Parents are required to provide housing for their child in their own household. Unless a court or the guardianship authority rules otherwise, the child's domicile is the residence of the parents, even if the child temporarily resides elsewhere.

A parent or the guardianship authority may demand the return of the child from anyone who unlawfully detains the child. A child who has reached sixteen years of age may leave the parents' residence or another place of residence designated by the parents without parental consent, subject to the approval of the guardianship authority, if it is not contrary to the child's best interests.

A child may reside abroad for an extended period—such as for studies, employment, or other similar purposes—independently or with one parent, subject to the agreement of both parents.

A child's departure abroad for the purpose of permanent settlement requires parental consent to that effect.

Choice of upbringing and career path: Parents have the right to choose the method of the child's upbringing. Taking into account the child's abilities, the parents and the child jointly decide on the career path the child should prepare for.

In the event of a dispute between parent and child regarding the choice of career path and, in connection with this, the child's education or choice of school, the guardianship authority makes the decision.

Management of the child's property

Parents exercising parental custody have the right and duty to manage all assets of their child that are not exempt from their management by law.

Parents are obligated to spend that portion of the income generated from the child's property remaining after paying expenses associated with the property on the child's justified needs.

Legal representation of the child

Parents exercising parental custody have the right and duty to represent their child in personal and property matters. A parent's right of representation does not extend to legal statements that, by law, can only be made personally by the child.

Unless otherwise provided by law, a parent may not represent their child in matters where the parent, their spouse, cohabiting partner, direct-line relative, or another person under their legal representation is an opposing party to the child.

If the parent exercising legal representation cannot act in the child's matter due to law or an order of the guardianship authority, a conflict of interest, or another factual obstacle, the guardianship authority appoints an ad hoc guardian for the child.

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The question is, therefore, what is the situation when the attorney drafting the sales contract for a condominium unit acts solely by checking the master sheet of the condominium to see whether a registered right of pre-emption is provided for the other owners.

In its ad hoc decision No. Pfv.VI.20.087/2020/10, the Curia explained that a right of pre-emption stipulated in the Deed of Foundation provides legal protection to pre-emption right holders only when accompanied by its registration in the land registry. According to the case, the buyer purchased the condominium garage subject to the proceedings without the seller calling upon the other owners to make a statement regarding their right of pre-emption, given that although the Deed of Foundation provided for the right of pre-emption, its registration in the land registry was omitted. The attorney drafting the sales contract, relying on the completeness and public authenticity of the land registry, did not check the Deed of Foundation and thus did not take into account the provision regarding the right of pre-emption recorded therein. Based on the sales contract, the competent land registry office registered the buyer's ownership in the land registry. One of the co-owners challenged the contract: they requested that the competent court declare the contract ineffective in relation to them under Section 6:223 (1) of the Civil Code and establish that the purchase and sale was concluded between them and the seller according to the provisions of the original contract. In the lawsuit, the seller referred to the buyer's bad faith. According to the buyer's statement, their conduct was in good faith, as they acquired property ownership in good faith and for consideration relying on the data in the authentic public registry (land registry), and in the absence of registration there, they did not have and could not have had knowledge of the existence of the right of pre-emption.

In its judgment, the court of first instance stated that although the seller and buyer had breached the right of pre-emption, it dismissed the claim of the plaintiff (the co-owner entitled to pre-emption), given that the pre-emption beneficiary cannot make a claim against a buyer acting in good faith (due to obligational effect); furthermore, according to the court's reasoning, the buyer cannot be expected to obtain the Deed of Foundation or otherwise investigate a potential right of pre-emption, it being sufficient to check for the existence of the entry on the master sheet relying on the data in the public registry.

The pre-emption beneficiary successfully appealed the first-instance judgment: the court of second instance overturned the judgment, citing Section 6:223 (1) of the Civil Code and Civil Department Opinion No. 2/2009 (VI.24) PK: in its judgment, it declared that the contract was ineffective against the plaintiff and ordered the competent land registry office to register the ownership of the pre-emption right holder. Explaining its judgment, the second-instance court argued that the acting attorney, in breach of professional rules, failed to obtain the Deed of Foundation, and thus, as the buyer's representative, could not gain knowledge of the existence of the pre-emption right. This failure on the part of the representative is attributable to the buyer, and thus the buyer is to be considered to have acted in bad faith. Against the final judgment, the buyer submitted a petition for judicial review, requesting that the judgment of the court of first instance be upheld.

In the judicial review procedure, the Curia established that the right of pre-emption existed as recorded in the Condominium Deed of Foundation, but due to an omission, it had not been registered in the land registry. A right of pre-emption is rendered effective in rem (dologi hatályú) by its registration in the land registry, in which case it can be invoked against anyone who acquired a right in the property following registration. If registration is omitted, the agreement establishing the right of pre-emption has merely obligational effect (in personam), meaning it creates rights and obligations solely in the relationship between the signatories of the Deed of Foundation. Therefore, a breach of rights deriving from the contract can only be invoked by the contracting parties in their legal relations with one another, and claims arising therefrom can likewise only be enforced against each other. Based on this, judicial practice established that the holder of an unregistered pre-emption right in the land registry cannot invoke this right against a buyer who acquires property in good faith, for consideration, and relying on the authentic public registry.

Under the Civil Code, a buyer acquiring property in good faith and for consideration—who, under the circumstances, did not know and could not reasonably have been expected to know that the public registry did not align with the effective Condominium Deed of Foundation—cannot be held liable for the fact that the right of pre-emption was not registered in the land registry. The Curia agreed with the second-instance court that the attorney representing the buyer did not act with due care regarding the purchase and sale, and that this is attributable to the buyer; however, the attorney's duties do not expressis verbis include searching for the Deed of Foundation, review of the condominium's master sheet being sufficient. According to the Curia, it depends on the care and decision of the acting drafting attorney and the buyer whether to locate and check the effective Deed of Foundation prior to signing the sales contract; omitting this may pose a risk to the buyer, but in no way grounds the ineffectiveness of the contract or bad faith on the part of the buyer. In its ad hoc decision, the Curia ruled that the buyer's bad faith was not proven; therefore, the buyer qualifies as a good-faith acquirer of rights, making the plaintiff's claim against them unfounded, and thus the Curia upheld the buyer's acquisition of ownership.

Based on the above, the conclusion is that although in this case the buyer could in good faith rely on the public land registry, the drafting attorney acts with complete precision if they routinely obtain the effective condominium deed of foundation to verify whether a right of pre-emption exists.

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