The provisions of the Civil Code concerning the right of construction entered into force in 2023, the most important provisions of which are analysed by Dr. György Zalavári, attorney-at-law, in this article.
Under a building right contract, the right holder may establish, construct or have constructed or use a building on or under the surface of real estate owned by another. A building right cannot be created by oral contract or by inducement. The grantee is granted the right to possession, use, and to receive the benefits of the building and its component parts erected on the land of another.
The consideration for the building right (the building rent) is due to the owner of the property. It can be a lump sum or a fee paid on a continuous basis or even a fee calculated on the basis of the turnover of the activity in the building, which must in any case be specified by the parties in the contract.
The building right may be transferable and subject to succession. The successor is also subject to the provisions of the contract establishing the building right. The transfer or encumbrance of the building right shall not affect the ownership of the immovable property. Claims arising from the building right or from the transfer or encumbrance thereof shall be governed mutatis mutandis by the rules governing claims arising from the ownership or from the transfer or encumbrance thereof.
The building right may also be subject to a pledge on the basis of a pledge agreement, which must also be registered in the Land Register. Restrictions on the exercise of the right in the contract establishing the building right against third parties shall be effective only if they are made known to any person from the entry in the Land Register or from the deed on which it is based. The building right shall be subject only to those rights and obligations which preceded the entry of the building right in the ranking list. Subsequent charges on the property do not affect the building right.
The building right may be held by several holders simultaneously and jointly. In the case of multiple holders, the rules of civil law on common ownership apply to the exercise of the building right and the performance of obligations. However, a building right may be created on a property jointly owned by several owners only if it is jointly owned by all the co-owners.
The building right may be established for a limited period of time, up to a maximum of fifty years.
The building right must be registered in the land register in favour of the holder. A building right may also be established by the owner of the property for his own benefit by means of a unilateral declaration. A building right may only be established on a part of a real estate subject to a land use right in favour of the holder of the land use right and at the same time as the cancellation of the land use right.
The consumer is excluded by law from the possibility to establish a building right, the consumer may not establish a building right on the immovable property owned by him and such a right may be acquired by the consumer only by inheritance. Thus, a natural person (individual) who is a consumer acting outside the scope of his profession, self-employment or business activity cannot establish a building right; this is only possible for enterprises, institutions and other legal persons.
If the right holder renounces the building right in writing and it is deleted from the land register, the right ceases.
The building right also expires after the expiry of the fixed term or after fifty years. The building right may also be terminated by the court in a lawsuit if the owner of the property proves that the holder of the building right has seriously infringed the rules governing the exercise of the rights or has seriously breached the obligations incumbent on him.
Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu