Real estate law and the sale and purchase of real estate

• drafting contracts relating to sale and purchase, gift, exchange, lease and the usufructuary right
• examination of the title deed and of the registered encumbrances, and a written summary of the legal risks
• holding the purchase price in attorney’s escrow, submission of the registration application on an electronic form, and representation in the procedure before the real estate registration authority
• transfer of properties encumbered with a mortgage lien, and conducting the process of the release of encumbrances

Why an attorney-at-law is mandatory in real estate matters

Under Act C of 2021 on the Land Registry, legal representation is mandatory in procedures initiated upon application for the registration of rights and facts. A legal representative may be an attorney-at-law entered in the register of the bar association and holding a procedural entitlement, a registered in-house legal counsel, or a notary public acting on behalf of the party. This is not a formality: submissions must be filed on the electronic form provided by the real estate registration authority, which can only be accessed by a legal representative.

As a general rule, registration may be based on an authentic instrument or a private instrument with full probative force which evidences the creation, modification or termination of the right forming the subject of the registration. In addition, the procedure requires a consent to registration issued by the entitled party, which under the Act may also be granted in a separate instrument — in practice this becomes significant where the purchase price is paid in instalments.

The course of the sale and purchase

The first step is the examination of the title deed and of the registered encumbrances. This reveals whether there is a mortgage lien, an enforcement right, a right of pre-emption or a right of repurchase, or a usufructuary right, and whether another procedure concerning the same property is already pending. I summarise the result of that examination in writing, because the terms of the contract are adjusted accordingly.

This is followed by the drafting and countersignature of the contract. By countersigning, the attorney-at-law certifies that the instrument complies with the law, that the parties have declared that its contents correspond to their intention, that he has carried out the identification of the parties and of their representatives, and that the parties signed the instrument in his presence or acknowledged the signature before him as their own.

An attorney’s escrow may be used for the handling of the purchase price, where the parties so agree. Following signature, I submit the registration application on an electronic form and provide representation in the procedure before the real estate registration authority until registration.

Where something changes in the course of the transaction

Real estate transactions rarely run their course without amendment. The Act provides a framework for this as well: until such time as the real estate registration authority takes steps to communicate its decision, the registration application may be withdrawn or amended by a joint declaration of all persons directly concerned by the registration, set out in an authentic instrument or in a private instrument countersigned by an attorney-at-law. Where a third person would have acquired an entitlement as a result of the registration, that person’s consent is also required.

Electronic signature and a party abroad

An electronic instrument may be signed by the party’s qualified electronic signature or by an advanced electronic signature based on a qualified certificate, or by means of the document authentication service under the Code of Civil Procedure. In the case of an electronic instrument drawn up in the information system of the real estate register, electronic authentication may also be carried out, in place of a party who does not use an electronic signature, at an administrative office, at a diplomatic or consular mission, or before a notary public. This offers a solution in particular for sellers and buyers who are staying abroad.

Frequently asked questions

Is it sufficient to instruct the estate agent to prepare the contract?

No. An estate agent may neither draft nor countersign an instrument serving as the basis of registration, nor may an estate agent act as legal representative in the registration procedure.

May the same attorney-at-law act on behalf of both parties?

The attorney-at-law who drafts the instrument may countersign it even where one of the contracting parties has not given him a retainer — in that case, however, he must inform that party in writing, before signature, that the countersignature does not create a retainer relationship between them.

When do I acquire ownership?

Ownership passes upon registration in the real estate register, not upon signature of the contract and not upon handover of possession.