Digitalization in the land registry

Digitalisation has been present in legal practice for a long time, company registration procedures and e.g. payment warrant procedures have been conducted electronically for more than a decade, and digital administration has also gained ground in the majority of administrative and judicial procedures. The management of land registry procedures has been kind of a last mohawk so far, based on paper, although electronic access to title deeds and maps has been available for quite a long time. The administration and filing of land registry documents usually require the personal presence of the clients or their legal representatives. However, this will change significantly with Act C of 2021 on the Land Registry, which will enter into force on 1 February 2023, replacing and repealing the current Land Registry Act and bringing a number of changes in practice from next year.

In practice, one of the most important changes is the full digitalisation of the land registry and the related land registry process. By eliminating paper-based administration and long lines at the land registry office, the procedure will become simpler, faster and more efficient, with the necessary documents being submitted electronically and the application for land registration being submitted exclusively through an electronic form to be defined by a government decree. As a result of electronic administration, the documents to be sent can also be electronically signed, so the signatories do not have to spend time and money travelling to the legal representative drafting the sale and purchase contract, but they can easily and simply sign it online. The often seemingly endless obligation for customers to sign papers will thus be eliminated.

Another important new feature is that, as a result of the electronic land registry, from next year it will be possible to display not only maps but also spatial representations, so that the state land registry map database, which is part of the land registry, will now also show the buildings below ground and above and below each other. The register will also be linked to other public registers, so that changes in individual data can be transferred more quickly.

Legal representation and the countersigning of the underlying documents by a lawyer or legal counsel will still be required in land registration procedures for the registration or cancellation of certain rights and facts, with the addition that under the new rules, countersigning will now be required for all rights to be registered, including, for example, rights of pre-emption or land use.

As far as the cancellation of certain rights and facts is concerned, under the new law, it requires a final court decision or a final administrative decision only, so that, by an agreement between the parties, for example if they decide to terminate the sale and purchase contract, the previously registered right can no longer be cancelled.

Another important innovation is that the pending option, which is popular in the current regulatory environment, will cease. Instead, if the signing of the contract and the payment of the purchase price are separated in time, the owner can maintain the title and the registration of the right to purchase can be requested in connection with this reservation.

The new legislation also introduces significant changes for legal representatives as well, given that a specialised training course will be required for the submission of applications to the electronic land registry, and only after completing this course will the lawyer be entitled to participate in land registration procedures.

The land registry will remain public and open to public inspection, except that the current inauthentic copy of the title deed will be phased out and replaced by a copy of the transactional title deed, which, apart from the data of the complete copy of the title deed, will contain all the identification data - other than the personal identification number - of the holders of the registered and cancelled rights and deeds indicated on the title deed.

Another benefit of digitalisation is that applications can be processed by any land registry office, instead of the office competent by location of the property, which can greatly improve the speed of processing in terms of capacity utilisation.

The new legislation brings several beneficial changes, but all the details are not yet known, and the details of the training required for legal representatives are still to be finalised.

The modernisation and digitalisation of the land registry has been long overdue, so the changes that will soon come into force, although they include some stricter rules, will certainly benefit real estate transactions and make the handling of legal transactions more transparent for clients.

Authors: Dr. Dániel Balázs and Dr. Dóra Katalin Kuti