Up Again Hungary: Premises and Workplace

Employment

1. What are the key things that employers have to consider in relation to social distancing in the workplace, e.g. open plan or spacing of desks, use of shared equipment, limited access to communal facilities, canteen / restaurant, etc.?

In accordance with the recommendation of the National Public Health Centre, employers must comply with health and safety requirements, and in doing so consider certain measures – for example, spacing of desks, restriction of use of shared equipment, and limited access to communal facilities, such as restaurants.

2. What key hygiene and/or infection prevention measures will employers have to take to ensure a safe workplace e.g. provision of adequate handwashing facilities, regular deep cleaning of offices, etc.?

According to the relevant laws, the employer has the general obligation to ensure a healthy and safe working environment. What this means in practice will depend on the actual circumstances of the workplace and the activity carried out.

In accordance with the guidance of the National Public Health Centre, it is recommended to consider certain measures, such as provision of adequate handwashing facilities, regular deep cleaning of offices, and introducing measures for maintaining social distancing.

Real Estate

3. Are there any specific obligations, liabilities or duties of conduct imposed on landlords, tenants or visitors with respect to the use or re-use and decontamination of premises; care, cleaning and maintenance of the exclusive and common areas; reporting requirements and/or measures in case of identified infections; health and safety issues - e.g. recommissioning water systems to avoid virus, installation of plexiglass screens, moving desks to comply with distancing. remodulation of fire prevention strategies (entrance/exit routes)? Is any distinction made between asset classes?

Many landlords introduced strict procedures regarding cleaning and maintenance of common areas and strict health and safety measures in their buildings. Admission of visitors (beyond tenants) was also restricted in many properties. There are, however, no specific obligations prescribed by legislative acts in this regard.

4. Are there any rent suspension measures and/or stay of recourses and actions (including eviction) or any Government support initiatives such as a furloughed building grant scheme (if so, maybe only a part of the building should be re-occupied)? When rent suspension measures are available, what is the usual payment mechanism and timing agreed to by the parties?

Non-residential lease agreements related to tenants engaged in tourism, catering, entertainment, gambling, film, performing arts, events or sports service, may not be terminated by landlords until 30 June 2020.

In the case of private individual tenants participating in the National Asset Management Programme, the asset manager may not terminate the lease due to non-payment until 31 December 2020.

Also, some landlords showed flexibility by offering special rent schemes or other reliefs for tenants who were otherwise not protected by the prohibition of termination.

5. Are there specific tax reliefs on payment or collection of rent instalments? Do they apply subject to actual payment or regardless? Do they apply generally or only to specific asset classes?

There are no specific tax reliefs regarding rent instalments.

6. Are there any measures regarding relief from the performance of real estate-related contractual obligations?

Generally, there are no specific reliefs regarding the performance of real estate-related contractual obligations. However, individuals participating in the National Asset Management Programme are exempt from paying purchase price instalments or rent that would otherwise be due up to 31 December 2020.

7. Are there any credit facilities in place to mitigate loss of income for landlords?

There are no specific credit facilities regarding landlords. The Hungarian National Bank launched a Growth Credit Facility Programme (Növekedési Hitelprogram Hajrá) for micro, small and medium-sized companies. Eligible landlords may also benefit from this programme.

8. Is there any relief from loan repayments / enforcement of loans secured against properties?

There is a payment moratorium for the capital, interest and fee payment obligations of debtors arising from credit, loan or financial lease contracts. The payment moratorium expires on 31 December 2020. The payment moratorium applies to loans already disbursed on the basis of contracts existing as of 18 March 2020. Entities supervised by the Hungarian National Bank are not subject to the payment moratorium.

9. Are public services necessary to complete the sale, acquisition or other operation of real estate assets or companies or to establish the right to open for business (planning authorities, notary public, Land Registry, Companies’ Registry, etc.)?

Agreements regarding the sale, acquisition or encumbrance of real estate assets must be countersigned by an attorney-at-law or executed before a notary public and filed with the Land Registry Office.

Leases and property and facility management agreements can, however, be executed without the necessity of public services.

10. Are there any specific processes or protocols available to consummate real estate operations enabling them to comply with any required social distancing (e.g. electronic signature, etc.)?

Electronic signatures are available and used in Hungary, although typically by specific professions or in specific procedures. That said, signing in counterparts is common practice for parties transacting in Hungary but not being present at the signing.

If the execution of the document requires legal countersignature, distance countersigning via Skype or similar applications arranged by an attorney-at-law is an option.

11. Are contractors who were carrying out works within the premises obliged to resume them? Can building sites reopen when they were closed down? Are there any specific provisions in relation to certain asset classes authorising continuation / resumption of works (e.g. healthcare structures)?

Contractors could operate during the state of danger. Final construction permits, construction framework permits, installation permits or demolition permits expiring during the state of danger are by virtue of law extended for another year from the date of the end of the state of danger.

Those permits that expire within 180 days after the end of the state of danger will also be extended for an additional year calculated from the original expiry date. Similar rules apply to archaeological exploration and heritage protection permits

12. Are there remedies or contractual arrangements available to address impossibility or delay for a party to handover premises to another which are/were to be constructed or refurbished, or for such other party to take over those premises?

The underlying provisions of the Hungarian Civil Code are currently subject to various interpretations. However, generally speaking, the impossibility of performance (objective impossibility) occurs when performance is not possible due to a force majeure event - i.e. for a reason that is outside the control and interest of the parties to the contract.

One of the cases of non-performance is a delay in performance, which can also be interpreted as a kind of temporary impossibility when the existing force majeure event makes it impossible to perform the contract only for a definite period and not permanently.

In the event of an impossibility of performance, the contract is terminated and the parties shall not be bound by their obligations under the contract.

Generally, the Hungarian Civil Code distinguishes the legal consequences on the basis of which a party is liable or not liable for the external circumstances causing the impossibility of performance.

If the failure of performance is outside the liability of both parties (e.g. a force majeure event), neither party is liable for the impossibility of performance (objective impossibility).

In such a case, the contract shall be terminated and the parties shall settle accounts with each other. That said, in each case the actual contract's relevant clauses (if any) and the specific circumstances should be assessed as a first step.