Dr. Burján Melinda

The Significance of Transactional Deeds (Contracts and Legal Declarations)

One of the greatest advantages of notarial deeds over private documents is their direct enforceability. A contract embodied in a notarial deed is directly enforceable through judicial execution if the obligor fails to perform. If the obligor or the contracting party fails to perform the obligation undertaken in the contract, the other party may, instead of pursuing lengthy court proceedings, directly initiate judicial execution with the notary who prepared the deed.

A notarial deed is thus capable of compelling the parties to act in accordance with the contract through the direct enforcement of its provisions. A public document can therefore also eliminate the risk of future litigation for the parties, saving them both money and time.

A notarial deed also carries special probative force: it attests to the facts and events contained in it with public faith. As a public document, a notarial deed provides full proof of the provisions it contains, of the truth of the data and facts certified therein, and of the making, time and manner of the legal declarations.

A transactional deed also attests to the fact of the declaration of intent made in respect of the given transaction, thereby ensuring that the person named in the deed has genuinely understood and accepted its contents. The notary is obliged to satisfy themselves as to the party's capacity to act, their intention, and that the declaration corresponds to the party's true will, and is obliged to inform the party of the legal consequences of the transactional deed.

Security and Guarantees

When preparing the deed, the notary verifies the identity of the parties and the authenticity of their documents, and confirms legal validity with the help of online databases. The secure paper-based safekeeping of public documents is guaranteed by the notary and, after a certain period has elapsed, by the Archives of the Hungarian Chamber of Civil Law Notaries; the notarial deed is also archived electronically in the Electronic Archives of the Hungarian Chamber of Civil Law Notaries.

Important Information

If you wish to conclude a contract or make any legal declaration in the form of a notarial deed, please call our office!

Before the Notarial Deed Is Prepared

The deed-drafting procedure must be requested from the notary. Pursuant to Act XLI of 1991 on Notaries Public (Kjtv.) and its implementing decree (Decree No. 13/1991 (IM) of the Minister of Justice), the request must be submitted in writing, either on paper or in electronic form. The request may be signed by the party or by their authorised representative acting under a power of attorney drawn up with the appropriate formal requirements, a template for which is available under the "Forms" menu.

Contracts

One of the most important tasks of notaries is to embody various contracts in public documents, whereby the notary records the declarations of intent of two or more persons in a public document. The notarial deed-drafting procedure is a non-contentious procedure commenced upon request, meaning that the client must arrive at the office with a completed request form, which can be downloaded under the "Forms" menu.

• Loan and pledge agreements
• Succession contracts and maintenance contracts
• Matrimonial and cohabitants' property contracts
• Gift contracts
• Sale and purchase contracts, or
• Lease contracts, and other similar legal transactions

For scheduling an appointment and discussing your matter, please call our office!

Loan and Pledge Agreements

The purpose of a loan agreement and a pledge agreement is to record the terms of the debt and the security within a secure framework; when embodied in a notarial deed, such agreements become directly enforceable and carry strong probative force. Such a deed protects both the creditor and the debtor, reducing the risk of future legal disputes and lengthy litigation.

What Is the Legal Significance of a Loan Agreement?

A loan agreement records the amount of money the debtor receives, the time limit and conditions under which they are required to repay it, and the interest, costs and other conditions attached to the debt. The purpose of the agreement is to clearly define the rights and obligations of the parties, preventing misunderstandings regarding, for example, the term, the instalments or the rate of interest.

If the loan agreement is embodied in a notarial deed, the deed — provided it has the appropriate content — is directly enforceable, meaning that there is no need to first bring a court action if the debtor fails to pay. In addition, the public document attests with public faith to the existence, amount and due date of the debt, which also considerably simplifies the taking of evidence.

What Is the Legal Significance of a Pledge Agreement?

A pledge agreement is a form of security: it allows the creditor — in the order of priority determined by law — to seek satisfaction from the object of the pledge if the debtor fails to perform. The object of a pledge may be, for example, real property, a motor vehicle, a business share or other assets, as well as rights or claims.

A validly established pledge grants the creditor priority over other creditors upon the sale of the given asset. If the pledge agreement is embodied in a notarial deed, the deed can serve as the basis for the swift ordering of judicial execution once the claim has become due.

Why Is a Notarial Deed Advantageous?

Direct Enforceability
A loan and pledge agreement embodied in a notarial deed — provided it contains the necessary undertaking, amount and time limit — is directly enforceable if the obligor fails to perform. This means that the creditor does not need to bring a court action, but may instead request the issuance of a writ of execution or an enforcement clause, allowing for significantly faster and more cost-effective enforcement of rights.

Enhanced Probative Force and Legal Certainty
A notarial deed is a public document: the law presumes that the facts and declarations contained in it are true, that the declaration was made by the person in whose name it appears, and that it was made at the time indicated. The content of a public document may only be challenged within narrow limits and under stricter rules of evidence, which provides greater security for both parties.

Professional Verification and a Comprehensible Contract
The notary verifies the identity and legal capacity of the parties and informs them of the legal consequences of the contract. The text of the contract is drafted in accordance with the clients' intentions, in clear and comprehensible form, reducing the risk of ambiguous or unfair terms.

Avoidance of Disputes and Litigation
Because the wording of the deed is precise, detailed and legally professional, disputes between the parties arise less frequently, as the essential issues (amount, term, interest, security, and the rules on termination and default) are clearly set out. Should a dispute nevertheless arise, the content of the public document and its direct enforceability significantly shorten the time needed to resolve the matter.

Special Features in Credit and Loan Transactions
For numerous state-subsidised housing loan and mortgage agreements, the law expressly prescribes the form of a notarial deed, typically in the form of a unilateral declaration of commitment. In registering the pledge with the Register of Security Rights and the pledge register, the involvement of the notary ensures that the pledge is registered in good time and with the appropriate content.

A Simple Example From Practice
If someone lends a significant sum of money to an acquaintance under a private document, in the event of a dispute they would first have to prove the amount and due date of the debt in court proceedings before they could request enforcement. With a notarial deed, by contrast, if the debtor fails to pay, the issuance of an enforcement clause can be requested directly and judicial execution can be initiated, while the deed also clearly records the precise terms of the debt, for the protection of both parties.