Who is considered a settler?

A natural person who does not own property, have a place of residence, or a place of stay in the municipality, and who intends to acquire property or establish a residence there.

1. What regulations may municipalities adopt?

According to the Hötv., municipalities may adopt decrees concerning the use of property and personal protective measures. Property-related measures apply to transactions involving real estate (in particular, the right of pre-emption), while personal measures concern restrictions on settlement in the municipality, such as prohibiting or making residence registration conditional, or requiring a settlement contribution.

Let us first examine the right of pre-emption. This provision is relevant if the property is to be purchased by a settler or a person not exempt from the rule.

1. Primarily, the local government or a company owned by it is entitled to exercise the right of pre-emption. If it does not exercise this right…
2. then the owner of the adjacent property is entitled to do so. If this right is also not exercised…
3. then any other property owner within the municipality may exercise it.

The applicable deadline rule is as follows: a 30-day forfeiture period.

The time limit for making a declaration starts on the day following direct notification or publication of the contract. Failure to make a declaration within this period is deemed a waiver of the right of pre-emption.

In the case of personal protective measures, the decree must not violate human dignity, the prohibition of unjustified discrimination, or the requirement of equal treatment.

The law also mentions the settlement contribution, the application and amount of which are determined by the municipality.

2. Who is exempt from prohibitions, restrictions, and conditions?

The Hötv. provides an exhaustive list of exemptions:

a) relatives of a person who has a residence or property in the municipality, as well as persons whose place of origin is the municipality;

b) those who prove or at least make it probable that within the first ten years after birth, they or a relative lived in the municipality for at least twelve months;

c) state or municipal employees – including employees of companies majority-owned by the state or a municipality – who move to the municipality for the purpose of performing their work;

d) persons not covered by point c) who prove that the purpose of their settlement is to engage in gainful activity in the municipality;

e) those acquiring property with state housing support;

f) employees of a church or ecclesiastical legal entity;

g) students of public or higher education institutions operating in the municipality;

h) persons living in a religious, healthcare, sports, social, child and youth protection, or penitentiary institution located in the municipality;

i) close relatives of persons meeting the conditions specified in points a)–g).

The municipality may grant these exemptions in three ways: 1. without a procedure, 2. through a simplified procedure, or 3. through an individual procedure. In the case of a simplified procedure, the municipality verifies compliance with an objective settlement condition or endorses the applicant’s request with an authorization clause. In such cases, the applicant must submit the documents required by the municipality to prove compliance with the conditions.

à The rules on exemptions also show that prohibitions, restrictions, and conditions do not apply to settlers who purchase property under the Family Housing Benefit (CSOK) or the Home Start Program.

3. What might the procedure look like in practice?

According to the Hötv., the procedure can only be initiated upon application, which may also be submitted jointly with a close relative of the person intending to settle. The application is assessed by the representative body, but this competence may be delegated to a committee or, in the case of a simplified procedure, to the notary. The applicant must present all circumstances and documents required by the municipal decree. The administrative time limit is 30 days, which may be extended by an additional 30 days. However, during the procedure, it may be necessary to prove compliance with the prescribed conditions.

4. Is there an alternative if I do not meet all the conditions?

The municipality may also provide for a discretionary decision-making power in its decree. If a settler does not meet certain objective or discretionary conditions, but there are equitable reasons supporting settlement, the representative body may decide to grant permission to settle.

5. What are the consequences of unlawful settlement?

The law provides for three types of legal consequences: the nullity of the legal transaction underlying the acquisition of the property, the cancellation of the address registration, and the imposition of a fine. Therefore, serious legal consequences may arise if someone fails to comply with the provisions of a municipality, so it is advisable to check the municipality’s website to see whether a decree on the protection of local identity has been adopted and what specific requirements it contains.

Contact us if you have questions about this topic or any other real estate law matter!

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