Traditionally, real estate law and land registry law are very static and are hardly considered to be at the forefront of legal innovation. However, current real estate development trends and the growing demand for the identification and registration of objects constructed under or above the surface - that often overlap and cross each other - have forced the Hungarian legislator to introduce a 3D land registry in Hungary, expected to be effective from 1 July 2018.

The need for a 3D land registry

Due to the rising demand for industrial, commercial and residential real estate, especially in the metropolitan areas, general development trends point to the increasing use of available underground and aboveground spaces.

As a result of such trends, besides multi-level building structures, developers often create multi-level traffic and transport hubs or parking garages both above and below the surface to ensure smooth access to buildings. The underground and aboveground spaces are also increasingly being used for the purpose of electricity cables, water or gas pipes, as well as telecommunications infrastructure.

All of this can mean that several structures are constructed on the same plot, often overlapping and crossing each other. However, the current Hungarian land registry system is not set up to indicate clearly the extent of the property rights relating to such structures.

The potential for disputes arising from this situation has created a growing interest in the legal recognition of three dimensional (3D) objects which would enable the separate registration of these multi-level structures in the land registry and on the cadastral maps. As a consequence of creating transparent and separated property rights over such objects, the owners could also use these properties as collateral for borrowing which would stimulate lending and growth.

Current Hungarian land registry system

The current Hungarian land registry system was introduced in 1972 as a unified land registry system incorporating both the cadastral mapping and land registration in an integrated form, operated by a single network of the land registry offices. This system has been electronic across the country since 1997.

In terms of the Hungarian Land Registry Act, the land registry is a system containing all land plots and other independent properties in Hungary meaning, among others, buildings, cellars, underground parking garages and condominium units.

By geometry, the digital map database of the Hungarian land registry is two dimensional (2D), with few exceptions. Practically speaking, this means that as a general rule the Hungarian land registry currently has no means of indicating real 3D objects and rights on the land registry maps, for example that an encumbrance (such as an easement right) only encumbers a selected floor of a building but not the entire building consisting of all floors. This means that the land registry office cannot register such an “isolated” encumbrance on the land registry sheet of the building.

3D situations in the current land registry

Notwithstanding the 2D nature of the land registry, there are a few exceptions in the current Hungarian land registry system when objects and properties constructed under or above the surface can be registered as separate properties.

For example, condominium units located within a single condominium building can be registered as separate properties under separate topographical lot numbers; however, such topographical lot numbers are based on and linked to the topographical lot number of the plot on which the condominium building is constructed. Furthermore, in the case of condominium units, the geometric description of the units is laid out in the deed of foundation of the condominium and in a scaled 2D layout plan of each level of the condominium which must be submitted to and registered with the land registry office upon construction of the condominium.

In addition, it is also possible to have certain underground structures (cellars, garages) registered under separate topographical lot numbers provided the objects are closely linked to a plot.

It is important to note that these exceptions are still implemented on the basis of a 2D cadastral map and thus do not provide a comprehensive solution to the challenges of the current development trends described above.

Proposed introduction of 3D land registry

In response to mounting pressure from developers and public utility companies, whose main infrastructure crosses the entire country, Hungary adopted a new Act on Surveying and Mapping Activities in May 2012. This Act introduces the concept of the 3D land registry, with the primary aim of determining the tasks of the Hungarian state regarding the establishment of proper legal and technical conditions for the future introduction and operation of a 3D land registry where properties and 3D objects, as well as all rights pertaining to them, can be precisely identified and separately registered. Such a 3D land registry is currently expected to be implemented by 1 July 2018.

Besides introducing the 3D registration concept and setting out the general requirements, the new legislation also proposed a concept for defining 3D properties which is to be incorporated in the Land Registry Act simultaneously with the implementation of the 3D registration. Under the proposed definition, underground and aboveground objects and structures, which have single ownership, would be taken into account as separate properties and thus would be registered in the land registry on separate land registry sheets.

It is envisaged that the 3D land registry will continue operating within the framework of the already existing land registry system of Hungary. Consequently, the legal and the geometric conditions must be developed and introduced at the same time in order to avoid data inconsistency.

In order to establish the necessary legal and technical (geometric) background for the new 3D land registry system, the Hungarian land registry regulator is currently working out the detailed rules and regulations for the implementation of the new system, with the involvement of state agencies and other bodies who are active in the field of cartography and geodesy.

Challenges for implementation

For the smooth implementation of the 3D land registry, certain issues must be addressed. These include the establishment of a sufficiently dense network of vertical control points (to design the nature of the 3D map for registration purposes), the introduction of the necessary statutory regulations of the 3D surveying and mapping processes, as well as the adaptation of the currently operating 2D infrastructure to the new 3D methods.

In addition, the connections, overlaps and crossings between the legal spaces of the 3D properties, as well as the rights arising from them, need to be modelled both legally and technically.

Furthermore, giving separate land registry numbers for such 3D objects which are constructed under or above the surface of several land plots (e.g. public utilities, tunnels and telecommunication cables), is challenging as these objects generally affect many plots on the surface and thus no clear link can be made to one specific plot (as opposed to condominium units).

Lastly, due to the unified nature of the land registry, the preparation of the necessary legal and technical preconditions is more complicated because the new 3D cadastral map data to be introduced in the land registry must be consistent both with the already existing 2D cadastral maps and the land registry sheets.

What’s next?

Given the current development trends and the difficulties in registering objects constructed under or above the surface, as well as their ownership and other property rights, the introduction of the 3D land registry is inevitable. However, due to its 2D nature, the traditional Hungarian land registry system in its current form is not yet completely suitable to co-exist smoothly with the 3D cadastral maps of the future.

Nevertheless, considering the multipurpose nature of the Hungarian land registry and the fact that it already includes elements of 3D registration (such as the registration of condominium units), and that there are no insurmountable technical difficulties, the general introduction of the 3D land registry does seem feasible after completion of the ongoing revision of the land registry law.

In the course of this revision the detailed rules of a legal environment which can handle 3D cadastral maps are being debated and developed, a process which gives a unique opportunity to stakeholders to influence the land registry legal environment of tomorrow.