Electronic Land Registry Security: Protection Against Digital Fraud

The digitalization of Hungary’s land registry is a gradual process framed by Act C of 2021 (new Land Registry Act — Inytv.). The transition to an electronic system brings far-reaching changes to everyday real estate transactions: the principle of public faith (közhitelesség, Civil Code § 5:171) now rests on encrypted electronic data packages rather than paper documents. Below we examine the genuine legal framework and security challenges of the digital land registry.

Public Faith in a Digital Environment

The Legal Framework

Civil Code § 5:171 establishes the principle of public faith: the existence of rights registered and facts recorded in the land registry, as well as the correctness of the registry’s content, shall be presumed. This presumption applies equally in the digital system — the legislature, through the new Inytv., has transformed not the substance of public faith but the technical medium of the registry and the procedure for registrations.

Protection of bona fide purchasers for value (Civil Code § 5:173) remains the cornerstone of real estate transaction security. In a digital environment, however, new considerations arise in assessing good faith: to what extent is the acquiring party obliged to independently verify the authenticity of data in the electronic system?

The New Land Registry Act (Act C of 2021)

The new Inytv. establishes the framework for electronic registration procedure. The statute entered into force in phases, envisaging a gradual introduction of full electronic operation. It is important to emphasize: the system is not the result of a single “switchover” but an infrastructure built over years and continually developed. Electronic submission of applications, handling of digital documents, and the automatic notification system are all elements of this gradual transition.

Digital Identity and Real Estate Transaction Security

Identification: DÁP, eID Card, and eIDAS

Identification of parties in real estate transactions relies on a multi-level system:

• Digital Citizenship Programme (DÁP) — the governmental digital identity management framework
• eID card (eSzemélyi) — an identity document also capable of electronic signatures
• eIDAS Regulation ((EU) No 910/2014, as amended by Regulation (EU) 2024/1183 — “eIDAS 2.0”) — the EU framework for electronic identification and trust services

The legal risk lies primarily in control over digital authentication credentials. Under the Civil Code’s general liability rules (§ 6:519) and the standard of due care (§ 1:4(1)), if someone negligently handles their electronic identifiers — for instance, sharing passwords with third parties — they may bear liability for resulting damage due to their own culpable conduct.

Electronic Safeguards for Property Transfers

Under the new Inytv. regime, land registry applications may be submitted exclusively through legal representatives (attorneys, notaries). The attorney preparing the deed submits the application with an electronic signature, and the system performs automatic priority note (széljegy) registration.

To protect property owners, the electronic system contains notification mechanisms: the owner receives electronic notification (email, mobile application) of any priority note registration. This enables the affected owner — if the application is unauthorized — to promptly take legal action (application for interim injunction, criminal report). The purpose of instant alerts is to ensure rapid response against unauthorized registrations.

Attorney Liability and Cybersecurity

The Heightened Duty of Care — Not Strict Liability

An attorney acting in real estate transactions bears liability based on the combined application of Civil Code § 6:519 (non-contractual damages) and the Attorney Act (Act LXXVIII of 2017 — Üttv.). To this is added Civil Code § 1:4(2), which calibrates the standard of conduct generally expected in the given situation to the heightened professional expectations of the legal profession.

A critical clarification: attorney liability is not strict (no-fault) liability but is fault-based with a heightened duty of care. This means the attorney is exonerated only if they prove they acted in a manner generally expected in the given situation — but this standard of expectation is higher, given the particularities of the legal profession, than that expected of a layperson.

Identification Obligations

Attorneys in real estate transactions face a dual identification obligation:

1. Client due diligence under the AML Act (Act LIII of 2017 on prevention and combating money laundering and terrorist financing) — §§ 7–11 prescribe detailed client identification and due diligence obligations, including verification of natural persons’ identity and identification of beneficial owners.
2. Information and identification obligations under Attorney Act § 32 — the attorney must satisfy themselves as to their clients’ identity and legal capacity.

The possibility of remote client identification (video identification) is regulated by AML Act § 9: under specified conditions — among which the Hungarian legislator increasingly encourages the use of biometric verification elements (facial recognition, liveness detection) — identification may be performed without the client’s physical presence.

Due to increasing deepfake and other digital manipulation risks, it is increasingly urgent for the legal profession to ensure adequate technological preparedness. If an attorney accepts remote identification without employing available technological tools, and identity forgery results in damage, the heightened duty of care standard may count against them — though this remains a question of culpability, not strict liability.

The Criminal Law Dimension

Abuses related to the electronic land registry may fulfill multiple offences under the Criminal Code (Act C of 2012):

• § 342 — Abuse of cashless payment instruments (analogous interpretation for electronic authentication credentials)
• § 375 — Fraud committed through information systems
• § 423 — Breach of information systems or data
• § 345 — Forgery of documents — electronic documents qualify as documents under Criminal Code § 459(1) point 11

Digital abuses thus may entail not only civil law (damages) consequences but also serious criminal sanctions.

Practical Advice for Property Owners

1. Activate electronic notifications — every owner should enable the land registry system’s automatic notification function to learn immediately of any priority note registration
2. Protect digital credentials — never share eID PIN codes or DÁP login data with third parties; sharing passwords may be assessed within the Civil Code’s culpability framework
3. Choose your attorney carefully — for real estate transactions, select legal representatives experienced in land registry practice who fully comply with AML and Attorney Act identification protocols
4. Immediate legal action upon suspicious activity — if the owner learns through a priority note notification of proceedings they did not initiate, they should immediately contact an attorney and, if necessary, the police

The electronic land registry serves both legal certainty and transaction speed, provided that all participants — owners, attorneys, and authorities — observe the heightened digital security requirements. The principle of public faith applies in the paperless world as well — but only the combination of legal and technical protection systems can offer effective defence against technological risks.