Maintenance Agreement

Maintenance Agreement

A maintenance agreement is a special civil law contract under which one party undertakes to provide care, support and assistance to another person for the rest of their life, while the supported person provides consideration in return. In practice, the consideration is often the transfer of ownership of a property, but any other asset or financial benefit may also be agreed upon.

Maintenance agreements are commonly used by elderly persons who wish to secure reliable care and support during their lifetime while arranging the future transfer of their assets.

What is a Maintenance Agreement?

According to the Hungarian Civil Code, the person providing maintenance must ensure support and care appropriate to the circumstances and needs of the supported person. In return, the supported person provides the agreed consideration.

The agreement must be concluded in writing. Oral agreements are not sufficient.

A carefully drafted maintenance agreement can help avoid future disputes between the parties and reduce the risk of inheritance-related conflicts among family members.

What Does the Maintenance Obligation Include?

Unless the parties agree otherwise, the maintenance obligation generally includes:

• providing suitable accommodation;
• supplying food and clothing;
• day-to-day care and assistance;
• nursing and medical assistance in case of illness;
• arranging and financing a dignified funeral.

The exact content of the maintenance obligation should always be tailored to the individual circumstances of the parties and recorded clearly in the contract.

Transfer of Property in Exchange for Maintenance

Many maintenance agreements involve the transfer of ownership of a house, apartment or other real estate.

If ownership of a property is transferred to the maintenance provider and the provider fails to offer adequate security for the performance of their obligations, the supported person may request the registration of a maintenance right against the property in the land registry.

This legal protection may provide additional security if the maintenance provider later breaches the agreement.

Can a Maintenance Agreement Be Modified?

Yes.

If circumstances change significantly or the relationship between the parties deteriorates, either party may request the court to modify the agreement.

Where maintenance in kind becomes impossible, the court may convert the agreement into a life annuity contract and determine the amount of periodic payments to be made.

Can a Maintenance Agreement Be Terminated?

The agreement generally terminates upon the death of the supported person.

A maintenance agreement cannot usually be terminated by a simple unilateral notice in the same way as, for example, a lease agreement.

However, the court may also terminate the agreement if its purpose can no longer be achieved or if maintaining the agreement would be unreasonable in light of changed circumstances.

If the relationship between the parties deteriorates, the performance of maintenance in kind becomes impossible, or the purpose of the agreement can no longer be achieved, the parties may terminate the agreement by mutual consent. Either party may also request the court to modify or terminate the agreement.

In certain cases, the court may convert the maintenance agreement into a life annuity agreement and determine the service to be provided by the maintenance provider.

Termination and modification issues often require a detailed legal assessment of the specific facts of the case.

Maintenance Agreement or Life Annuity Agreement?

Although the two legal institutions are similar, they are not identical.

Under a maintenance agreement, the provider typically undertakes personal care and support obligations. Under a life annuity agreement, the provider generally makes periodic monetary payments.

Selecting the appropriate contractual structure requires consideration of the parties’ age, health, financial situation and long-term objectives.

Why Is Legal Assistance Important?

A maintenance agreement may affect substantial assets and can have long-term consequences for both the parties and their future heirs.

Professional legal assistance helps ensure that:

• the agreement complies with Hungarian law;
• the parties’ intentions are accurately reflected;
• the maintenance obligations are clearly defined;
• property transfer provisions are properly documented;
• future disputes are minimised.

Legal Assistance with Maintenance Agreements

Our law firm provides comprehensive legal services in connection with maintenance agreements, including:

• legal consultation before signing the agreement;
• drafting and reviewing maintenance agreements;
• property transfer documentation;
• land registry procedures;
• modification or termination of existing agreements;
• representation in disputes related to maintenance agreements.

If you are considering entering into a maintenance agreement, we are available to assist you throughout the entire process.