Buying Real Estate
The governing principal of Cambodian Land Law is that foreign nationals cannot hold a 100% stake in real property within the Kingdom. However, legal mechanisms and documentation exist that allow foreigners to fully control the purchase, sale and use of real property in which they have invested, and benefit fully from any profits they make.
There are basically 5 Options for buying real estate and details of these follow. Option 1 [forming a company] is the safest option. Read the information below for a general idea of how this method works.
The safest method by which foreign nationals can purchase real property within Cambodia is to form a limited company in partnership with a Cambodian citizen. Any real property purchased for investment is then registered in the name of the company. The company must have a minimum 51% Cambodian shareholding. However, careful allocation of shares, and careful drafting of the rights attached to share certificates can ensure the foreigner’s full control of the company and its assets. Additional mortgage, security and Power of Attorney documents can also be created to accompany ownership documentation. Following this procedure ensures security for the foreigner’s investment.
Additional Notes: Option 1
Under this Option, the foreigner is expected to pay 100% of the purchase cost of real property plus any construction costs. If the real property is later sold, 100% of the sale price goes directly to the foreigner. This includes any profit accrued as a result of the property increasing in value. This issue should be detailed carefully in any company and/or sales documentation.
This method allows foreign nationals to purchase real property and register the Title Deed in the name of a Cambodian citizen. The foreigner and the Cambodian then enter into a long-term rental agreement by which the Cambodian citizen leases the property back to the foreigner. Lease periods can last up to 99 years.
The problem with this method, and why it has few takers, is the psychological attachment to freehold ‘ownership’. Most foreign investors expect full ‘ownership’ of something they buy. The principal of renting back property that has already been purchased is an anathema to most foreigners.
However, correct drafting of the terms of the property holding and lease arrangements make this a reasonably secure method of controlling real property in Cambodia. Under this method, the foreigner may sell the property at any time and keep 100% of the revenue from the sale. The Cambodian citizen is not permitted to disagree with or obstruct the sale. The foreigner retains the original copy of the new Title Deed as a security precaution: sale of real property is impossible without the original copy of the Title Deed.
Additional Note: Option 2
Though the foreigner can sell the property at any time, the Cambodian citizen’s signature or thumbprint is generally required before any sale can take place. A good working relationship between both parties is therefore very important.
Foreign nationals have rights, under the Kingdom’s Statutes, to choose a Cambodian in whose name their Title Deed is registered. That is, a foreign national can purchase property and register the purchased property in the name of the Cambodian citizen (see Additional Note below).
Once the Title Deed is transferred to the Cambodian citizen, the foreigner retains possession of the new Title Deed. This is a security precaution that protects the foreigner’s interests by preventing the Cambodian citizen selling the land or property: sales are impossible without the Title Deed. Transferring the Cambodian’s rights to the foreigner via a Mortgage or Lease Agreement provides additional security for the foreigner’s investment.
Copies of the Title Deed and any Mortgage or Lease Agreements must be registered with the Department of Provincial Land Management, Urban Planning and Construction, as well as the appropriate District and central government departments that handle land registry. Most importantly, a copy of the Land Title and any Mortgage or Lease Agreements must be lodged with the Cadastral Land Registry Office.
The Cambodian citizen in whose name the Title is registered does not need to be resident in Cambodia. For example, the Title can be registered with a Cambodian citizen living in the USA or Australia. The Cambodian citizen must be able to prove Cambodian nationality.
Foreign buyers who are married to a Cambodian national can register real property using the name of their wife/husband on the Title Deed. It is also possible for a foreign national married to a Cambodian citizen and resident in the country for a long period to apply for Cambodian citizenship. In the event of citizenship being granted, Cambodian Law holds that land can be registered in the names of both parties. Neither partner can subsequently sell the land or property without mutual agreement.
In the event of divorce or separation, division of the land or property is dependent on the conditions under which divorce or separation takes place, and the decision of any court ruling or arbitration relating to the divorce.
A foreigner may be granted honourary Cambodian citizenship if he or she donates a significant sum of money in excess start from $57,000 to $70,000 to the Royal Government of Cambodia for the purposes of benefiting the people of Cambodia. Foreigners who have made a special impact or rendered exceptional help to the Kingdom may also be granted this honour in recognition of their expertise or altruism.
One consequence of being granted honourary citizenship is that it becomes possible for a foreign national to acquire a 100% right of ownership over real property purchased within the Kingdom. This arrangement is recognized by the Ministry of Land Management, Urban Planning and Construction for the Kingdom of Cambodia, and by the Royal Government.
Honourary citizenship is recognized by the Royal Government of Cambodia as a legitimate means of purchasing real property within the Kingdom but it does not affect the foreigner’s original nationality or citizenship in any way.
C-A-R-E is committed to providing the highest degree of security to its clients. Should any client wish to seek expert, independent legal advice, C-A-R-E can direct him or her to a firm that specializes in Cambodian Land Law, and in the preparation of land purchasing and ownership documentation. As law firms within the Kingdom are not allowed to promote their services through a third party, this information is only available on request.
- Providing legal advice on local laws
- Advice on project and financing documentation
- Obtaining business and project licenses
- Drafting joint venture agreements
- Incorporation and registration of companies
- Assistance with the legal aspects of financing and banking
- Advice on labour law and employment contracts
- Advice on the ownership, lease, titling and registration of land
- Registration and protection of intellectual property
- Corporate governance
- Dispute resolution
This website is designed to provide general information to overseas investors seeking to invest in Cambodian real estate, and to display a selection of the real estate available. It does not purport to provide legal advice. Legal advice should be obtained separately from a reputable and qualified legal specialist or law firm.