Real Estate Purchase Process in Cambodia: Foreigners cannot take land in Cambodia under Article 44 of the Constitution. Nevertheless, foreigners can establish land control in four ways:
- Land can be purchased through a local company.
- Land can be given on lease.
- The route, actively encouraged by the government to obtain Cambodian citizenship, gives the right to buy land.
- The land is sometimes purchased through a Cambodian nominee, but it has been decided to be against the constitution and is unsafe.
What is the Real Estate Purchase Process in Cambodia?
The 4 ways of establishing control overland
1. Buying land through a locally incorporated company
Foreigners often own land through a company in Cambodia. This structure provides the least amount of risk for a foreign investor, who may be an individual or a legal person.
More than one land can be occupied. But setting up a landholding company is expensive, and has a high cost of maintenance, and taxes on rental income are significantly higher.
The applicable law is the Law on Investment of the Kingdom of Cambodia, stating that the land can be directly owned by legal entities with more than 51% equity capital, either by natural persons or by legal entities holding Cambodian citizenship.
There are 3 layers of security in the structure of a landholding company:
- Different classes of shares. Cambodians must own 51% of the land owned but usually have separate rights with 2 classes of shares, one class held by a foreign investor, and one by local investors.For example, Cambodian entities or individuals may have fewer rights to transfer shares and designate directors, and a 2 / 3rds majority may be required for the decision of the company.
- Minority Control Document. A series of private agreements are usually drawn up by which Cambodian shareholders hold foreign exclusive rights – ie. A permanent majority on the board, varying powers of attorney, or a blank shareholder transfer form.
- Conservation of land. The landholding company often registers a mortgage on the land, meaning that the land cannot be transferred without the consent of the foreigner.
The result is not 100% bulletproof – the main risk is always Cambodian companionship. Because Cambodian courts are corrupt and decisions are usually bought, the buyer must work hard on the partner so that the possibility of a future issue is minimized that will reach the courts.
The following are the requirements to form a company:
- Deposit the required starting capital at any authorized bank. The bank will then issue a certificate of deposit.
- Check the uniqueness of the company name in the Ministry of Commerce. This process costs about $ 10 and takes five days to complete.
- Companies are required to have a company seal. These are usually made by the Ministry of Commerce, but the company can do it elsewhere. The seal costs around US $ 15.
A summary of company organization documents, such as legislation, memorandum, and articles of association, should be published in a recognized public newspaper. It should include the following:
- Company’s name
- Company form
- Summary of business objectives
- Office address
- Company tenure
- Total capital in cash
2. Place where the company has to be registered
The publication will cost around $ 42 and take seven days to release. To apply for registration, at least two copies of the approval of the newspaper and application documents must be secured.
Enrollment in business operations is required within one month of the commencement of business operations and/or within 30 days. The following documents have to be submitted to the Registrar in the Ministry of Commerce:
- Copies of the registration application
- Memorandum and Articles of Association (2 copies)
- Description of conformity (2 copies)
- Application for printing in the approved newspaper (2 copies)
- Copies of identity cards or passports of directors and shareholders (2 copies)
- Pictures of directors and shareholders (2 copies)
- Declaration of non-conviction of directors (2 copies)
- Share Contribution Decision (2 copies)
3. Taking control of land through the lease
Long-term contracts are a different common way for immigrants to manage land in Cambodia. For example, the super-luxurious Phnom Penh Raffles Le Royal Hotel is held on a long-term lease.
A long-term lease reduces all necessary rights for the development of the land. It is a much simpler structure, but less secure than a company structure.
There is no maximum period for which land can be leased from a private owner – this period in land law is indefinite. The lease usually lasts 50 years, 70 years, or 99 years. Leases above 15 years of age should be registered with the Land Office. On state land, the maximum is 40 years, with the possibility of expansion.
A background check on the owner is required, as is the case with the landholding company structure. Greedily leased, politically well-connected owners can be disastrous.
4. Safeguards usually include a lease contract:
Disputes outside of Cambodia are often kept by contract, e.g. in Singapore. It is less effective than is widely believed, as many land disputes do not involve disputes on the contract itself, but on other matters.
Also, Cambodian courts often refuse to identify foreign arbitration or to resettle issues already decided.
The plaque is often required to obtain the lessee’s permission to sell to the owner. Or prohibits the owner from selling, until the new owner recognizes the lease.
Also, the block sale notice ‘may be registered with the land office, which directs the office not to sell the land without the permission of the lease owners.
Buying land by obtaining Cambodian citizenship
Taking Cambodian citizenship is one way to get the right to buy land, which the government is encouraging. Citizenship applications will be considered if significant investment is being made in Cambodia. It is important to ensure that the Ministry of the Interior, the Council of Ministers, and the President all agree to grant citizenship.
Buying land through a nominee structure
Often used by investors because it is simple and inexpensive, the nominee structure ignores the constitutional prohibition on the direct ownership of property by foreigners and is illegal and strongly discouraged by all land lawyers.
