Cambodia enacted its current Land Law in 2001, establishing a national immoveable property registration system. Under this system, registration of title on the national register is conclusive evidence of ownership, and all transfers of land must be registered in order for ownership to pass. The system is similar to the Torrens titling system used in Australia, being a title by registration system rather than a recordation system, such as is used in the United States and in Japan. There is no need to trace the title history in order to prove valid ownership.
- What are the categories of land rights?
Private ownership of land is permissible for all types of land. At present, three main types of land tenure exist:
- Freehold: This may be referred to as fee simple, unrestricted title ownership over land;
- Leasehold: An long term leasehold of a term of 15 years or greater creates “in rem” rights. The new Civil Code provides for a maximum lease period, for all leases entered into after 21 December 2011, of fifty (50) years, with a right of renewal for a further fifty (50) year period. The terms of leases entered into prior to 21 December 2011 are protected, save that any terms above ninety-nine (99) years will be reduced to ninety-nine (99) years; and
- Concessions: A concession is a form of Conditional lease, granted by the Government, over state private land. Concessions are used for specific development purposes with the land subject to specific conditions of use. Concessions are used primarily for agricultural projects, island development and mineral exploitation. The Royal Government of Cambodia temporarily suspended the grant of new land concessions on 7 May 2012.
- Are there any laws restricting the ownership of any interest in land by foreign persons or entities?
There is a general prohibition on foreign ownership of land. This prohibition is in the Constitution and the Land Law. There are no exceptions.
The following options are available to foreigners who wish to obtain rights over land in Cambodia:
- Strata Title: Foreigners may acquire title to apartments registered as qualifying condominiums from the first floor up to the seventy percent of the total space of private parts.
- Short or Long-term Lease: There are no restrictions on foreigners taking leases (whether short or long-term) of private or State private land.
- Land Concession: Foreigners have been permitted to take concessions of state private land (subject to the approval, on a case by case basis, of the Royal Government of Cambodia). However, the Royal Government of Cambodia temporarily suspended the grant of new land concessions on 7 May 2012.
- Citizenship: It is possible for foreigners to acquire Cambodian citizenship (and with it the right to purchase land) under the Law on Nationality. Note that it is a time consuming process.
- Cambodian Landholding Company: A Cambodian company can maintain Cambodian nationality and satisfy the requirements for owning land in Cambodia as long as a majority of its shares 51% (fifty-one percent) or more of its shares are held by Cambodian nationals. The foreign shareholder(s) in the company can achieve some degree of control over the company by implementing various protective measures.
- Khmer (Cambodian) Nominee: Some foreign persons may elect to register the title deed directly in the name of a trusted Cambodian individual person to act as nominee. This option must be exercised with caution, however, as risks may arise with in the event of the death or disappearance of the Khmer nominee, or where there is a breakdown in the relationship between the parties.
- Citizenship: It is possible for foreigners to acquire Cambodian citizenship (and with it the right to purchase land) under the Law on Nationality. Note that it is a time consuming process.
- What instruments evidence ownership of real property?
Because private ownership was not possible before the enactment of the Land Law, the national land registration process was started only after 2001. In effect, many properties remain unregistered. Such unregistered land is usually held under documents such as an application for land occupation, a letter of transfer acknowledged by local authorities, or even a simple and private sale-purchase agreement. There are two documents evidencing land ownership in Cambodia – “soft title” and “hard title”.
- What is a “soft title”?
Such documents evidencing land ownership but not being registered with the national-level cadastral registry are normally issued by or recognized by the local level authorities and are commonly referred to in Cambodia as “soft title”.
When land is under a soft title, there is a risk that there could be competing claims to the title since it is not confirmed and recorded at the national level registry. In addition, other problems associated with a soft title may arise, which can lead to disputes, including duplicate soft title documents issued to different applicants, issuance of a soft title document against the existence of a hard title certificate, issuance of a duplicate soft title while the property has been encumbered, or issuance of a soft title over State-owned land or public property such as a road.
- What is a “hard title”?
“Hard title” refers to three different types of land title certificates which are registered with the national Cadastral: Certificate of Land Use and Occupation Rights (known to many people as “Chicken Feather Title” due to a feather mark on the title documents), Certificate of Immovable Property Possession, and Certificate of Immovable Property Ownership. Of these three, the first two are registered sporadically (for a specific land plot requested by the owners to be issued with title) and indicates possessory status; whereas the Certificate of Immovable Property Ownership is registered systematically in relation to the adjoining parcels, is the strongest and definite one and indicates full ownership status. The Certificate of Land Use and Occupation Rights and Certificate of Immovable Property Possession remain theoretically contestable, but in fact these are also registered with the national-level cadastral registry, and there is rarely a dispute with respect to ownership of land that has been issued with one of these forms of title.
- Can a “soft title” be registered?
There are two ways that a “soft title” may be registered at the national level and thereby converted into a “hard title” in Cambodia:
- Systematic Registration: being a Government-initiated process conducted on a rolling village-by village basis (i.e. soft titles or sporadic titles are registered systematically in relation to adjoining land parcels); and
- Sporadic Registration: being a type of registration conducted on a specific plot of land, on a case by case basis. This form of registration takes account of the slow rollout of the systematic registration process, and allows the holders of “soft titles” and “chicken feather titles” to obtain greater certainty regarding the legal status of their land.
Note that sporadically registered title may be converted to full ownership title once the systematic registration is conducted.
- How reliable is the register?
The register is conclusive evidence of transfer and ownership of immoveable property. However, there are still many land transactions which go unregistered. The law favors registered rights, but the registration system is fairly new and it is probable that courts would still recognize an unregistered right so long as the subject land is not yet registered.
- Is the register public? What is the process for dealing with queries arising on a registration? Are the land and buildings registers held in paper or electronic form?
The register is public. However, in order to search the registry it is usually necessary to provide a copy of the title deed for the subject land in order to confirm its registration/ legal status.
All queries go to the Cadastral office for nationally registered land. For unregistered land the queries are made to the commune and district land offices. Registers are kept in both paper and electronic format. Slowly, the system is becoming all-electronic, with paper print outs being made available.
- Is there a combined land and buildings registry?
There is only one registry and all buildings/ structures are registered under the land upon which they are located.
- Who may register a property transfer? How long does the registration process take?
Both parties to a transaction must thumb-print (in person before Cadastral officials) on any dealing instrument to be registered with the Cadastral. The transfer registration can take three (3) to six (6) weeks for the transfer process to be completed, depending on the location of the property.
In the case of companies, the local authorities will require a resolution and power of attorney from all shareholders granting power to a person authorized to thumb-print on behalf of the company – this authorized person is usually required to be a Cambodian citizen per customary practice. In the case of a married person, the spouse also needs to thumb-print on spousal declaration if the property is to be transferred to only a husband or wife, but not a couple, and for an unmarried person, a “declaration of single status” needs to be issued by the local authority and accompany the transfer documents.
Transfers of “soft” titles (which are only registered with local authorities) can be effected very quickly, often within one to two days. Both parties will be required to thumb-print the soft title transfer documentation before the relevant local authorities.
- Do taxes, assessments, duties, rates or other charges have to be paid prior to acceptance for registration of a document?
For transfer applications, a 4% (four percent) transfer tax of the Government-assessed value of the land has to be paid as well as any unused land tax (charged on all unused portions of land over a standard size residential block) and any unpaid annual property tax before the authorities will issue the updated title deed. At law, the transfer tax is for the account of the buyer, but in practice it is commonly paid by the seller (who often uses the deposit monies received from the buyer for this purpose).
Transfer tax is often not collected in respect of the transfer of soft titles.
- Is all land surveyed?
No. As a result, a common problem is overlapping boundaries. Previously, there was no technically reliable way of demarcating boundaries and overlaps can be substantial in respect of soft titles. Currently, surveys are conducted on all land registered at the national Cadastre. Official computerized maps are available of all areas already subject to the government systematic registration program.
- What are typical leasing arrangements?
Usually leases are negotiated on a case by case basis in accordance with the format required by the lessor. There is currently no common/standard lease arrangement. Leases of between fifteen (15) to fifty (50) years (a long-term, lease) form a right “in rem” and burden any incoming buyer of the property and may be registered on the hard Title Deed. In addition, a Long-Term Lease Certificate will be issued confirming the leasehold. The document takes the same form as a Title Deed and is designed to allow leases to be used as collateral for loans.
- What is the current taxation system in Cambodia with regard to property? What unpaid taxes, if any, may become an encumbrance on the title to property?
There is an annual property tax of 0.1% (one-tenth of one percent) of 80% (eighty percent) of the “Immovable Property Value”, to be determined by the “Immovable Property Assessment Committee”. The taxable amount shall be the Immovable Property Value times 80% (eighty percent) minus 100 million Cambodian Riel (approximately US$ 25,000 at the current exchange rate).
At this time the only taxes which become an encumbrance on a title are unused land taxes (only applicable on undeveloped properties) and the above mentioned property tax.
At the current time property taxes are being introduced on a phased basis, and accordingly not all regions are yet subject to property tax.
- Is there a condominium law? Can the condominium title be registered as real property?
Yes, the Law on Providing Foreigners with Ownership Rights in Co-Owned Buildings (promulgated 24 May 2010) permits foreigners to own certain qualifying condominiums provided that:
- the subject building has been approved for “strata” titles;
- the subject condominium is located above the ground floor;
- foreign ownership does not exceed 70% (seventy percent) of the total floor space of the building; and
- there is a property management agreement in place amongst the co-owners.
It is predominately newly constructed apartment buildings that are approved for “strata” titles. It is technically possible to convert the title of an older, existing building into strata titles, but to our knowledge, this has not yet been done.
A separate title is issued for each qualifying condominium unit.
- What law and practices are there allowing the state to take property for public use?
The Royal Government of Cambodia may expropriate private land if it considers it to be in the public/national interest. The Law of Expropriation provides for compensation to be paid to affected landowners.
- Are there standard loan and mortgage contracts typically used in Cambodia?
There is no “typical” mortgage agreement. These differ according to the lender. The mortgage instrument (now called a hypothec) to be registered with the Cadastral authorities is, however, a standard government form in Khmer.
Under the Civil Code, security over immoveable property may be taken by way of a hypothec. In practice it is common that lending institutions demand the possession of title deeds from mortgagees before extending loans. This restricts the owners of the mortgaged properties from entering into other mortgage agreements with other creditors.
- What legal process would the Lender be required to follow when a debtor has defaulted on a mortgage?
The lender can file a civil lawsuit in the case of payment default by the mortgagor. If the lawsuit is successful, a court may order a sale of the mortgaged property by auction or tender and the lender can claim repayment of the debt from the sale proceeds.