Since its promulgation in 2001, the Land Law has been the primary source of law in relation to immovable property, covering issues such as ownership, transfers, mortgages and leases. It has been supplemented, in part, by Sub-Decree 146 on Economic Land Concessions and Sub-Decree 114 on the Mortgage and Transfer of the Rights over a Long-Term Lease or an Economic Land Concession.
The new Civil Code contains many provisions which may either supplement or abrogate the provisions of the Land Law, although such specific applicable provisions will remain unknown until implementing regulations are effective.
The section of the Civil Code on real rights, starting with Article 119, introduces the concept of a “thing,” or “res,” as a corporeal object which is either immovable or movable. An immovable object is defined as land or anything immovably affixed to land including a building, crops and plants. A movable object is any thing that is not immovable. Generally, anything immovably affixed to land would not be subject to rights separate from the land, except where those immovable things have been affixed by a holder of a right to use the land.
A “real right” is defined as the right to directly control a thing and which can be asserted against all persons. The Civil Code establishes four kinds of real rights, including ownership; possession; usufructuary real rights which include perpetual leases, usufruct, rights of use or residence and servitude; and security rights which include rights of retention, preferential rights, pledges, hypothecations and transfers of title for security purposes. Generally, to assert a real right against third parties, the right must be registered per the protocols established for the registration of that right. For example, to assert ownership rights over land against a third party, the transfer of the land to a new owner must be registered with the relevant land office.
Under the 2001 Land Law, immovable property is divided into three categories:
(i) public ownership consisting of immovable property publicly or privately owned by the State;
(ii) private ownership consisting of immovable property owned by a private individual or a private legal entity; and
(iii) collective ownership consisting of monastery immovable property and immovable property of indigenous community.
Ownership of land extends to the areas both above and below the land, subject to certain other laws and regulations. For example, a landowner cannot assert ownership over cultural artifacts or minerals found on the land as those are subject to ownership by the state or via mining licenses. An owner of land does have a right against nuisance by a neighbor and can demand compensation for severe harm resulting from a nuisance. As also provided in the Land Law, an owner of land with no access to a public road is entitled to public road access via a neighbor’s land in exchange for compensation. However, such access must be the most direct route causing the least burden to the neighbor.
Where there is a flow of water across land, the Civil Code establishes obligations and rights attaching to neighbors of the land to preserve and repair the flow of water, determine usage rights for agricultural irrigation and address water drainage. It should be noted where land is enlarged on a riverbank due to alluvial deposits over time, the benefiting owner is not required to compensate the sacrificing owner whose land is diminished as a result. However, if the deposit of land is due to a sudden force, the owner of the lost land may claim compensation within one year of the event.
Additionally, islands or alluvial beds formed in the middle of navigable rivers become the property of the state. In the case of non-navigable rivers, an island or alluvial bed forming on one bank belongs to the owner of that bank but if it forms in the middle, it is shared by the owners of both banks.
The Land Law sets out a number of rights of ownership acquisition over immovable property in Cambodia. These include:
Ownership is the most secure and absolute right a person can acquire over property. An owner owns a series of interests or rights (i.e., the right to enter, use, stay; the right to exclude, to alienate, to transfer, to make alterations) with regard to the property. Ownership is the right to manage absolutely and solely any property, provided that such actions are not otherwise prohibited by law. This right is demonstrated by a “Title Certificate”. Although official title certificates are currently available, not all landowners have obtained such a title certificate, especially in the areas outside Phnom Penh, Sihanoukville, and Siem Reap, namely because of costs associates with obtaining title and transferring registered title (4% transfer tax based on value of the land).
A person is in “possession” of property when he physically occupies the property but is not the owner of the land as recognized by the relevant land office. The right of possession is recognized instead, by the local Sangkat authorities, however such right of possession are inferior to registered title holder interests over land. A possession right as recognized by the local Sangkat authorities may be converted to registered title after five years of open, uncontested possession of the land. Furthermore, Article 39 of the 2001 Land Law grants a possessor waiting to become, as so long as the land is private property and not state property, a full owner the right in rem over the immovable property after converting the right of possession to a registered title with the land office. A right in rem permits the property to be exchanged and transferred.
Concessions enable individuals and entities, as a concessionaire, to occupy and use State Private immovable property for a particular approved purpose. The 2001 Land Law recognizes three kinds of concessions:
- economic concession for industrial and/or agricultural use;
- social concession for residential and subsistence use; and
- concession for use, management and exploitation of land for purposes such as mining, airports, ports, fishing, and industrial development.
A lease is a contract by which the owner of immovable property tenders possession of such a property to another for temporary use with regular payment of rent proportional to the time of use. In many cases, especially for longer term leases, the periodic payment of rent may be represented by one or several substantial up-front payments at the beginning of the lease term.
The 2001 Land Law allows for two types of leases:
- limited term lease which includes short-term and long-term leases with possible extension. The duration of a long-term lease must be at least 15 years and can be for up to a period of 99 years, with possible extension. A long-term lease creates a right in rem on the land, meaning that the right attaches to the land itself. The in rem right favours the lessee as it grants more security than a personal right (i.e., that of a short-term lease). Hence, the lease can be pledged as security for financing and assigned for consideration or transferred by succession.; and
- unlimited term lease. The law does not elaborate on this other than to state that the term is of unspecified duration.
Long-term leases may be registered on land title certificate through the relevant land office in order to provide notice to any third party purchasers and to protect the lessee’s in rem right interest in the property for the term of the lease, as well as providing the right to register a pledge of the lease on the long term lease registration certificate. (Sub-Decree 114 on the Mortgage and Transfer of Rights Over a Long Term Lease or an Economic Land Concession).
As in many developing countries, foreign ownership of land in Cambodia is prohibited. Cambodia restricts ownership of land to Cambodian citizens and Cambodian legal entities. A legal entity is considered to be a Cambodian legal entity when at least fifty-one percent (51%) of its shares are owned by Cambodian citizen(s) or by Cambodian legal entities. (Article 13, Law on Commercial Enterprise). Non-Cambodian legal entities are expressly prohibited from land ownership under Article 44 of the 1993 Constitution, Article 8 of the 2001 Land Law, Article 16 of the 1994 Investment Law and Article 16 of the 2003 Amended Law on Investment. Furthermore, Sub-Decree № 111 on “The Implementation of the Amendment to the Law on Investment” (2005) (“Sub-Decree 111”) forbids the use of nominees in order to avoid the restrictions or prohibitions that may apply to a foreign individual or entity.
The certificate of title (hard title) issued by the Provincial Land Office is the only real certificate of ownership and grants indisputable proof of freehold ownership. This ownership title can be transferred to another Cambodian person (individual or juristic person). The validity of the title can be ascertained through a title search at the Provincial Land Office. In order to conduct the title search, typically a copy of the title must be obtained and then compared to the records at the Provincial Land Office.
The possession title (also called soft title) certifies that the occupant has the right to use the land. This soft title is issued by the Commune. The possession title is an evidence of possession, but not itself a title of ownership and is not indisputable (Article 40 of the Land Law). The possession title can be transferred to another Cambodian person. The possession title may be converted into a certificate of title granted by the provincial Land Office under certain conditions. To validate a soft title, inquiry must be made at the Commune by interviewing the Commune official and checking land records at the Commune office.
A person can acquire ownership of immovable property through peaceful and open possession of the immovable property for a period of 20 years with the intention of ownership. Ownership of immovable property can be acquired after 10 years if the peaceful and open possession of the immovable property is commenced in good faith and without negligence. This method of acquisition is known as prescriptive acquisition and can be interrupted by loss of possession, the filing of a lawsuit or similar exercise of legal rights by any other person with a claim to the property, an injunction or an acknowledgement of interruption. In certain cases, such as temporary loss of possession for less than one year, the period of prescription is deemed to continue uninterrupted upon the person regaining possession. Property belonging to the state cannot be acquired via prescriptive acquisition.
In the case of minors and persons under guardianship without legal representation, the period of prescriptive acquisition is not deemed complete until six months after the individual either attains capacity or legal representation. Prescriptive acquisition applies to perpetual leases (leases with at least a 15 year term), usufruct, rights of use or residence, servitude, leaseholds or pledges.
Co-ownershipCo-ownership is defined as ownership of a single thing by multiple persons. Each owner’s interest is limited to their own share. A co-owner has the right to pledge, transfer or use its own share, but cannot dispose of or significantly alter the co-owned thing without the consent of the other co-owner(s). Co-owners must share expenses in proportion to their shares. If a co-owner renounces its share, or dies without an heir, its portion devolves to the other co-owners. A co-owner may demand partition or sale of a co-owned thing through a court action.
Indivisible Joint Ownership
Indivisible joint ownership occurs when there is a partition, such as a wall, moat or hedge distinguishing ownership of adjacent land or buildings and both parties jointly own the partition.
While the joint owners have a shared duty to preserve, maintain and repair the jointly owned partition they also share a right of use. If one party desires to increase the height of, or widen, the partition, that party must bear the cost of the improvement unless the other party wishes to share the benefit, in which case both parties must share the cost of the improvement. The same rules apply to an enclosure separating parcels of land.
Possessory Rights/Flawed possession
A person can possess a thing either directly, or indirectly, through another person. Assignment of possession can be accomplished by an actual delivery of possession or an agreement to assign possession. Possession is deemed flawed when one in possession knows he or she has no right to possess the thing, is unaware one has no right to possession through one’s own negligence, has acquired possession through violence or possesses the thing but conceals the possession. If a possessor’s predecessor had flawed possession then the successor’s possession would also be considered flawed. As a general legal concept, one can only get what the other has a right to give.
Protection of Possession
A possessor may demand the return of a dispossessed thing, removal of a disturbance or prevention of a disturbance. An action for the return of a thing must be brought within one year of the dispossession of the thing. Similarly, an action for removal of a disturbance, or damages resulting therefrom, must be brought within one year of the termination of the disturbance.
The Civil Code provides special protection to persons who possess immovable property and have a certificate of occupancy but have not registered their right because the cadastral survey and register have not yet been prepared. Similarly, those who have possessed an immovable property for five years prior to the promulgation of the Land Law, and have not yet registered their occupancy, can assert their right of possession against a third party.
Long Term (Perpetual) Leases[v]A perpetual lease is a long-term lease, in writing, with a term of not less than fifteen years. A perpetual lease can only be asserted against third parties if it has been registered. A lessee may assert its registered perpetual lease against a new owner of the immovable property. In the case of an unregistered perpetual lease, or a lease with a term less than fifteen years, a lessee who occupies the immovable property can assert a right of occupancy against a new owner during the first fifteen years of the lease.
Under the current Land Law, long-term leases frequently have a term of up to 99 years with a right of renewal. The Civil Code limits the duration of leases to fifty years with a right to one renewal not exceeding an additional fifty years from the date of renewal. The Civil Code also provides for the right to shorten a lease with a term longer than fifty years to a term of fifty years. It is unclear whether this right will be applied retroactively to leases existing before the implementation of the Civil Code.
If a perpetual lease does not specify the time for payment of rent, payment is due annually at the end of the year or at the end of the harvest season. Furthermore, if the rental rate is no longer appropriate due to a change of circumstances, either party may request a court modify the rental rate to an appropriate amount. Additionally, perpetual leases may be assigned, sub-let and inherited.
Upon termination of a perpetual lease, the lessor cannot demand the lessee return or restore the immovable property to its original condition unless the lessee has destroyed the immovable property or fundamentally changed its nature. Furthermore, the lessor will acquire ownership of any improvements and structures installed on the immovable property by the lessee without any requirement to compensate the lessee, unless there is a written agreement which states otherwise.
A usufruct, either contractual or statutory, is the right to use and enjoy the profits of an immoveable property of another person for a term that may not exceed the life of the usufructuary (the beneficiary of the usufruct).
A usufruct may be written or unwritten. In the case of an unwritten usufruct, the owner of the immovable may terminate the usufruct at any time by giving a written notice to the usufructuary. If the notice does not specify the time of termination, or the time specified is less than the statutory period below, the usufruct shall be concluded three months from the date of the termination notice in the case of a building and one year in the case of land. If the land is cultivated, the notice of termination must be given after the end of the harvest season.
A usufruct may only be asserted against third parties if it is registered. Additionally, a usufruct may not be leased by the owner of the usufruct to another person for longer than three years and may not be renewed for a term exceeding three years. The rights and obligations of the owner of the usufruct to demand return, and to remove or prevent disturbance are the same as the owner’s rights and obligations. During the term of the usufruct, the usufructuary has an obligation to repair and maintain the immovable property subject to the usufruct, except for major repairs.
Right of Use and Right of ResidenceA right of use is the right to collect the fruits of an immovable property and a right of residence is the right to occupy a part of a building, both to the extent of the needs of the rights holder and his/her family. These rights can be formed by an agreement between parties or by provisions of law, with provisions of law taking precedence over an agreement.
Unwritten rights of use or residence can be extinguished at any time by the owner of the immovable property. To assert a right of use or residence against a third party, the holder of the right must actually use the right. If immovable property is transferred, the holder of a right of use or residence who actually exercises such a right can assert that right of use or residence against the new owner. If no term is provided in the agreement for the right of use or residence, the right terminates upon the death of the holder of the right. The holder of the right has the same rights and obligations as the owner to assert a demand to return, remove disturbances and prevent disturbances.
Easements[vi]An easement is the right to use the land of another for the benefit of one’s own land. The land used to benefit the other land is called the “servient land,” while the land benefitting from the use is called the “dominant land.” Easements may be written or unwritten. However, an unwritten easement may be extinguished by the owner of the servient land at any time. To assert an easement against third parties, the easement must be registered. An easement will pass with the ownership of the dominant land unless otherwise specified in writing. The owner of servient land cannot obstruct or change the easement without the consent the dominant land’s owner. An easement must be used within the scope of the agreement under which it is established. A holder of an easement has the same rights and obligations as the owner to demand return, and to remove or prevent a disturbance. If no term is stated in the agreement for the easement the owner of the servient land may apply to the court to have the easement extinguished.
An easement may be acquired by prescription when it is continuous and apparent. This means the easement is used without interruption, provides a benefit to the dominant land, creates a burden to the servient land and has an externally visible structure.
GiftsA Gift, whereby one party gives property to another, without payment or expectation of payment, and is accepted by the recipient, is subject to general transfer principles. For example, the gift of titled property can only be perfected by transfer of the title to the recipient of the gift. A Gift, not in writing, may be revoked unless it has already been given. After declaring the intention to make a gift, if the donor is reduced to a state where s/he cannot support herself or himself and her/his dependants, s/he can rescind the offer of the gift. If performance of the gift is complete, the rescission must occur within five years of the gift. Under the Civil Code, donors have no liability for defective gifts.
The subject of a lease may be movable or immovable property. In the case of leased immovable property occupied by a lessee, the lease may be asserted against a subsequent acquirer of any real right in the property by the lessee as long as the lessee continues to use and profit from the property. A lessee occupying leased immovable property may exercise the same rights as the owner in demanding the return of a dispossessed thing and removing and/or preventing disturbance.
A lease may be oral or written, but if oral it is deemed a lease without a defined term. Leases with a term of fifteen years or more are considered perpetual leases and governed by the provisions of the Civil Code relating to perpetual leases.
A lessee is entitled to use the leased property in a manner consistent with the contract, or the nature of the property, and has a duty to manage the property with the level of care of a prudent manager. A lessor has a duty to repair and that duty must not be obstructed by a lessee. However, if the lessor’s actions prevent the lessee from enjoying the lease, the lessee may demand a reduction in rent or termination of the lease.
If a lessee expends funds to improve the property, and the value of such improvement remains at the end of the lease, the lessee may demand reimbursement from the lessor for the expense, or any increase in value, at the lessor’s discretion, upon the termination of the lease.
A lessee cannot claim compensation for the unsuitable condition of the leased property if the lessee failed to inspect the property for suitability. However, if defects are hidden and unknown to the lessee, the lessee can demand repair or replacement of the property plus compensation, a retroactive reduction in rent or termination of the lease if the intent of the lease is frustrated. Such a demand must be made within one year of the date the lessee became aware, or should have become aware, of the defect.
Except for perpetual leases, a lessee cannot transfer its rights in a lease or sub-lease without the consent of the lessor. In the case of a sub-lease, the sub-lessee assumes the obligations of the lease directly with the lessor, but the lessor may still exercise rights against the original lessee. Additionally, if a lease fails to state a date for the payment of rent, rent must be paid at the end of the month in the case of movable property and buildings and at either the end of the year, or at the end of the harvest season if applicable, in the case of a lease for land.
Leases are deemed to automatically renew at the end of the term unless otherwise specified in writing, or a notice of termination is given at least three months prior to the end of the term in the case of a building or one year in the case of land. If a lease fails to specify a termination date, either party may terminate the lease at any time by giving notice. If the notice fails to specify a date of termination, the lease shall terminate after one day in the case of movable property, three months in the case of buildings and one year for a lease for land.
Upon the termination of a lease, the lessee must return the property to the lessor in its original condition except for normal wear from usage. Upon termination, a lessee may remove anything it attached to the property.
Preferential rights of creditors with respect to the satisfaction of claims against movable and immovable property are divided into general preferential rights and specific preferential rights. Specific preferential rights are preferential rights held by a creditor over specific property of a debtor and take priority over general preferential rights. A creditor will have preferential rights over the property of a debtor as to claims arising from expenses for common benefit with respect to the management of the asset on behalf of creditors, claims held by employees under a labor contract, funeral expenses of a deceased debtor, and supplies of daily necessities for the debtor. A creditor may also have a preferential right for claims over immovable property arising from preservation, construction and sale of the immovable property.