The land titling system in Cambodia must be understood in the context of Cambodia’s recent history, where private ownership of property and land was abolished in 1975 and not restored until the 1980’s. A significant percentage of land in Cambodia is not yet registered with the national land office and has no official land title certificate which clearly identifies land ownership. The modern land title system was established in 2001 under the Land Law (the “Land Law”). Titles that existed prior to 1979 have been cancelled and are not recognized. Currently, there are essentially two types of documents which evidence the right to possess or own land in Cambodia: (1) a Letter of Possessory Right, commonly referred to as a “Soft Title”, and (2) a Certificate of Title issued by the Ministry of Land Management, Urban Planning, Construction and Cadastre (the “Land Office”), commonly referred to as a “Hard Title”.
A Letter of Possessory Rights refers to the right of “possession” of property. A person is in “possession” of property when s/he physically occupies the property but is not the owner of the land as recognized by the authority. The Letter of Possessory Right is typically issued by the Sangkat (commune) or Khan (village) chief and is not registered at the Land Office. It is not a secure method of land ownership because of the lack of registration. Where a person has peaceful and uncontested possession of land for at least 5 years prior to the Land Law, that person can request a title of ownership, i.e., a Certificate of Title, from the Land Office. (Article 30, Land Law). Article 39 of the Land Law grants a possessor waiting to become a full owner the right in rem over the immovable property. A right in rem permits the property to be exchanged and transferred. Before being recognized upon the establishment of a Certificate of Title at the Land Office, the land possession can be transferred upon the execution of a Letter of Possessory Rights at the relevant local authority (Sangkat or Khan). The Letter of Possessory Rights is only evidence of possession and is not itself title ownership and is not indisputable. (Article 40, Land Law).
A Certificate of Title refers to an ownership right, which 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, Article 85-88, Land Law) with regard to a property. Ownership is the right to manage absolutely and solely any property, provided that it is not prohibited by law. As mentioned in the paragraph above, a Certificate of Title is issued by the Land Office and is registered in the official records of the Land Office registry. A Certificate of Title is acquired either through the procedure of a holder of a Letter of Possessory Rights requesting a title of ownership from the Land Office, or through a transfer of an existing Certificate of Title, which transfer must be registered at the Land Office in the name of the acquiring owner to be enforceable against third parties. (Article 65, Land Law).
Under the system of titling in Cambodia, the original Certificate of Title, once issued by the Land Office, is kept in the possession of the owner of the property. When a transfer, lease or mortgage is registered, it is notated directly on the Certificate of Title as well as in the registry of the Land Office.
Procedures for the registration of new Certificates of Title have been implemented since 2002. To date, new titles are not available for all locations and new Certificates of Title may contain discrepancies or mistakes with respect to the location of the re-titled lands or to their dimensions due to the procedures that were used during the survey of the land.
There are three levels of land registry which range from the highest level (being the National Level) to the lowest level as follows: (i) The Department General of Cadastre and Geography located in Phnom Penh; (ii) the Provincial/Municipal Department of Land Management, Urban Planning Construction and Cadastre located at each province/municipality and; (iii) the District/Khan Land Management Urban Planning Construction and Cadastre located at each district/khan.
The ownership title (also called hard title) is issued by the provincial Land Office (Koh Kong Province Land Office because the land is located in Koh Kong Province). The provincial Land Office is responsible for conducting the surveys in coordination with other local authorities, maintaining the Land Register, updating the Register under the supervision of the General Department of Cadastre and Geography (Article 226 of the 2001 Land Law).
Once the ownership title has been issued by the provincial Land Office, the original title is the sent to the General Department of Cadastre and Geography in Phnom Penh for verification. The General Department verifies that all the procedure has been completed and returns the title to the provincial Land Office. There is no specific mention from the General Department on the title that this process has been completed.
Once the hard title has been obtained, and ownership of the land is properly registered, the Government has only limited rights to claim back the property or a part of the property. Land ownership is protected by the Constitution and the 2001 Land Law. Under Article 9 of the Law on Investment, the Royal Government “shall not undertake a nationalization policy, which shall adversely affect private properties of investors in the Kingdom of Cambodia.” However, the Cambodian Government is entitled to expropriate privately held land only if such expropriation is in the “public interest” and if “fair and just compensation” is given to the owner in advance (Article 5, 2001 Land Law).
The only way to legal secure loans for land is through registration of the type of security chosen with the relevant Land Office. Only land which has effective legal title, therefore can be secured in registered form (either in the form of a mortgage, gage or antichrèse). There are, however, many land transactions in Cambodia, where the land subject of sale and purchase is not properly titled. Instead, there is a certificate from the Sangkat level (smaller, more localized form of government office) stating the right of possession. Additionally, there are sometimes land transactions involving state land that is subject of either a concession or long term lease.
Involvement in these types of land-holding arrangements, although common, should either be avoided by creditors, or should be entered into carefully with additional security over the loan being taken either offshore, or otherwise because it is uncertain how security over such land can be effectively registered in Cambodia.
Cambodia is currently undergoing a World Bank sponsored program called the Systematic Re-titling Program which anyone interested in land transactions in Cambodia should be aware of. It is intended that this program will eventually be implemented throughout the entire country, but at the moment is being done on a Sangkat-by-Sangkat basis. The program involves the re-measuring and re-titling properties in Cambodia and computerizing the records regarding land titles over each property in the Sangkat.
Currently, the Land Office of a particular Sangkat where the re-titling is taking place will not allow the legal transfer of title in a Sangkat, until all properties in that Sangkat have been re-titled and recorded. It is therefore necessary for all parties to ensure that the land subject of a Sale and Purchase Agreement is not located in a Sangkat which is undergoing the systematic re-titling program, because title will not be able to be transferred until the re-titling is complete for that Sangkat, and therefore, security over the land cannot be registered.