Cambodia enacted its current Land Law in 2001, establishing a national 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 in nature to the Torrens Title system used in Australia, being a Title by Registration system rather than a Recordation system, such as in the US and Japan. There is no need to trace title in order to prove valid ownership.
Currently much of the land is under “possession” status, a holdover from the former socialist system of land holding. For those with possession status, proving 5 years continuous possession is sufficient to convert this status to “ownership” status. This is achieved by undertaking “first time registration.” Once registered for the first time, title can be passed by having the Cadastral office amend the Register to replace the transferor’s name with the incoming transferee.
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: fee simple, unrestricted;
- Leasehold: long term leasehold (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 50 years, with a right of renewal for a further 50 year period. The terms of leases entered into prior to 21 December 2011 are protected, save that any terms above 99 years will be reduced to 99 years; and
- Concessions: conditional leases 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 want an interest in land in Cambodia:
- Khmer nominee: some clients elect to register the title deed directly in the name of a Cambodian nominee. This option can be problematic though in the event of the death or disappearance of the Khmer nominee, or where there is a breakdown in the relationship between the parties.
- Cambodian Landholding Company: with 51% shares held by Cambodian nominees (so as to satisfy the Khmer nationality requirements) and the foreigner investor owning 49%. The foreign shareholder(s) will however control the company, and therefore the land, by virtue of a range of protective measures.
- Strata Title: foreigners may acquire title to qualifying condominiums subject to certain conditions.
- 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), but note that it is a costly and 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. These parts of land are normally held under a variety of documentary forms, normally recognized by the local level authorities, ranging from an application for land occupation to a letter of transfer acknowledged by local authorities to even a simple and private salepurchase agreement. All of these are known as “soft title” documents, which are soft legally and physically (i.e. in terms of both the legality and the sheet of paper).
When a property is held under a soft title, there is a risk that there might be competing claims to 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 will potentially lead to disputes, including duplicates of 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’s property.
“Hard title” refers to three types of property title certificates which have been registered with the national Cadastral: Certificate of Land Use and Occupation Rights, Certificate of Immovable Property Possession, and Certificate of Immovable Property Ownership. Of the three, the first two are registered sporadically and indicate possessory status whereas the last one, which is registered systematically in relation to the adjoining parcels, is the strongest and definite one and indicates full ownership status. The first two types of hard title remain theoretically contestable, but in fact they are also registered with the national-level cadastral registry, and there has been hardly any case of dispute pertaining to their status.
There are two ways that a “soft title” may be registered (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 wing titles” to obtain greater certainty in respect of the legal status of their land.
Please 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 what is registered. However, there are currently many transactions conducted which go unregistered. The law favors registered rights, but the system is new and it is probable that the courts would recognize an unregistered right.
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 which confirmation of the status is being sought.
All queries go to the Cadastral office for nationally registered land. For unregistered land the queries are made to the local and district land offices. Registers are in both paper and electronic. Slowly, the system is becoming allelectronic, with paper print outs.
Is there a combined land and buildings registry?
There is only one register and all properties are registered by the land upon which they are located. Note however that there is a separate registrer for ownership of buildings, but to our knowledge it is not used.
Who may register a property transfer? How long does the registration process take?
Both parties to a transaction must sign (in person before Cadastral officials) on any dealing instrument to be registered with the Cadastral. The registration process can take 3 to 6 weeks for a transfer registration to be completed, depending on the location of the property.
In the case of companies, the local authorities require a resolution and power of attorney from all shareholders granting power to the signing member of the company. In the case of a married person, the spouse needs to also sign, and for an unmarried person, a “declaration of single status” needs to be signed.
Transfers of “soft” titles (which 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% 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) 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).
There is no transfer tax payable in respect of the transfer of soft titles.
Is all land surveyed?
No. As a result, a common problem is overlapping boundaries. There was no technically reliable way of demarcating boundaries in the old days, and the overlaps can be substantial in respect of soft titles. Surveys are however 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 between15 to 50 years form a right “in rem” and burden any incoming buyer of the property and may now be registered on the 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 a property tax of 0.1% (one tenth of a percent) of 80% 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% minus 100,000,000 Riels (approximately US$ 25,000).
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?
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 a “strata” title;
- the subject condominium is located above the ground floor;
- foreign ownership of the building does not exceed 70%; and
- there is a property management agreement in place amongst the coowners.
It is predominately newly constructed apartment buildings that have “strata” titles. It is technically possible to convert the title of an older, existing building to a strata title, but to our knowledge, has not yet been done.
A separate title is issued for each qualifying condominium.
What law and practices are there allowing the state to take property for public use?
It is open to the Royal Government of Cambodia to expropriate private land if it considers it to be in the public/national interest. The Law of Expropriation provides for compensation for 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 to be registered with the Cadastral authorities is, however, a standard government form in Khmer.
Under the Land Law, there are 3 types of secured loans: mortgage, antichrese and gage. In an antichrese the creditor takes possession of the property; in a gage the creditor takes possession of the title deed; in a mortgage the creditor merely takes a right to foreclose but not possession of either the property or title deed.
In practice, however, 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 files a civil lawsuit to the court in the case of default of payment by the mortgagor. The only remedy is to ask the court to sell the mortgaged property by auction or tender and claim repayment of the debt from the sale proceeds.
