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Purchasing Real Estate in Cambodia
By law foreign nationals cannot hold a 100% stake in real property in Cambodia. However, there are legal means that allow foreigners to fully control real property in which they have invested.
Aside from becoming a Cambodian citizen, which requires a substantial investment in the country, or marrying a Khmer citizen and putting the title in the spouse's name, there are 2 options for buying real estate in Cambodia.
In terms of buying and selling real estate, forming a company in partnership with a Cambodian citizen is regarded as the safest method of investing in land and property within the Kingdom. It is therefore important to have a general understanding of how foreigners can register a company in Cambodia.
The governing principal of Cambodian property law is that a foreigner cannot hold a 100% share in land or property within Cambodia. This principal also applies to the share held by a foreigner in a Cambodian-registered company, including limited companies formed to manage real estate. A 49% stake in a limited company can be vested with a foreigner provided that a 51% stake is vested with a Cambodian national.
Information 1: Forming a Company with a Cambodian Citizen
The safest method by which foreign nationals can purchase real property within Cambodia is to form a corporation. Real property is registered in the name of the corporation which must be majority owned - at least 51% - by a Cambodian citizen. Legal mechanisms exist which allow the foreign shareholder full control of the company and its assets.
The foreigner pays 100% of the cost of real property and receives 100% of the benefit. The Cambodia partner, nonetheless, must receive some benefit in the form of annual fees. In addition, forming a corporation for the purpose of owning real estate costs significantly more than the second option listed below.
Information 2: Purchase plus long-term Rental
In this option foreign nationals purchase real property but the title deed is registered in the name of a Cambodian citizen. The foreigner and the Cambodian then enter into a long-term rental agreement by which the Cambodian citizen leases the property back to the foreigner. Lease periods can last up to 55 years.
Proper drafting of the lease arrangements make this a reasonably secure method of controlling real property in Cambodia. The foreigner may sell the property at any time and keep 100% of the revenue from the sale, though usually a 3% commission is paid to the legal owner. In addition, to make the lease legal an annual lease payment is made to the legal owner, this can be as little as $60 per year. The foreigner retains the original copy of the new title deed as a security precaution since the sale of real property is impossible without the original copy of the deed.
* It is essential in this arrangement that the Cambodia legal owner be totally trusted since their signature is needed before the property can be sold.
Independent Legal Advice
For property of relatively low value the lease back option detailed above is reasonably simple and doesn't require expensive legal fees. However, for any substantial investment, legal advice is highly recommended.
For any client who wishes to seek expert, independent legal advice, we can direct him or her to a firm that specializes in all aspects of Cambodian Land Law.
Legal services include, but are not limited to:
- Advice on the local laws
- Obtaining business and project licenses
- Incorporation and registration of companies
- Advice on the ownership, lease, titling and registration of land