Foreign nationals and entities cannot own land in Cambodia. However, due to the promulgation of the Law on Providing Foreigners with Ownership Rights in Private Units of Co-owned Buildings (“Law on Foreign Ownership”) on 24 May 2010, foreigners may now own private units in certain circumstances.
The Law on Foreign Ownership only applies to “private units” of “co-owned buildings.” Article 5 of the Law on Foreign Ownership states that legally qualified foreigners have ownership rights in private units of co-owned buildings and rights to use and enjoy the benefits of the common areas. The Law on Foreign Ownership defines “co-owned building” as a building or construction in which several owners reside, and consists of some parts that are the exclusive ownership of each co-owner, called “private units,” and some other parts that are common spaces for the common use of co-owners, called “common areas.” According to the 12 August 2009 Sub-Decree on the Management and Use of Co-owned Buildings (“Sub-Decree on Co-owned Buildings”), there are many categories of co-owned buildings including, but not limited to, detached buildings, semi-detached buildings, attached houses (that have several attached units and floors), and condominiums. The co-owned building are to be constructed only on one parcel of land. A consolation of the Certificate of Title will be required if the co-owned building is comprised of more than one Certificate of Title. Co-owned buildings must be governed by internal building regulations, and the internal regulations must be registered.
Foreign ownership rights are restricted to private units from the first floor up. Thus, foreigners are not permitted to own the ground floor or underground floors.
Foreign owners are also limited to private units only and therefore cannot own the common areas or the parcel of land on which the building is situated. Additionally, foreigners may not own private units of a building located within thirty (30) kilometers of a land border with certain limited exceptions.
− Acquisition of Units in New Buildings
The Sub-Decree on Co-Owned Buildings, which enables the titling of units under a co-owned building, was initially intended to apply only to new constructions. However, the existing construction may be converted to a co-owned building subject to some specific requirement thereunder. The Sub-Decree on the Proportion and Calculation of Percentage of Private Units that Can Be Owned by Foreigners in a Co-owned Building (“Sub-decree on Percentage of Foreign Ownership”) limits foreign ownership rights in private units of co-owned buildings to seventy (70) percent of the total surface size of all private units of the co-owned building. When issuing a certificate of ownership of a private unit to a foreign owner, the Cadastral Authority must write down on the certificate the proportion of the surface size of the private unit to the total surface size of all private units in the building.
− Conversion of Title to Co-Owned Building
The Sub-Decree on Co-owned Buildings addresses new construction of a co-owned building and existing construction of a co-owned building prior to and before 19 December 1997. At this time, we are not aware of any existing buildings where all the units are owned by a single individual, that have been successfully converted into a co-owned building for the sale of titles to foreign owners. However, please note that there is no law that prohibits such a conversion. If conversion of an existing building to a registered co-owned building is being contemplated, conferring with a high level land official regarding the ability to convert the building would be recommended.
In principal, a building’s master title can be converted to titles for a number of individual units. The issuance of individual titles for units in a co-owned building is referred to as “strata title.” According to the Sub-Decree on Co-owned Buildings, only co-owned buildings that have been fully constructed in accordance with legal provisions in force can be the object of cadastral registration of private units. When attempting to convert a building to co-ownership, all owners of the building must agree on the conversion.
− Internal Regulations
After a building is registered as a co-owned building, internal building regulations shall be developed and the co-owners shall establish a management board or an executive committee to manage the building. The internal regulations shall determine the rights, obligations, and responsibilities of the co-owners over the private units and common areas, determine the share of expenses related to maintenance and repairs of the common areas, and determine a procedure for decision making for the management of the building.
Once the building has been registered as co-owned and internal regulations established, the Ministry of Land Management, Urban Planning and Construction (“MLMUPC”) has the authority to register certificates of title acknowledging the owners of the private units. In order to register the private units of a co-owned building, the owner of the private unit needs to apply for cadastral registration at the Land Office by filling out a registration form giving clear identity and information of the unit, and providing documentation such as a certificate that the building was correctly constructed, a detailed architectural plan, internal regulations, owner’s identity documents, and other relevant documents. The Land Office will confirm that the application is properly submitted, field data will be collected in cooperation with developers or their representatives, the data will be displayed publicly, and if no disputes arise, the Land Office will register the private unit. According to the Sub-Decree on Co-owned Buildings, this process should take approximately six weeks.
Under the process of registration of a co-owned building and issuance of strata title, developers or others must pay for costs related to the conversion of the master title, the establishment of the internal building regulations and for each individual title to be issued.
For further information about Foreign Ownership, please contact:
Guillaume Massin
Partner; Managing Director, Cambodia
Deputy Head of the Regional Real Estate Practice Group
guillaume.massin@dfdl.com
