This memorandum discusses basic laws and regulations in Cambodia governing land ownership and procedures to obtain hard titles of the land and land usage such as mortgage and lease.
This memorandum is prepared based on our analysis of the following laws:
1-Civil Code dated 08 December 2007 (“Civil Code”);
2-Law on Implementation of Civil Code dated 31 May
2011 (“Law on Implementation of Civil Code”); and
3-Land Law dated 30 August 2001 (“Land Law”)
Most articles in the Land Law were abrogated by the provisions of Civil Code and the Law on Implementation of the Civil Code.
A. Historical Overview
During the Democratic Kampuchea regime (1975-79), the Khmer Rouge abolished ownership of land and destroyed all existing official land records in Cambodia. At this time, private ownership of land was abolished and all land belonged to the State. For the decade following the overthrow of the Khmer Rouge regime, the State continued to own all land.
This began to change towards the end of the 1980s, and in 1992, a Land Law was passed which recognized that all Cambodians have the right to own and transfer land. By this time, many properties, especially in Phnom Penh, were informally owned by politically powerful or well- connected families, or had been occupied by refugees who had moved into the city from the countryside.
From 1995 to 2002, pilot projects supported by the German, Finnish and French governments registered 81,000 land parcels. Due to ongoing land disputes among private persons and private persons and big companies, the government of Cambodia launched in 2012 a campaign to measure land and delineates boundaries and provides titles to Cambodian people. Whilst this project achieved some success, land disputes remain a significant issue in Cambodia.
A new Land Law was promulgated in 2001 to establish a framework for the recognition of land and property rights throughout Cambodia. This law addressed the following topics:
❖ private ownership for both residential and agricultural holdings;
❖ creation of a land registry and systems for registering titles and encumbrances;
❖ mechanisms for identifying the boundaries of state land;
❖ mechanisms for distribution of state land, as“social concessions”;
❖ communal tenure for indigenous communities and religious sites; and
❖ a cap on industrial agricultural concessions to 10,000 hectares.
The full implementation of the Land Law and its associated regulations is expected to take many years. Due to lingering uncertainty over possession and ownership, it is important for investors to perform due diligence before acquiring any property interests in land. Even today, the legal legitimacy of landholding varies widely.
The Civil Code was passed in 2007 and came into force through the Law on the Implementation of the Civil Code at the end of 2011. The Civil Code clarified major issues relating to land and property in Cambodia as follows:
The Land Law and its associated regulations have created two different ways to register land. In the systematic system, the government chooses areas in which all plots of land are measured, registered and titled, until eventually the whole country is registered. In contrast, sporadic registration is initiated by owners applying for land titles from the central Cadastral Office.
All legal possessors of land have the right to convert their possession into ownership when systematic registration comes to an area or a sporadic title is applied for. To constitute legal ownership, possession must have commenced before 30 August 2001, and must have been continuous, peaceful, honest, unambiguous and known to the community. There can be no legal possession of State public land, private land held by an individual, or collective land.
Legal possession of land is not as strong as ownership, but it gives the possessor rights to live on the land, transfer it to others, and to prevent people from trespassing on the land. In practice, title requests are often refused, especially for communities who are facing the threat of forced eviction. Other barriers to registration include the 4% transfer tax charged by the Cadastral Office, high unofficial fees, and processing delays. Many legal possessors may also lack sufficient evidence of their ownership to satisfy authorities of their claim.
In 2002, the Land Management and Administration Project (LMAP) was initiated to implement systematic registration, with the support of the World Bank and the governments of Germany, Finland and Canada. The objective of the project is to assist the Royal Government of Cambodia to reduce poverty, promote social stability and stimulate economic development through improving land tenure security and promoting the development of efficient land markets.
In working towards its objectives, LMAP, and its recent incarnation as LASSP (Land Administration Sub-Sector Program) has had a number of successes. These include developing key parts of the legal framework for land administration, training Ministry and technical staff, and adjudicating over a million titles. Pursuant to its mandate, the titles issued have been in predominately rural areas that are non-contentious and are relatively easy to adjudicate.
LMAP titles are considered reliable as they are anchored to GPS points and may be valued at a premium by foreign purchasers.
Land held under soft title is registered at the local sangkat (council) or district level only and not at the national level. It is technically considered “possession” status and not ownership. Soft title documentation can take a variety of forms, including building applications which act as proof of ownership. Owners with no evidentiary documentation may request a possession status certificate from the local sangkat. A letter of transfer from the previous possessor stamped by the sangkat and the district office is also proof of soft title.
If land to be purchased is soft title, the buyer should conduct due diligence at the sangkat and district office to identify who the local officials view as the owner of the land. Similar enquiries should be made of neighbors. The property boundary should be carefully checked, as borders are often not properly demarcated and overlaps can be significant.
A hard title is an ownership certificate which is issued by the Cadastral Office and recognized at national ministerial level as well as at the sangkat and district level. This is the most secure form of ownership, as registration should be the only evidence required of indefeasible title.
However, many transactions or ownership transfers are still largely done with soft title deeds and at the commune and district level in the interests of a speedy transaction and to avoid paying higher transaction costs, including property registration tax at 4%, ownership transfer fees, and unofficial fees. The ownership transfer process at the Cadastral Office usually takes between one to four weeks.
Under the Civil Code, there are only two categories of security mechanisms available for the land owner to secure the loan repayment with the bank: (a) hypothec and (b) pledge.
The Civil Code newly reintroduced the notion of “Hypothec” by which the land may be used to secure one or more loans in the absence of the transfer of the title deed to the creditor (bank). Legally speaking, if the land is under pledge or hypothec, the owner of such land cannot freely sell or dispose the land, unless the subject land has been duly discharged from the pledge or hypothec by the Cadastral Office.
Under the Civil Code, a creditor is entitled to hold possession of the thing that it has received from debtors or a third party as security for their claims, and to obtain satisfaction of his/her claim out of such thing in preference to other creditors. It means that if the owner chooses to put his/her land under a pledge agreement, the subject land will be transferred into possession of the creditor, unless otherwise agreed by the parties to the pledge agreement.
The term of the pledge is up to 5 years and renewable.
Foreigners were formerly barred from owning land in Cambodia under Article 44 of the Constitution, although the Investment Law of 1994 permitted investors to use and develop land, and to sign unlimited long-term lease agreements.
Generally, private land can only be owned by Cambodian individuals or by Cambodian legal entities. A legal entity has Cambodian nationality if 51% or more of its shares are held by Cambodian citizens.
A recent sub-decree passed by the Council of Ministers now allows foreigners to purchase up to 70% of a building, with the exception of the ground floor or within a certain distances from an international border. Investors have so far been cautious in taking advantage of this opportunity. It is anticipated that at least in the early years, it will be mainly new apartments rather than pre- existing ones that will be purchased in this manner.
There are alternative ways for foreigners to invest in Cambodian property:
Long-term Lease/Land Concession
Long-term leases are another common way to control land. There is no maximum term for which land can be leased from a private owner; leases commonly last for 50，70 or 99 years.
A clause can be inserted into the lease requiring the owner to get the lessee’s permission to sell, and/or entitling the lessee to convert to full ownership with the lessor's cooperation. In addition, a ‘block sale notice’ can be registered with the Land Office, instructing the office not to sell the land without the lessee's permission.
Long term leases can now be registered at the national Cadastral Office and noted on the land title deed. A 99-year term is based on the Land Law, but under the Civil Code, the term of the long term lease is up to 50 years. According to the Law on the Implementation of Civil Code, if a long- term lease was granted prior to the entry into force of the Civil Code and the remaining term exceeds 50 years, the term will survive the Civil Code’s term. However, if the remaining term of the long-term lease exceeds 99 years, it will be reduced to 99 years. In addition, a certificate separate may be issued to the title deed noting the lessee’s interests in the property. This certificate can be traded by the lessee and used as security to obtain financing.
The competent authority may grant a concession to any natural person or legal entity or group of persons. Land concession shall respond to a social or economic purpose. The term of concession varies from case to case. Under the Civil Code, the term of land concession (or perpetual lease) is limited to 50 years, but can be renewed. A land concession can only be granted on land that is not the private property of the State. Land concessions areas shall not be more than 10,000 hectares.
The Land Law 2001 divided land into three main classifications: State property, private property and collective property. State property is divided into State public and State private property. Collective property is divided into monastery and indigenous community property.
State public property is property that is available for the public to use, or property that provides a service to the public. This includes property of natural origin (forests, riverbanks, seashores, lakes) and airports, roads, public gardens, public hospitals, administrative buildings and archeological, cultural, or historical sites such as Angkor Wat.
State public property cannot be bought or sold by people or companies. It may be leased, but for no longer than 15 years, and the lessor must not damage the land or change its public function.
However, if the land is no longer used for the public interest, it can become State private property by prime-ministerial sub-decree.
State property that is not public is State private property and may be sold or leased by the Government in accordance with the law.
The State may compulsorily acquire private property if it is in the public interest and there are no viable alternatives. In this situation, the State must give the owners fair compensation before taking the land. Under the Land Law, the Government should also ensure that those evicted have access to alternative adequate housing and land.