Most Hong Kong property owners understand the idea of a deed of assignment or a deed of mutual covenant for a Hong Kong property, and mainland Chinese property owners have their property ownership certificate — but far fewer people fully understand the process and paperwork involved in buying property overseas. An earlier article already covered the process of buying property in Cambodia; this one looks at land titles in Cambodia. For overseas buyers, understanding these issues early can help avoid being misled and suffering financial loss.
There are mainly three types of title involved in buying property in Cambodia: Hard Title, Soft Title, and strata title.
Land Certificate
After the end of the Cambodian-Vietnamese war, Cambodia signed the Paris Peace Accords in October 1991, and the country gradually recovered from war, with the real estate sector beginning to grow. This land certificate was issued by the National Treasury between June 1989 and 1993, and is still considered legally valid today, and can be used for transfer transactions.
Property Certificate
The property certificate issued in 1992 tends to look like an older document; without accompanying photographs and a map, it can easily cause confusion when trying to identify it. It is similar to an LMAP (Land Management and Administration Project) title, but differs in that this property certificate is a distinct, dedicated form of document.
Real Estate Permit
This type of certificate is a derivative title issued by the planning authorities. Where several people jointly purchase the same plot of land, the person contributing the largest amount of capital generally holds the land title, but to demonstrate that the other joint purchasers also hold part of the land ownership, each partner may separately hold a valid certificate of their own. This is also intended to prevent the person holding the land title from appropriating the entire plot for themselves. In the process of urban planning and construction, this form of documentation has been used continuously from 1998 to the present.
Strata Title
Strata title mainly applies to foreigners, meaning the owner has no ownership of the land itself, only of a limited space purchased within a building on that land.
In 2010, Cambodia passed the Law on Foreign Ownership of Buildings, setting out ownership regulations under which foreigners in Cambodia may hold certain specific property rights. These ownership rights are limited to buildings that have obtained strata title. This has also made it easier for foreign investment to enter the Cambodian real estate market.
Put simply, this refers to a building with multiple owners, where some parts belong exclusively to a particular owner (private areas) and other parts are jointly owned by all owners (common areas).
Strata title is spreading quickly and applies not only to residential buildings but also to commercial buildings and shared office buildings.
Hard Title
A) Certificate of Immovable Property Possession (also called a Land Use Certificate)
B) Certificate of Immovable Property Ownership (House Use Certificate)
This is a form of title recognised by the Cambodian government under land law and issued after review by the provincial land office where the land is located. It is a formal certificate of immovable property ownership issued by the provincial land office commissioner, carrying nationally certified detailed land information. It is the strongest and best form of land title in Cambodia. A Hard Title is comparatively safe and well protected during a land transaction. A Hard Title issued by Cambodia’s central government carries permanent ownership, and can be mortgaged to a bank for a loan.
From 1 January 2019, Cambodia’s land and construction authorities began implementing new regulations issuing an updated version of the Hard Title. Compared with the old version, the main new feature of the updated Hard Title is a QR code, intended to guarantee the legality of property ownership, avoid triggering land disputes, and make the market more regulated.
Soft Title
Soft-title land currently accounts for a large proportion of land in Cambodia, particularly agricultural land. Soft-title land generally cannot be used as collateral for a bank mortgage. Soft title is issued by district or sub-district authorities, based on the actual registered period of use.
LMAP Title
This is Cambodia’s most secure form of property document, and the most secure form of title. It was established by Cambodia’s land, urban planning and construction authorities to ensure the security of land ownership.
Under the LMAP (Land Management and Administration Project) model, all land must be registered with GPS coordinates.
Under LMAP, agreement on boundaries is reached with all neighbouring parties, so no boundary disputes exist.
The Process of Handling Title
Generally, the property developer will collect the buyer’s passport and any other required supporting documents. At the same time, the buyer must pay the registration tax required to process a Hard Title (4% of the purchase price under the sale contract) and a property tax of 0.1% (calculated according to Cambodian government regulations), which are then handed to the developer’s local representative lawyer for review, along with a Khmer translation, before being submitted to the land authorities for processing. This typically takes around six months after the unit is completed and handed over. The title document is a certificate registered with the land authority under land law, and is officially printed on good-quality paper in the Khmer language.
Put simply, when a local person buys a townhouse (with land), they hold only land ownership and no separate building ownership. Foreigners, on the other hand, may only buy units above the second floor, and are registered only with building ownership, not land ownership. Holding a Hard Title (property certificate) means full ownership, which is permanent and more secure. Foreigners hold the same rights as local Cambodian citizens, and any future redevelopment will also be handled according to the proportion of land area recorded on the property certificate.
Understanding Cambodia’s property titles makes it possible to invest in Cambodian property with greater confidence. As the saying goes, renting is about the present, buying is about the future — the next article looks at the infrastructure development that overseas buyers find most attractive about investing in Phnom Penh, Cambodia’s capital, and why it draws so much interest.
Have a question about this guide? Leave a comment below, or ask Zagdim directly.
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