The 1993 Cambodian Constitution stated that only people or legal entities of Khmer nationality have the right to own land. However, this law does not forbid foreigners from buying land directly in their names in Cambodia.
Cambodia’s hard title and Land Management and Planning office land sale system are steadfast and centralized. You can get mortgages from a bank for hard title land & LMAP title land hypothecs in Cambodia.
If you are not from Cambodia and want to invest in real estate in Cambodia and buy land or landed property, you can buy them through any of the six legal and safe approaches mentioned below. For a more clear understanding, you can contact real estate agents in Cambodia who can walk you through the legal buying of property here.
1. Setting Up A Land Holding Company
The most recommended option for foreign ownership is establishing a company to own the land. Under applicable legislation, article 16You can set up Land Holding Company (LHC) so that the foreigners who are minority shareholders with 49% of the company and have regulated decision-making and voting rights in the company, while majority shareholders who are the Khmer nationals hold 51% of the company and have limited rights and powers.
Even then setting up an LHC is the safest legal method.
Extensive security documents strip power away from the majority shareholder and provide it to the minority shareholder(foreigners), making LHC a safe form of foreign ownership.
The shareholder with a majority of shares must be a Cambodian citizen, and there can be more than 1 Cambodian shareholder.
To ensure the special rights like different powers of attorney, a permanent majority on the board, blank shareholder transfer forms, etc., several private agreements are signed in which the Cambodian shareholders grant the foreigner all those rights.
We recommend pledging the purchased property with the foreigner’s name as the lender.
To ensure that the land can not be used as collateral for the loan unless the foreigner mandates the land registry to exempt the mortgage-secured land from its owner. They need to submit a mortgage registration document to the competent land registry before the sale of the acquired land and its property.
The use of land authorized to investors may include long-term leases of up to 50 years, extending upon request.
2. Trust Services In Cambodia
The Cambodian parliament adopted the Law on Trusts on 25 December 2018 and then was mandated on 2 January 2019, presenting a new concept in Cambodia’s legal system. This new law describes a basic framework for creating trusts in Cambodia, registration, regulating the establishment, and management.
It states that a Trust company controls and manages the property of the grantor, a settlor, or trustee(person who has founded a Trust company) and assigns the property to a trustee to administer it for the benefit of beneficiaries.
The trustee has to develop, manage, and build up the trust fund’s assets to acquire the trust fund’s purpose for the beneficiaries’ benefit. The owner of the property relinquishes ownership to the trustee. The trustee handles the assets and income from the assets.
In Cambodia, there are many reliable trust companies that buy freehold land and landed property for foreigners, letting the foreigners have full ownership rights of the land and landed property as freehold owners for a fee.
3. Through A Cambodian Nominee
According to Cambodian constitutional law, only persons or legal entities with Khmer nationality are entitled to own land. Another way for foreigners to buy land in Cambodia is for a Cambodian representative to hold the deed on their behalf. We do not advise this method unless the nominee is your spouse.
Nominee ownership is the most common method that real estate companies frequently offer because it is the most effortless one in terms of paperwork and time consumed. Nevertheless, we do not recommend the nominee method as it has serious flaws.
If the nominee is your spouse, then it is entirely legal for his/her to be a nominee for you to buy land. Remember that you can’t sell the property without permission from your spouse in Cambodia. For this method, you need to have a Cambodian spouse, and you must register your marriage in Cambodia.
In the nominee structure, a foreigner signs with a Cambodian citizen a trust agreement that grants the foreigner full control and purchase rights over the land. Using this system is easy and inexpensive, but it’s discouraged because it violates the Khmer Constitution Law, preventing direct foreign ownership. The documents are used to prove that foreigners have authority over land purchased.
Many Cambodian courts have found the nominee method to be illegal in many cases and have described it as an evasion of Cambodian law. We recommend using other safe, legal methods recognized by the Cambodian government.
4. Acquiring A Cambodian Citizenship
The other way to buy the land is by acquiring Cambodian citizenship. Cambodia allows dual citizenship. You can get Cambodian citizenship by naturalization and by getting married to a Cambodian citizen. You can get citizenship by naturalization if you have lived in the country for at least seven years and three years by marriage.
You must know the Khmer language, culture, and history. Becoming a Khmer citizen grants foreigners the right to possess the land and encourages them to become citizens.
If you don’t want to get Cambodian citizenship by naturalization or getting married, another way to acquire citizenship is by donation. Article 12 of the Cambodian Nationality Act provides a method to obtain Khmer and Cambodian citizenship via the investment by donating $250,000 in cash to the Cambodian economy. Per Article 8 of the Law On Nationality, paragraphs 1, 2, 5, and 6, if a foreigner contributes USD 100 million or more to the state budget and is interested in the country’s redevelopment, he or she may apply for Cambodian citizenship.
5. Leasing Land From Landlords Under 50 Years Contract [Leasehold]
The other most common way for foreigners to control land in Cambodia is long-term leases. Many private agreements signed with Cambodian shareholders grant special rights to foreign investors. These agreements are valid and secure.
The maximum validity for long-term leases is 50 years which you can extend. These leases are registered by the Ministry of Land Management, Urban Planning, and Construction at the national level. Because of the hardships of foreign ownership in Cambodia, many international investors have chosen long-term leases.
To stop a second sale of the property, you will need security agreements, such as a mortgage and a notice to block sales. The mortgages and block sales notices are steadfast and can be obtained directly from the Land department offices of the MLMUPC.
6. Investing In Land Via Concessions Of 50 Years [Leasehold]
The Cambodian government has promoted the long-term leasing of unused land to private companies at bargain prices to attract investors.
The country’s Land Act of 2001 gives the government the right to issue Economic Land Concessions that they can lease for up to 99 years to improve the local economy and develop a thriving agro-industry. To develop a thriving agro-industry and improve the local economy, the Land Act of 2001 mandates that the government can grant Economic Land Concessions for 99 years.
Buying land directly in Cambodia for foreigners is illegal, but they could use the following methods mentioned above to acquire the land in the country legally.