Guidelines for Land Investment in Cambodia

An Introduction to the Legal System of Land in Cambodia

1. Progress in the Development of Land Laws in Cambodia

During the period of Khmer Rouge regime from 1975 to 1979, Cambodia witnessed the confiscation of private land and the destruction of most land ownership certificates. The government established collective land ownership and relocated a significant portion of the population to rural agricultural production areas. With the development of a market economy, the government began redistributing land to individuals. In 1992, the Cambodian Parliament enacted the “Land Law,” establishing a system of immovable property rights and promoting a modernized land registration system. At this time, the Cambodian economy was gradually transitioning to a market economy, and the government started focusing on attracting investment in designated economic zones for industry and agriculture, granting land concessions to private enterprises. However, many Cambodian citizens still struggle to obtain official land registration certificates. This is due to the high costs and fees associated with the registration process, as well as the government’s exclusion of disputed lands, which significantly reduces the effectiveness of the land registration system.

2. Legal System of Land in Cambodia

Currently, Cambodia’s legal system of land primarily derives from the Land Use Planning, Urbanization, and Construction Law, the Land Law, and their subsidiary regulations such as Sub-Decree No. 19 on Social Concession Land, Sub-Decree No. 114 on Mortgage and Transfer of Long-Term Lease Rights, and Sub-Decree No. 146 on Economic Concession Land, among others. These laws and regulations encompass various aspects, including ownership regulations, land permits, leasing, co-ownership, and other related provisions such as guarantees. It is important to note that Cambodia’s land laws are significantly influenced by government policies. For example, in 2012, President Hun Sen announced the cessation of granting new economic land concessions, which resulted in certain provisions in the Land Law and Economic Concession Land regulations facing challenges.

Land Ownership System

According to the land regulations in Cambodia, the land ownership system can be categorized into three types: state ownership, collective ownership, and private ownership. Within the land ownership system, state ownership can be further divided into two types: land classified as state public property and land classified as state private property, depending on whether it is transferable.

1. Classification of Land Tenure

01. State Public Land:

According to Article 15 of the Land Law, state public land can be classified into seven categories as follows:

• Original Natural Resources, including forests, waterways, natural lakes, embankments, rivers, and coastlines.
  
• General Property for Public Use, including docks, ports, railways, train stations, airports, and other infrastructure, as well as naturally formed or constructed properties provided for public use, such as streets, parks, and protected areas.
  
• Property for Public Use, including public schools, hospitals, educational institutions, and administrative centers.
  
• Assets designated by law as natural protected areas.
  
• Historical sites, buildings, and cultural assets.
  
• Immovable properties belonging to the royal family but not classified as private property.

02. Collective Ownership Land

Collective land in Cambodia can be classified into two types:

(1) Monastic Land:

In Cambodia, land within monastic institutions is permanently owned by religious entities and their successors. The immovable properties of monasteries cannot be sold, exchanged, or given away, but they can be leased or rented, as long as the income is dedicated to religious affairs. Monastic land is not governed by government regulations but is protected by representatives of the religious committee. The Ministry of Culture and Religion in Cambodia has the authority to establish protective measures for the selection of religious committee representatives. However, land and properties belonging to other religious institutions are not subject to these restrictions and are managed in accordance with the respective religious associations’ legal frameworks.

(2) Highland Indigenous Communities:

Indigenous communities residing within Cambodia have distinct religious, cultural, social, and economic characteristics. Prior to legal recognition, they lived according to traditional practices and engaged in farming on their own lands. In accordance with customary norms and laws, indigenous communities bear the responsibility of self-governance over their societies and immovable properties.

The land ownership is granted to indigenous communities in the form of collective ownership by the state, which includes rights and protections equivalent to private land ownership. However, they do not have the authority to transfer collective ownership to individuals or groups, as the land is considered as public property of the state.

In order to facilitate cultural, economic, and social progress among members of indigenous communities and enable them to freely disassociate from the collective or release themselves from restrictions, a portion of the land can be transferred to individual ownership. This approach aims to provide greater flexibility and opportunities for indigenous community members to develop and thrive at an individual level.

Non-indigenous entities are not able to acquire property rights over the immovable assets of indigenous communities. This means that external organizations or individuals cannot own or control the land resources of indigenous communities.

03. State Private Land

Private land owned by the state and government institutions can be exchanged, allocated, bought, and transferred. It can also be leased and become the subject of contracts in accordance with the law. The sale and management of private properties owned by the state and government institutions should adhere to the conditions and procedures stipulated by law, and in the absence of corresponding regulations, the sale cannot proceed. The transfer of state private land is subject to the conditions specified in Chapter Five of the Land Law.

04. Private Ownership Land

Private individuals can acquire land ownership through methods such as purchase, gift, exchange, or inheritance. However, land ownership may be deprived, in accordance with legal and regulatory procedures and with fair compensation, provided that it does not harm public interests.

In order to uphold national sovereignty over its territory, Cambodian land laws strictly prohibit foreign nationals from owning land. Only individuals or legal entities with Cambodian nationality are eligible to possess land ownership rights.

In Cambodia, the status of a registered company as Cambodian or non-Cambodian is determined by the nationality of its majority shareholders. If the combined nationality of the majority shareholders exceeds 51%, the company is recognized as Cambodian. It is important to note that the law prohibits altering the shareholding structure through undisclosed agreements. This ensures that foreign investors cannot effectively obtain land ownership through nominee arrangements or similar methods.

For foreign investors, legitimate ways to utilize land in Cambodia include land concessions and long or short-term leases. However, transferring land ownership indirectly to Cambodian individuals or legal entities as a means of acquiring land ownership may increase the risk of legal disputes.

2. Acquisition of Land Ownership

The methods of acquiring land ownership are as follows:

01. Occupation

Since 1989, Cambodia recognizes that occupation, under certain conditions, can establish immovable property ownership. According to Article 30 of the Land Law, any person who peacefully and uncontestedly occupies privately ownable immovable property for a period of no less than 5 years prior to the enactment of the Land Law has the right to apply for a certificate of ownership. If the granting of the certificate of ownership is contested, the individual must prove that they acquired the property peacefully and uncontestedly, or that they obtained it from the original holder, legal beneficiary, transferee, or inheritor of the property. Since the enactment of the Land Law in 2001, Cambodia no longer recognizes the acquisition of ownership through prescriptive rights. New occupants without proof of ownership for properties belonging to public institutions or private individuals are considered illegal occupants and are subject to penalties under Article 259 of the Land Law.

02. Transfer for Consideration

The transfer of private land for consideration can be done through two forms: exchange and sale. The real estate sale contract allows the seller to transfer the ownership of the property to the buyer, who in turn pays the purchase price as the exchange condition. Cambodian citizens who are capable of entering into contracts have the ability to sell or purchase real estate.

People who are not allowed to sell immovable property include the following:

• Non-owners of the property.
• Co-owners of indivisible property without the consent of other co-owners.
• Persons whose property has been confiscated.

People who are not eligible to receive transfer of immovable property include the following:

• Guardians are not allowed to personally acquire property belonging to their wards.
• Administrators are prohibited from personally purchasing the assets they administer.
• Judges or government officials are not permitted to personally acquire the property under their jurisdiction or responsibility for sale.
• Individuals whose right of redemption has been revoked are not allowed to repurchase the property.
• The sale contracts between spouses are invalid.

03. Gratuitous Transfer/Gift

Gratuitous transfer refers to the act in which the donor transfers ownership of the property to the recipient, and the recipient accepts it as a gift. Only immovable property transfers that are executed in writing, in the prescribed legal format, and registered with the competent authority have legal effect against third parties. Gratuitous transfers of immovable property can be classified as inter vivos (during the donor’s lifetime) gifts, testamentary gifts (gifts upon death), and entrusted gifts.

Due to social reasons, the state can only grant immovable property to natural persons for their residence or subsistence farming purposes. Considering the social status of the beneficiaries, the value of immovable property gifts must be limited within the scope of the aforementioned purposes, and speculation or improper profit is prohibited.

Once an immovable property gift is accepted, it is irrevocable. The ownership of the gift can be transferred promptly, but the donor may retain servitudes, usage rights, and the right of residence over the property. These rights must be specified in detail in the contract and registered with the relevant authority.

04. Inheritance

The following are examples of immovable properties that can be transferred through inheritance:

• Proof of ownership documents for immovable properties established in accordance with this law.
• Legal documents, ownership certificates, or other evidence of lawful possession.
• Any limited property rights and rights to immovable properties

Immovable properties that are in actual possession but have not been registered or recorded, yet meet the legal requirements, can be transferred through inheritance. Occupied properties without ownership certificates, after being transferred through inheritance, become the inherited properties of the new property holder, who can continue to manage and enjoy protection, as long as they comply with all other requirements of the Land Law.

3. Co-ownership of Land

01. Undivided Land Ownership

Undivided ownership refers to joint ownership by several individuals of a specific property, with equal shares and the shared rights and protections of mutual interests. They also jointly bear the management expenses and taxes. Undivided owners have the right to the undivided ownership unless there is an opposing agreement. Each undivided owner can handle day-to-day management tasks, but significant matters require the decision of the majority (representing ownership of more than half of the property).

No one can force others to retain undivided property ownership. Property division can only take place if requested by any of the undivided co-owners at any time. Undivided co-owners can temporarily maintain undivided ownership, but it should not exceed 5 years unless there is a new agreement.

02. Joint Ownership

According to Article 175 of the Land Law, ‘joint ownership’ refers to the ownership of immovable property by multiple individuals, with each person owning a portion of it while the remaining portion is considered as shared property. Joint owners can manage the property in accordance with the regulations, management procedures, and obligations specified in the Land Law, particularly with regard to internal regulations concerning the shared portion.

Joint owners have full authority to exercise exclusive rights over their respective portions, as long as it does not infringe upon the shared portion or impede the shared use by other joint owners. They are entitled to freely lease, establish easements, establish residency rights, mortgage, or jointly utilize their respective portions. However, they are prohibited from establishing priority rights over their portions. In cases where a portion of a building or land is allocated to all joint owners or specific joint owners to ensure their equitable interests, such allocated portion shall be considered as the shared portion.

Jointly owned property includes the following items:

• Land, parking lots, courtyards, gardens, and pathways.
• Structural maintenance of walls and buildings, common facilities such as water, electricity and gas pipes, etc.
• Chimney
• Shared service area

The following subsidiary rights are considered common property:

• The right to excavate material already in the ground.
• Right to build a courtyard, parking lot or garden in the common part.
• Rights involving joint ownership of common parts.
• Right to build on top of part of common use building. The owner of the top floor of the common building is not allowed to build an apartment for himself or sell that right.

All of the above are rights consistent with public order.

Any private use or sale of the co-owner of the jointly owned portion is the responsibility of the restitution. Violators are punished under Section 257 of the Land Code. A person who is not a co-owner occupying a common part shall return the occupied premises and restore it to its original state. Regardless of the circumstances, the competent authority shall not issue a certificate recognizing the rights of the person. If issued, it is the responsibility of the competent authority to ensure that illegal occupation is suppressed.

03. Co-Ownership

Article 186 of the Land Code states: “Co-ownership means a form of joint ownership applicable to walls dividing two adjacent titles. According to this law, walls include ditches, fences and embankments.”

(1) Commonly owned walls

Repairing and rebuilding the Community Wall is a shared responsibility of the share owners. If a co-owner renounces his co-ownership and is not responsible for such repairs or reconstructions unless the co-ownership walls support his building. A co-owner of a common wall shall not dig deep pits on the common wall or carry out any work that may damage the wall without the consent of the other co-owners. If no consensus can be reached, an arbitrator may be appointed as an expert to determine the necessary methods to ensure that other new work does not infringe the rights of other co-owners. Each co-owner can build on the co-owner’s wall, and can place beams and railings at least 5 cm from the other side, so as not to affect the rights and interests of other co-owners.

(2) Commonly owned canals, walls and dams

No owner of adjoining land shall compel the owner of common walls and dikes to own ditches, walls and dikes with them.

Land licensing system

1. Classification of land permits

The Cambodian land licensing system is a way in which the government grants the right to use national land within a specific period of time to citizens, legal persons and other social organizations through administrative concessions, allowing them to use the land in the form of ownership. This land system is regulated in detail in Chapter V of the Land Law. According to Articles 49 and 50 of the Land Law, land concessions in Cambodia can be divided into three categories: social concessions, economic concessions and development concessions. The “Social Concession Land Act” No. 19 and the “Economic Concession Land Act” No. 146 sub-decree have made specific regulations on the social concession land and economic concession land systems respectively.

According to the Cambodian Land Law, there are some restrictions on the acquisition of economic concessions. The law stipulates that the area of economic concession land owned by the same legal entity shall not exceed 10,000 hectares, and if this limit is exceeded, it needs to be reduced, unless a special exemption is obtained. In addition, the law prohibits the issuance of certificates of land title exceeding 10,000 hectares to a specific individual or to multiple legal entities controlled by them. In addition, economic concessions can be used for a maximum of 99 years. Only the Ministry of Forestry, Ministry of Agriculture and Ministry of Fisheries authorized by the Cambodian government have the authority to issue administrative licenses to allow private use of economic concessions. These restrictions and regulations have important implications for protecting the rationality and fairness of land use.

2. Rights and Responsibilities of Owners

01. Rights of owners of economic concession land

The economic concession land system in the “Land Law” is stipulated in the “real estate ownership” section. In fact, economic concession is only a restricted property right, not real land ownership. Although the right holders of economic concessions can exercise land rights similar to landowners, this right is limited by two important restrictions: the use period needs to be granted by the state, and the right is not permanent; and the transfer between private parties is prohibited. It can only be re-licensed by the government after being taken back. The purpose of these restrictions is to ensure the sustainability of land use and the public interest. Thus, the economic concession system provides a limited but purposeful land use right that promotes economic development and protects the country’s land resources.

Owners of economic concession land have the following rights:

Title of rights	Relevant legal terms
Land use rights
Eminent domain	Article 56, paragraph 3, of the Land Code
Right to relief
Public relief	Paragraph 1 of Article 56 of the Land Law
Private remedy	Paragraph 2 of Article 56 of the Land Law
Litigation	Paragraph 2 of Article 55 of the Land Law
Inheritance	Paragraph 2 of Article 57 of the Land Law

02. Obligations of the right holder of economic concession land:

1. Agricultural development shall be carried out according to the purpose of the license, and the right holder shall not change the use of the land without authorization, damage the natural structure, or conduct destructive development at the end of the license period. — Article 56, Paragraph 3 of the Land Law
2. The obligation to pay the license fee, if the obligation is not fulfilled, the government has the right to revoke the license, and the licensee has no right to claim the resulting losses. — Paragraph 2, Article 62 of the Land Law

03. Conditions for administrative licensing of economic franchise land:

According to the provisions of Sub-Regulation No. 146, the grant of economic concessions must meet the following five conditions:

• Land ownership: The land must be classified and registered by the state as state private land.
• Land use plan: The land use plan must be submitted to the land management department of the local government and approved.
• Environmental and social impact assessment: Environmental and social impact assessment is required to assess the impact of the project on the environment and socie
• Resettlement: The problem of resettlement of people must be addressed and involuntary resettlement should not be tolerated.
• Consideration of stakeholders: The opinions of stakeholders must be fully considered, such as local residents and land management departments.

04. New policies for economic concession land

Economic concession land is a land system closely related to the Cambodian government’s economic and land policies, and it is greatly influenced by government policies.

Date	Event Description
May 7 2012	Cambodian Prime Minister Hun Sen issued a government order “Improving the Management Efficiency of Economic Concessions”, announcing that the approval of new economic concessions will be suspended from now on. All government departments and relevant units are required to conscientiously implement the concession land compliance regulations to protect the living environment of the community and local residents. Companies that violate the regulations and infringe on community land will be taken back to the concession land.
June 2016	Minister of the Ministry of Environmental Protection of Cambodia Sai Osong said that in order to strengthen the protection of national forest resources and resolve land disputes, the government will take back the economic concession land that has not been developed under the contract, and shorten the lease period of the economic concession land to 50 years.

Land Lease System

Article 106 of the “Land Law” stipulates: “The owner of the real estate may lease it to others. A lease contract is a contract in which the owner of the real estate temporarily hands over the property to others, with the specified rent and lease term as the consideration. The lease contract of real estate is also called lease agreement.” According to Article 109 of the law, the lease contract should be concluded in writing; at the same time, the law also recognizes that an oral written contract is valid, but it is regarded as an indefinite lease, as long as it is notified before the rent payment period, it can be terminated at any time. contract.

According to Article 108 of the Land Law, leases can be divided into two forms: irregular leases and fixed-term leases. Fixed-term leases include short-term leases with an option to renew as well as long-term leases exceeding 15 years. The lease right formed by long-term lease can be transferred and inherited, and the lessee has the right to make improvements on the basis of not damaging the nature of the subject matter. At the end of the lease term, the lessor takes full ownership without paying compensation for the improvements, which comes from section 108 of the Land Law.

Before signing the contract, the lessee is obliged to know the condition of the real property. Failure to inspect the immovable property will be deemed to be in default condition in accordance with the lease agreement, Section 110 of the Land Code. During the lease contract renewal period, the lessee is responsible for the normal maintenance of the property, unless the contract agrees otherwise. After the lease term ends, the lessee is obliged to restore the leased property to its original state and bear the losses caused by improper use. This provision comes from Article 111 of the Land Law.

Land Guarantee System

1. Mortgage

Article 198 of the “Land Law” stipulates: “mortgage is a form of guarantee, and the ownership of the real property is not transferred. The creditor has the right to sell the real property through the court when the debt is due. No matter how many times the real property has been transferred, the creditor has the right to sell the real property Priority right to repayment.” Only real estate registered with the land registration agency is eligible for mortgage.

A mortgage contract must be drawn up in statutory form by a competent authority or an authorized lawyer and must be registered with the competent authority. The relevant drafting guidelines for mortgage contracts and registration forms shall be drawn up by the bodies prescribed by law. The mortgage contract must clearly describe the condition of the property, its nature, and the fee and value determined in accordance with the relevant regulations. Mortgages can be made successively on the same property, and each creditor should exercise its rights in the order of mortgage registration.

2. Pledge

Article 206 of the Land Law stipulates: “A pledge is a contract whereby the debtor transfers real property to the creditor as a guarantee for repayment. The creditor has the right to sell the property and obtain compensation in priority over other unsecured creditors. If the pledge contract is established, the creditor may pay interest or principal and interest Withhold the property.”

According to the current law, the pledge contract should be presented in written form, and be drawn up and registered before the competent authority in accordance with the statutory format. The pledge contract formulated in the above manner shall be deemed valid, and no third party shall be able to challenge its validity. An unregistered pledge contract will cause the creditor to lose its security rights, and the creditor has only the right to claim compensation in accordance with the current law. The pledged property shall be returned to the debtor after the debtor pays off the debt.

Under no circumstances can the creditor be the owner of the property. In the pledge contract, the creditor has the right to ask the court to force the sale of the real property, and give priority to the value of the property.

During the pledge period, if the creditor of the pledged owner purchases the pledged property, the purchase contract must be registered, and the unregistered one is deemed invalid. During the period of possession of the pledged property, the creditor has the responsibility to maintain and protect it. If the pledged property is damaged due to the creditor’s act or negligence, the corresponding loss must be deducted. The debtor is responsible for paying taxes unless otherwise agreed.

Once the debtor pays off the debt, the creditor shall not take possession of the pledged property because the debtor owes him another debt, unless a new pledge contract is concluded according to law. The debtor may challenge the creditor’s heirs or designees to raise a challenge.

3. Pawn

Articles 219 and 220 of the Land Law stipulate: “Pawning is a way of guaranteeing debts. The debtor does not transfer property ownership, but transfers the property ownership certificate registered with the registration agency.” The pawn contract should be in writing Formulate and register with relevant registration agencies.

In any case, the creditor cannot become the actual owner of the property involved in the pawn contract. The pawn contract only authorizes the creditor to obtain the priority of repayment of the real estate in court liquidation, prior to other creditors. After the debtor pays off the debt when it is due or not, the creditor shall cancel it in the registration agency and return the property ownership to the debtor.

The debtor has the right to manage and use his property, but shall not do anything that may reduce its value. The heirs or nominees of the debtor and creditor shall have the same rights and obligations as the debtor and creditor they represent. The heirs or nominees of the debtor and the family members of the co-owners of the pawned property shall bear the same rights and obligations as the debtor.

Land Registration System

The real estate registration system is divided into two levels, central and local. Before registering, the registration authority must investigate the land owner, land nature, land survey, land change, building condition, ownership change and other matters to protect the rights and interests of the owner. The registration agency may issue real estate ownership, possession certificates, mortgage certificates, and relevant materials and documents on the nature of the land, natural conditions, legal conditions, and violations based on the registration documents and the real estate register. Registration certificates are considered officially recognized legal documents.

Legal Liability

1. Falsifying property right certificates

Anyone who forges a certificate of property rights and uses it officially, regardless of the method, will be sentenced to one to five years in prison. Anyone who defrauds the registrar to perform his duties or the registration agency to register land will be fined from 500,000 to 3,000,000 riel and may be sentenced to one to six months in prison.

2. Private relief

Cambodian law strictly prohibits the use of personal relief. Under no circumstances should private power be used to protect an individual’s property rights or enforce a court judgment and compel the occupant to evict. Violence by bona fide occupants of immovable property, whether or not their rights are established or disputed, is punishable by a fine of 1,500,000 to 25,000,000 riels and a possible sentence of 6 months to 2 years in prison. In addition, the infringer also needs to bear the liability for civil losses caused by acts of violence.

3. Unauthorized disposal

Any person who sells other people’s real property or uses other people’s real property as security, regardless of whether civil damages are caused, shall be punished with imprisonment from 6 months to 3 years.

4. Common property

Co-owners of indivisible property who infringe on the common part of immovable property under Article 180 of the Land Law shall be fined from 1,500,000 to 9,000,000 riels. If it is a repeat offender, the punishment should be doubled. Co-owners who refuse to fulfill their obligations to maintain common property or do not respect the public order stipulated in Article 185 of this Law shall be fined from 500,000 to 3,000,000 riels.

5. Violation of public property

Violations of public property are subject to a fine of 5,000,000 to 50,000,000 riels and may be sentenced to 1 to 5 years in prison. The infringer shall immediately release the public property and shall not be entitled to any compensation for works or improvements of the property.

If before this law came into effect, you owned the public property of the country and had documents proving that you purchased it from others, you can ask the competent authority to take legal measures against the person who illegally sold the public property of the country to make up for the losses suffered thereby. In any case, you have no right to continue to occupy the public property of the state.

6. Prohibitive provisions of the law

Anyone who disregards the prohibition of laws and regulations, cultivates his land without authorization, intentionally provides it or leases it to a third party for cultivation will be fined from 15,000,000 to 45,000,000 riels and imprisoned in accordance with current laws.