Learn about the process of land transaction and ownership transfer in Cambodia

Real estate experts once said 2023 will be a good opportunity for real estate investment, for those who have high capital and expect long-term profits, because real estate prices in 2023 are still not very high, while the overall market is unlikely to recover significantly.

Similar to other types of property, lands in Cambodia are also seen has a decent level of trading transactions.

Due to the fact that this type of property transaction is still popular and important for both sellers and buyers, today, Compass will introduce some important points that should be taken into account and be very careful.

** In this article, we will focus on the following points:

● Types of title deeds in Cambodia

● Land purchase and sale process

● Land title transfer process and required information

● Other expenses (for sellers and buyers)

⓵ Types of title deeds in Cambodia

↣ Hard Title

Hard title is the most important title deed form and the best land title deed in Cambodia. This type of title deed is issued by the Land Management Office. In addition, hard title contains details that recognized and certified at a national level by the Cadastral Office and the Ministry of Land Management.

↣ Soft Title

Soft title deed is the most common land title deed in Cambodia, which is recognized by the local government. Soft titles are provided by the Sangkat or District Office and are not registered at the national level, but it is still considered a full ownership document.

↣ LMAP Title

A new land map measurement system, called the Land Management and Administration Project (LMAP), is a certificate of land title deed. It was introduced in Cambodia to improve the land tenure security.  

If you have an LMAP Title, there is agreement between the neighbors, so the border dispute has been resolved. It’s also one of the safest types of title deed.

⓶ Land purchase and sale process

1. Find the type of land and location you want

Nowadays, there are many ways to find a property type of land, including:

- Search online: You can search through real estate websites (for example: COMPASS.COM.KH, which has land features for sale with a lot of size and price, easy to choose), or through social networks such as Facebook, Wechat, etc.

- With assistance from real estate agents

- Find directly to the area you want 

- Recommended by relatives and friends

2. Check the condition of the land before buying

Before buying a land, the buyer should consider the following points:

√ Types of title deeds of landowners: the buyer must careful about whether the types of title deeds held by the land seller is a hard title or soft title? If the land seller is holding a hard title, the buyer can verify the documents quickly.

√ Land conditions: after checking the type of title, the buyer need to check the condition of the land to see if the land is surrounded by other land boundaries or fences. If the inspection is still unclear, please re-measure the land in the presence of the Cadastral Authority.

√ Land status: the buyer should careful about whether the land was taken as collateral or leased out. In the other hand, the buyer must investigate whether the land is the subject of a foreclosure lawsuit, If the land is in dispute and there is a lawsuit in court, the buyer should not risk buying it.

√The land is part of the road or next to development projects: Cambodia's infrastructure and development projects are growing nowadays. Therefore, before buying the land they want, the buyer must observe whether the land is part of the road or in any development project of the government.

Some lands may be located in any conservation area designated by the State. All of these issues require the buyer to carefully examine the extent to which the land is affected by the projects.

3. Confirm price and negotiation

After the buyer has checked the condition of the land according to the above points, the seller and the buyer must discuss and negotiate the price. If the terms and conditions are agreed upon by both parties, an agreement will be made.

4. Agreement Making Process

At this stage, the agreement to be created is as follows:

- Deposit contract: The deposit agreement is made up to indicates the willingness of the seller and the buyer to agree to sell and buy a property, the seller or the buyer can negotiate the suitable deposit amount. This contract protects both the seller and the buyer in any transaction.

- Sale- purchase agreement: The seller should prepare this contract, where there are two types of land sales contracts, including hard title-type and soft title-type with different procedures.

Both the seller and the buyer must sign a contract for the sale of the property under a “specific contract”, not a private contract, which is a type of contract that must be made in the form and procedure as prescribed by law.

- Contract for pay and receipt of money: the law does not require this type of contract to be made, but it is a trust and evidence for both parties to avoid other disputes in the transfer of ownership.

⓷ Land title transfer process and required information

The process for transferring ownership from the landowner to the buyer's name is as follows:

Step 1: The buyer and the landowner should bring a witness with relevant documents (original land title, and copy of ID card, birth certificate and family book of both party) to the district / Khan cadastral office to fill out the ownership transfer document and give a thumbprint to all agree. 

Step 2: After completing the transfer documents and giving a thumbprint in front of the cadastral officer, the land owner or buyer have to take the above documents to meet with the village chief and commune chief to have them sign and stamp. Then, apply the original land title and the transfer document to the director of the district / khan cadastral department for signing and stamping. District / Khan cadastral service fee is 200,000 Riels per plot, no matter how big or small.

This stage is only 50% of the transfer process, and the title deed is still under the original owner's name, it only means that the buyer has already bought the land legally, accompanied by a legal title deed and transfer documents.

Stage 3: If the buyer wants to change the title from the original owner to the buyer's name, the land owner or the buyer must take the original land title and transfer documents completed from the District / Khan cadastral office to the provincial / municipal cadastral office for review and stamping that there are sufficient documents to certify and follow all procedures.

Then bring the original land title and the transfer document to pay the stamp duty at the rate of 4% of the land value determined by law at the General Department of Taxation of the province / municipality, and the land evaluation will take a month.

After evaluating the land and calculating the stamp duty, the General Department of Taxation of the province / municipality will contact the landowner or buyer to pay the stamp duty of 4% and take back the original land title and transfer documents.

After paying the stamp duty, the land owner or the buyer must bring the original land title and the transfer documents back to the provincial / municipal cadastral office to sign and stamping the title deed from the name of the original owner to the buyer, and pay a service fee of 600,000 Riels to issue a new land title in the name of the buyer. The period for waiting to obtain a new land title can range from three to six months.

⓸ Other expenses

* Buyer

- Stamp duty: The tax rate is 4% of the total property value (value according to the Real Estate Appraisal Commission). Sellers and buyers can also negotiate who to pay for this type of tax.

- Property tax: The tax rate is 0.1% of the total property value. This tax applies to land used for various business purposes with a property value of more than 100 million riels or $ 25,000.

- Tax on vacant or unused land: This tax is required to pay 2% for non-constructed land and abandoned land located in areas designated by the Unused Land Appraisal Committee (ULAC). In particular, this tax is not collected on land with a full crop. On the other hand, if you are taxed on unused land, you don’t have the 0.1% of property tax.

- Title deed verification fee: For title deed verification fee, it costs 50,000 Riels and the changing of new owner's name cost 600,000 Riels.

- Attorney's fee: It costs about $ 250 to prepare the documents and the sales contract (buyer and seller can also negotiate to pay half of this fee).

- Cost related to land purchase loan: Although land loans are not as widely offered by banks as buying a home, buyers can still get loans from a number of banks, with a general interest rate ranging from 7%-11% per annum. The buyer have to pay 1% of the total loan amount for the service fee of loan evaluation and operation.

* Seller

-Capital gains tax: The tax rate is 20% of the profit from the sale of any property. The good news is that this type of tax will be exempt until the end of 2024.

-Real estate agent fees: Usually, the seller has to pay 3% of the total real estate sales price to the real estate agent. But in some cases, the seller can also negotiate with the agent to reduce the fee.

Finally, the above content is just a reference to help promote your investment or transaction to buy and sell your land faster, more successfully and legally. For more details, please consult a real estate professional.