Cambodian Country Title Land Transfer to Foreigners

In the current development boom, Cambodian legislation on foreign ownership land titles has been mostly untested. However, Ministry of Land Management, Urban Planning and Construction (MLMUPC) has now begun transferring strata titles to buyers of residential units — creating legally binding ownership within the co-owned structures.

#What are the Strata Title steps?

The developer obtains the land at the very first stage, which will be developed with a tough title on behalf of development company. However, you cannot transfer private unit ownerships directly to individual buyers from this initial master title. You first need to transfer to the developer's name and ownership the complete collection of divided titles. For instance, for 50 different titles, the original one hard title may be 50 units.

At this step, the Ministry's Land Department will also screen your common regulations and procedures. If it is confirmed by the land department that co-owned areas are properly managed and insured, the strata are issued. After these 50 titles are generated, we may then transfer these titles into the ownership of the corporation to the individual purchasers.

#What does it mean to transfer the title to the end buyers and owners of the strata from the development company?

The MLMUPC requires comprehensive certified identity and marital status evidence from the end purchaser and such documents must also be submitted and translated into Khmer. Especially, the title of strata is in Khmer alone, therefore English names for the title of strata are not allowed, and the name of all buyers must be translated. Khmer purchasers, foreign purchasers and the development company must all meet somewhat varied processes and documents requirements.

During this phase, opt to involve a qualified local law company in the revision and translation of certified documents, liaise with the authorities in the local government department and provide legal aid to the buyers during the process until the transfer tax is paid.

#Are the purchaser need to take control in Cambodia of the new strata title?

Yes.The customers are physically present in Cambodia, but most critically on Vente Definitive and the Ownership Transference Application, both of which are typical templates for the Land Department to be delivered.

#What is the cost of the transfer process?

The conversion of the master title involves a public service fee per stratum title. For each individual strata title to be granted on behalf of a buyer, there is additionally a public service fee. As far as transfer tax is concerned, the exact same documents with other forms shall be presented to the General Taxation Division once the set of certified documents has been inspected and accepted by the Land Department.

The tax officers will then issue an invoice based on the chosen range and method of computation with a transfer tax to be paid following the property value assessment. The land department will conduct the title transfer after proving from the General Department of Taxation that the tax was payable by the buyer.

#If the purchaser does not want to transfer the title of the strata?

In theory, it is not easy for the second purchaser to carry out an in-depth study or to make sure there are no conflicts, mortgages, judgments or unpaid taxes related to the property sold. Pure investors are frequently resistive to physical bureaucracies and monetary demands for ownership transfers on their behalf. Some developers in this case may accept to hold the title for them – but this can cause complications for buyers later. It is not really advised.

On the other hand, such an arrangement also creates landlord liabilities for the developer holding the strata title. An effective way to mitigate this for the reassurance of the buyer is to enlist quality legal support, to ensure constant communication with the developer and to get education surrounding the process. Hiring a professional legal firm with experience in this is crucial – because they can make this transfer process as smooth and predictable as possible.

#For additional information about the Cambodian Process of Land Title Transfer.

The following details detail the actions required to transfer land ownership titles in Cambodia. Each phase offers instructions, the government agency responsible and the projected time and the official costs to accomplish the phase.

Step 1 – The buyer checks for any (debt) or other burden using a Land Office title certificate:

In the first phase, the buyer must get from the seller a copy of the first title certificate and check that the title certificate is rightful to the seller.

-Relevant Government Agency: Land Office

-Estimated time to complete the step: 10 days (should occur simultaneous to steps 2 and 3)

-Official cost: According the Prakas 995 dated of December 28th 2012 on public service at Ministry of Land Management, Urban Planning and Construction = KHR 50,000/US$12.50

Step 2 – Obtain information on the property from the relevant Commune Council Official:

The land purchaser must contact the village chief or the commune council official, in which the property is located, to obtain information on the land, in addition to an official search upon the title at the municipal land office.

-Relevant Government Agency: Commune Council

-Estimated time to complete the step: 10 days (should occur simultaneous to steps 1 and 3)

-Official cost: No Cost

Step 3 – The buyer must obtain the certificate of incorporation of the seller’s company and other official documents from the seller:

If the landowner is a legal entity, the buyer must obtain a copy of the ID of the shareholder, or person acting on behalf of the company, and a certified/notarized copy of the certificate as issued by the Ministry of Commerce. These documents are needed to verify the accuracy and identity of the company name appearing on the title certificate. A Power of Attorney is also needed, as well as a resolution signed by the Board of Directors from that company authorizing the named individual to represent the company at the land office, accompanied by the Power of Attorney implementing that Resolution.

-Relevant Government Agency: Ministry of Commerce

-Estimated time to complete the step: 10 days (should occur simultaneous to steps 1 and 2)

-Official cost: KHR 80,000/US$20

Step 4 – Apply for registration at the District Land Office of the Ministry of Land Management, Urban Planning & Construction (MLMUPC):

When 2 persons/companies wish to buy/sell real property, they must first go together to the district office of the Ministry of Land Management, Urban Planning & Construction (MLMUPC) and arrange to prepare and sign documents. The documentation needed includes the company’s statute, its Certificate of Incorporation, and Power of Attorney (obtained in Step 3). At the same time, the original Title Certificate held by the seller must be presented to the Khan at the time of signing the deed, in order to have the name of the new owner officially inserted on the document.

-Relevant Government Agency: District Land Office, MLMUPC (District Land Office of the Ministry of Land Management, Urban Planning & Construction)

-Estimated time to complete the step: 20 – 30 days

-Official cost: A cadastral transfer fee of KHR 600,000 is paid to MLMUPC.

Step 5 – Pay transfer tax at the Tax Collection Office:

A transfer tax of 4% of the total value of the property is paid to the Ministry of Economy and Finance at the Tax Collection Office, relevant to the location of the transferred property. A Tax Receipt is then issued to prove that the property transfer tax has been paid. The 4% transfer tax is set out in Article 40 of the Law on Finance 1995. In Phnom Penh, however, this tax is not assessed based on the true transacted value of the property; but, rather, based on a schedule of price of property determined by the Phnom Penh Municipality. 

The assessed valuation by the Phnom Penh Municipality is usually based on the total number of square meters, the land’s location, use, potential use etc. The tax is thus not based on the actual price for which the land is sold; rather it is based on the assessed value made by the Municipal office. If the land is more than 1200m², the surplus of the land will also be subject to “unused land tax.” For land less than 1200m², the unused land tax is not applicable. *The time for the tax office to complete the calculation of transfer tax will depend on the location of the land and its size.

-Relevant Government Agency: General Department of Taxation

-Estimated time to complete the step: 1 day*

-Official cost: 4% of property value (transfer fee)

Step 6 – Return to Cadastral office to complete the registration process:

After all taxes are paid, the parties may return to the cadastral office at the MLMUPC and sign/thumbprint a MLMUPC form for buying/selling real property, as filled in by MLMUPC official. The signing/thumb printing must be witnessed by a local authority such as commune chief, who will also thumbprint. These procedures are based on Land Law Arts. 65, 244 and 245. Land Law Art. 69 bars transfer unless all necessary taxes are paid. The documentation provided should include payment receipts of transfer tax (obtained in Step 5).

-Relevant Government Agency: MLMUPC (District Land Office of the Ministry of Land Management, Urban Planning & Construction)

-Estimated time to complete the step: 5 days

-Official cost: Cadastral service fee paid in Step 4

Step 7 – Obtain the certificate of title from the Municipal Land Office:

The Khan/District land office forwards all the “transfer documents” to the Municipal Land Office where it issues the final Certificate of Title in the new owner’s name. It is now registered.

-Relevant Government Agency: Municipal Land Office

-Estimated time to complete the step: 1 to 2 weeks. The last procedural step in practice can take several weeks, depending on the diligence of the land officials and interested parties.

Foreign Property Ownership in Cambodia may not be simple, but it is increasingly possible. Always do your due diligence and take your time, and soon you will achieve foreign property ownership in Cambodia, and gain a valuable property asset.

Source : hunter-estate