Detail Explanation of Permanent Property Right of Housing in Cambodia

The global financial crisis caused a 40% drop in property values between 2009 and 2010. In 2011, the property market began to rebound, aided by robust economic growth and the passage of a new foreign ownership rule.

What is the object of Cambodia new foreign ownership rule or “Foreigners with Ownership Rights in Private Units of Co-Owned Buildings”?

“Foreigners with Ownership Rights in Private Units of Co-Owned Buildings”, the law is aims to:

– determine general principles, rights and obligations of foreigners

who have ownership rights in private units of co-owned buildings

and other rights relating to the common areas, and procedures for

registration of these rights.

– facilitate foreigner's investing in the Kingdom of Cambodia.

– facilitate investor's businesses in the field of construction as well

as respond to the expansion of the land market in the Kingdom of Cambodia.

What does “Co-Owners of Private Units” means?

Persons who hold ownership rights in private units are referred to as Co-Owners of Private Units.

What does “Special Co-Ownership” means?

Special co-ownership refers to the rights of numerous people in a co-owned building, including foreigners and Khmer nationals, who have ownership rights in private units and special undivided ownership rights over the common spaces.

Who does the law apply to?

Foreigners and Cambodian nationals who own private units in co-owned buildings in the Kingdom of Cambodia are subject to this law.

The General Principles of “Foreigners with Ownership Rights in Private Units of Co-Owned Buildings”

Article 5: Legally qualified foreigners have ownership rights in private units of co-owned buildings and rights to use and enjoy benefits of the common areas, and they have obligations to comply with the provisions of this law and other related regulations in force.

Article 6:

• Foreigners have ownership rights in private units of co-owned buildings only from the first (1st) floor up. The ground floors and underground floors cannot be owned by foreigners.

• A Sub-decree shall determine the proportion and percentage of private units that can be owned by foreigners in a co-owned building.

• This ownership right only provides private units of co-owned buildings for foreigners. As far as the common areas of co-owned buildings are concerned, they shall be kept for the common use of all co-owners of the co-owned buildings.

• In any case, the land parcel where the co-owned building is located cannot be subject to the ownership of special co-owners.

• Foreigners are not authorized to acquire ownership rights in private units of co-owned buildings located within 30 (thirty) kilometers of the land borders of Cambodia and in other areas determined by the Royal Government, except for the co-owned buildings located in Special Economic Zones, in important urban areas and in other areas determined by the Royal Government.

• In case the co-owned buildings are constructed on land leased from a third party, foreigners enjoy perpetual lease rights in private units similar to how Khmer citizens do.

What is the acquisition of special co-ownership?

The creation, transfer and modification of special co-ownership can be done as follows:

– Through agreement among parties in accordance with the laws and

regulations in force;

– Through succession.

A transfer of special co-ownership by agreement shall not be effective unless it has been registered in accordance with the legal provisions and regulations regarding registration.

When a Cambodian co-owner of a private unit has transferred ownership of a private unit to a foreigner, the special co-owner shall acquire an ownership right to the private unit and only the right to use and enjoy the common areas. In this case, the former Cambodian co-owner of the private unit shall lose his/her undivided ownership of the common areas. In case the co-owner of the private unit is a foreigner and has transferred the private unit to a Cambodian, the Cambodian co-owner shall acquire an ownership right in the private unit and undivided ownership of the common areas.

Successors of special co-owners shall receive the rights and obligations of the deceased in accordance with the laws and regulations in effect. In case the inheritance is unoccupied because there is no successor or the successor abandons it, or if the inheritance is not designated to any person in accordance with the legal provisions, such inheritance shall become the property of the State.

In the event that, after this law becomes effective, any foreigner receives the transfer of or purchases any private unit of a co-owned building in violation of Article 6 of this law, the transaction shall be null and void and the parties to the transaction shall make a restitution.

The Rights and Obligations of Special Co-Owners Concerning Private Units

Special co-owners of private units shall have the right to freely use, enjoy, and dispose of the ownership of their private units to the extent determined by law.

Special co-owners of private units cannot use their private units to hurt, infringe, or hinder the use, or to disturb the livelihood, of the other co-owners of private units.

Special co-owners of private units shall not take any action that could harm the maintenance of the co-owned building or take any other action against the common interests of the co-owners of private units in relation to the management or use of the co-owned building.

Special co-owners of private units of co-owned buildings shall have the same obligations and burdens as Cambodian co-owners. Special co-owners shall comply with all obligations and/or burdens stipulated in the internal rules of the co-owned building and/or the laws in effect.

The Rights and Obligations of Special Co-Owners Concerning Common Areas

Common areas shall be under the regime of special undivided ownership of all co-owners of private units. Special co-owners shall have only the right to use and enjoy the common areas.

Special undivided ownership and other marginal rights recognized by law shall not be subject to division, disposal, and forced sale separate from the private unit.

Special co-owners shall participate in the maintenance of the common areas. The burdens of such maintenance shall be divided in proportion to the value of each lot except as otherwise agreed to or as stipulated to the contrary by the internal rules.

The right to use and enjoy the common areas, including the land on which the co-owned building is situated or the land developed as courtyard that has been determined as a common area, shall not cease although the building or the private unit ceases to exist. In the event that a co-owned building becomes dilapidated, impossible to reside in, or destroyed in any way including by a forced measure by the competent authorities to dismantle it for the safety of the residents, all co-owners may agree on repairing or reconstructing by taking charge of the expenses according to the proportion of the value of each lot or according to a previously-made agreement or the internal rules. The repair or reconstruction shall be undertaken in compliance with the effective legal procedures regarding construction permits and shall maintain the original structure of the building unless there is an agreement to the contrary or provided otherwise by the internal rules of the co-owned building.

In the event that a co-owned building gets totally destroyed by a human act or by force majeure and the Cambodian co-owners agree to sell the land on which the co-owned building is situated, special co-owners shall be entitled to receive sale proceeds based on their right to use and enjoy the common areas according to the proportion of the surface area of their private units or according to a previously-made agreement or the internal rules.

Source: The Council for the Development of Cambodia (CDC), Global Property Guide