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PropertyDream Real Estate, Rental and Property Sales.

Probably The Best Property Management Sales professionals

PROPERTY DREAM CAMBODIA

About Us: PropertyDream.net website is here to bring sellers and buyers together.
As Cambodia is an exceptional investment dream,
Cambodia is in investment prospects the same as Thailand 15 Years ago.
With legal safeguards the same.

Can foreigners buy Real Estate in Cambodia?
The short answer is ‘yes!’
The following options show how this is possible.

Options for Buying Real Property in Cambodia
The governing principal of Cambodian Land Law is that foreign nationals cannot hold a 100% stake in real property within the Kingdom. However, legal mechanisms and documentation exist that allow foreigners to fully control the purchase, sale and use of real property in which they have invested, and benefit fully from any profits they make.

There are basically 5 Options for buying real estate and details of these follow. Option 1 [forming a company] is the safest option. Read the information below for a general idea of how this method works.

Option 1: Forming a Company with a Cambodian Citizen
The safest method by which foreign nationals can purchase real property within Cambodia is to form a limited company in partnership with a Cambodian citizen. Any real property purchased for investment is then registered in the name of the company. The company must have a minimum 51% Cambodian share holding. However, careful allocation of shares, and careful drafting of the rights attached to share certificates can ensure the foreigner’s full control of the company and its assets. Additional mortgage, security and Power of Attorney documents can also be created to accompany ownership documentation. Following this procedure ensures security for the foreigner’s investment.

Information on Forming a Company

Forming a Company in Cambodia
Note

This section of the PropertyDream.net website is intended for information purposes only. Foreigners wishing to form a limited company in Cambodia are strongly advised to seek independent legal advice when drafting the necessary documentation.

Introduction
In terms of buying and selling real estate, forming a company in partnership with a Cambodian citizen is regarded as the safest method of investing in land and property within the Kingdom. It is therefore important to have a general understanding of how foreigners can register a company in Cambodia.

The governing principal of Cambodian property law is that a foreigner cannot hold a 100% share in land or property within Cambodia. This principal also applies to the share held by a foreigner in a Cambodian-registered company, including limited companies formed to manage real estate. A 49% stake in a limited company can be vested with a foreigner provided that a 51% stake is vested with a Cambodian national.

Applications and Company Documents
There are two methods of applying to form a company. One is to use a prescribed application form drafted by the Ministry of Commerce. This is accompanied by a Company Document that clearly states the business purposes and structure of the company. The following issues should be addressed in the Company Document:

•Name of the Company
•Type of Company (e.g. limited company)
•Business purposes and objectives of the Company
•Registered address of the Company
•Duration of the Company’s business activities in Cambodia
•Terms of conduct of the business
•Binding terms and conditions affecting the conduct of business and the rights of shareholders
Some potential investors consider the format of the Company Document, prescribed by the Ministry of Commerce, to be inadequate and opt to privately produce their own Company Document using an independent lawyer.
The advantage of this second method [see below] is that additional safeguards and conditions can be added to the Ministry’s prescribed format.

Application Fees and Company Shares
The fee for making an application to form a limited company is currently set at R4,000,000 or US $1000.
This fee is paid by the foreigner and is taken as the registered capital of the company.
It also represents the total share value of the company. An example of the possible division and valuation of the shares is shown below.

Total Registered Capital of the Company: .............R 4,000,000 or US $1,000
Total value of all company shares:..........................R 4,000,000 or US $1,000
Total number of company shares:..........................Usually 1000
Individual value of shares:........................................R 4,000 or US $1
Foreigner’s share allocation:...................................490 shares (Type X)
Cambodian’s share allocation:...............................510 shares (Type Y)

There are numerous options in terms of company shares.
For example, it is possible to divide the shares into two types [see above] and attach different rights to the different types of shares.
In an arrangement like this the Cambodian’s rights might preclude him/her from voting on company policy or benefiting from property sales.

Licenses to Operate
Commercial licenses are generally sufficient to cover the business activities of companies dealing in real estate.
Commercial licenses are granted by the Ministry of Commerce upon submission of the Company Document, presentation of the Application and the creation and distribution of company shares.

Large investments [in excess of $1,000,000] are licensed through the Cambodian Development Council.
The CDC handles the concerns of multinational companies investing in capital works projects such as hospitals, roads and city drainage systems.

Licenses in Cambodia are granted for the following business purposes:
•the sale, exchange or purchase, and the import or export,
•of products and materials
•commercial storage and warehousing of products and materials
•the purchase, sale or rent of land or property
•provision of medical services
•commercial distribution businesses operating by land, sea or air
•construction and capital works services including
•infrastructure improvements
•tourism and hospitality
•investment in agriculture and animal husbandry
•investment in industry
•investment in the production of handicrafts
Government Facilitation Fees for setting up a Limited Company
Application: R 4,000,000 or US $1,000 (the registered capital and total share value)

Licenses:

•The cost of a non-company, merchant’s license used to register a small, commercial business.
US $400 (1-2 months) or US $700 (1-2 weeks)

•The cost of a license used to register a large commercial company or business enterprise [including a company used to own real estate].
US $1000 (for a fast-track license taking approximately 1-2 weeks)

Please note:
The above costs exclude any administrative fees resulting from the creation and distribution of share certificates. Neither do the above costs include any legal fees incurred when independent legal advice is sought.

Forming a Company using an Independent Lawyer
There are a wide range of legal safeguards available to foreigners using an independent lawyer to draft company and/or property ownership documents. Foreign investors are advised to discuss these options with their chosen legal representative[s].
As a guide, here are some of the documents and legal options available.

•Company Document
Company Documents produced by an independent lawyer should address similar issues to those produced using the prescribed form issued by the Ministry of Commerce [see above].

•Power of Attorney Document
A Power of Attorney document waives the rights of Cambodian business partners to manage; control; sell; possess or profit from property bought in the name of a company with a 49% [foreign] - 51% [Cambodian] share holding. The principal purpose of this type of Power of Attorney document is to further protect the ownership rights of foreign real estate investors.

•Registered Title Deed
A Title Deed prepared by an independent lawyer and registered at government [Ministry] level provides first-class legal security for property bought through a Cambodian-registered company. Security of tenure is further enhanced if the new Title Deed is prepared using Cadastral or LMAP land registration procedures. In most cases the company name would be used on the Title Deed as the registered owner of the property, removing any ambiguity related to ownership.

•Security Document
Contact a legal specialist for further details.

•Mortgage
Contact a legal specialist for further details.

Legal Fees for setting up a Limited Company using an Independent Lawyer
Legal fees can vary depending on the law firm used. Contact private law firms direct for precise quotations.

Security Document:.................................$1000
Power of Attorney Document: ................$500
Mortgage:....................................................$1000
Register Title Deed: .................................$500
Company Document and License:........$1100

Approximate Total Cost:................... $4,100

Advantages
The foreign buyer has their own company and any property they purchase is registered using the company. The level of security for any investments made through the company is high. Real estate held in the name of the company is registered at government level.

Additional Notes: Option 1
Under this Option, the foreigner is expected to pay 100% of the purchase cost of real property plus any construction costs. If the real property is later sold, 100% of the sale price goes directly to the foreigner. This includes any profit accrued as a result of the property increasing in value. This issue should be detailed carefully in any company and/or sales documentation.

Option 2: Purchase plus long-term Rental
This method allows foreign nationals to purchase real property and register the Title Deed in the name of a Cambodian citizen. The foreigner and the Cambodian then enter into a long-term rental agreement by which the Cambodian citizen leases the property back to the foreigner. Lease periods can last up to 99 years.

The problem with this method, and why it has few takers, is the psychological attachment to freehold ‘ownership’. Most foreign investors expect full ‘ownership’ of something they buy. The principal of renting back property that has already been purchased is an anathema to most foreigners.

However, correct drafting of the terms of the property holding and lease arrangements make this a reasonably secure method of controlling real property in Cambodia. Under this method, the foreigner may sell the property at any time and keep 100% of the revenue from the sale. The Cambodian citizen is not permitted to disagree with or obstruct the sale. The foreigner retains the original copy of the new Title Deed as a security precaution: sale of real property is impossible without the original copy of the Title Deed.

Additional Note: Option 2

Though the foreigner can sell the property at any time, the Cambodian citizen’s signature or thumbprint is generally required before any sale can take place. A good working relationship between both parties is therefore very important.

Option 3: Registering Real Property with a Cambodian Citizen
This method is very similar to Option 2 but requires 100% trust in the Cambodian citizen.

Foreign nationals have rights, under the Kingdom’s Statutes, to choose a Cambodian in whose name their Title Deed is registered. That is, a foreign national can purchase property and register the purchased property in the name of the Cambodian citizen (see Additional Note below).

Once the Title Deed is transferred to the Cambodian citizen, the foreigner retains possession of the new Title Deed. This is a security precaution that protects the foreigner’s interests by preventing the Cambodian citizen selling the land or property: sales are impossible without the Title Deed. Transferring the Cambodian’s rights to the foreigner via a Mortgage or Lease Agreement provides additional security for the foreigner’s investment.

Copies of the Title Deed and any Mortgage or Lease Agreements must be registered with the Department of Provincial Land Management, Urban Planning and Construction, as well as the appropriate District and central government departments that handle land registry. Most importantly, a copy of the Land Title and any Mortgage or Lease Agreements must be lodged with the Cadastral Land Registry Office.

Additional Note: Option 3

The Cambodian citizen in whose name the Title is registered does not need to be resident in Cambodia. For example, the Title can be registered with a Cambodian citizen living in the USA or Australia. The Cambodian citizen must be able to prove Cambodian nationality.

Option 4: Marriage to a Cambodian National
Foreign buyers who are married to a Cambodian national can register real property using the name of their wife/husband on the Title Deed. It is also possible for a foreign national married to a Cambodian citizen and resident in the country for a long period to apply for Cambodian citizenship. In the event of citizenship being granted, Cambodian Law holds that land can be registered in the names of both parties. Neither partner can subsequently sell the land or property without mutual agreement.

In the event of divorce or separation, division of the land or property is dependent on the conditions under which divorce or separation takes place, and the decision of any court ruling or arbitration relating to the divorce.

Option 5: Acquisition of Honorary Cambodian Citizenship
A foreigner may be granted honorary Cambodian citizenship if he or she donates a significant sum of money to the Royal Government of Cambodia for the purposes of benefiting the people of Cambodia. Foreigners who have made a special impact or rendered exceptional help to the Kingdom may also be granted this honour in recognition of their expertise or altruism.

One consequence of being granted honorary citizenship is that it becomes possible for a foreign national to acquire a 100% right of ownership over real property purchased within the Kingdom. This arrangement is recognized by the Ministry of Land Management, Urban Planning and Construction for the Kingdom of Cambodia, and by the Royal Government.

Additional Note: Option 5

Honorary citizenship is recognized by the Royal Government of Cambodia as a legitimate means of purchasing real property within the Kingdom but it does not affect the foreigner’s original nationality or citizenship in any way.

Independent Legal Advice
PropertyDream.net is committed to providing the highest degree of security to its clients. Should any client wish to seek expert, independent legal advice, we sagest You contact your embassy for a list of approved solicitors’ that specializes in Cambodian Land Law, and in the preparation of land purchasing and ownership documentation.
PropertyDream.net strongly recommends that all its clients seek expert, independent legal advice before purchasing real estate within the Kingdom of Cambodia.

This website is designed to provide general information to overseas investors seeking to invest in Cambodian real estate, and to display a selection of the real estate available. It does not purport to provide legal advice. Legal advice should be obtained separately from a reputable and qualified legal specialist or law firm.

 


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