As a foreigner investing property in Cambodia, you should know one fundamental rule of land property/ownership in Cambodia - only Cambodian nationals can own land and landed property within the Kingdom. Usually when we buy a condominium, we are given a “Strata Title” ownership. However, Strata title property is less common in Cambodia even though it’s growing in number.
In Cambodia, there are two other main forms of property titles, namely “Soft Title” and “ Hard Title”. Legally, both can give you freehold status but the property must be owned by either a Cambodian or a Cambodian company. There are a few important points you should know about these two titles before you sign the contract.
Soft title is the most popular form of ownership and is a commonly issued Cambodian land title, as the transfer taxes and fees are relatively cheaper than a hard title. Soft titles are registered at the local council or district level, and are not recognized at the national level.
Hence, the processing time is quicker and easier as well. The approval can be obtained in a few days (estimated 7 to 10 working days) rather than months. In Cambodia, more than 80% of land ownerships are held under the soft title. All the lands issued under this title will be legally recognized by the local government level (Sangkats & Khans). For Cambodians, it is considered a valid legal document of ownership in which practically any local bank will accept it as a collateral in order to secure a loan.
On the other hand, a hard title is a land ownership registered through the national government by land registry and is the strongest form of property ownership in Cambodia. It is well recognized by the Ministry of Land of Cambodia and thus gives property owners an indisputable right. In the event of any disputes, the owner of the hard title usually wins the suit. Hence, hard titles are claimed to be safer and is a more secured form of ownership, especially for foreigner investors. However, the transfer usually will take months (up to 12 weeks) to get approved. A transfer tax of 4% will be paid based on the total property value, which is more expensive as compared to soft titles.
Hence, before you purchase a property, it is critical to obtain outright ownership in order to feel secure about your new asset. You should check with your developer, realtor or lawyer to make sure the status of your title. If it is a soft title property, reconfirm with the seller if they are indeed the true owner and has no encumbrances on land. I believe it is a matter of time that all lands in Cambodia will be converted from a soft title to a recognized hard title with the government initiatives.
This article is written by Mandy Chen.
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