Escrow Services in Cambodia: What They Are, How They Work, and Which Banks Offer Them

You bought a property, let say a house or condo. 2 important questions: What if the seller doesn't transfer ownership after receiving payment? What if the buyer changes their mind after construction has already started?

This is where an ‘escrow service’ can make a significant difference.

While escrow has long been common in international business, it is becoming increasingly relevant in Cambodia as the country's property market continues to mature.

Here's what you need to know about escrow services in Cambodia, how they work, and which banks currently offer them.

What Is an Escrow Service?

An escrow service is a financial arrangement where a neutral third party, usually a licensed bank or trustee, holds money on behalf of a buyer and seller during a transaction.

Instead of paying the seller directly, the buyer deposits the agreed amount into an escrow account. The funds remain safely secured until all conditions in the sale agreement have been completed, such as transferring the property's ownership or fulfilling contractual obligations.

Once both parties meet the agreed terms, the escrow provider releases the funds to the seller.

This process protects everyone involved.

• For buyers, it reduces the risk of paying for a property before ownership is legally transferred.
• For sellers, it provides confidence that the buyer has already secured the necessary funds before completing the transaction.

 

How Does an Escrow Service Work in Cambodia?

lthough the exact procedures may be different between financial institutions, the overall process is generally straightforward and easy. 

1. Both Parties Sign a Sale Agreement

The buyer and seller first agree on the terms of the transaction by signing a Sale and Purchase Agreement (SPA). Depending on the bank's requirements, the agreement may need to be witnessed or verified by a legal representative before the escrow account is established.

2. The Buyer Deposits the Funds

The buyer transfers the purchase amount, or an agreed milestone payment, into the escrow account.

The bank securely holds the funds while informing the seller that the money has been received and is ready for release once all contractual conditions have been met.

Additional Read: Common Payment Terms for Buying Properties in Cambodia

3. Ownership Is Transferred

The seller completes their obligations, such as transferring the property's hard title or completing the required legal documentation.

After the escrow provider confirms that all agreed conditions have been satisfied, the funds are released to the seller. If the transaction cannot be completed according to the agreement, the funds are handled based on the terms set out in the escrow contract.

What Can Escrow Be Used For?

Although many people associate escrow with buying property, it can be used for various high-value transactions.

Common uses include:

• Residential property purchases
• Commercial property transactions
• Land acquisitions
• Company share transfers and mergers & acquisitions (M&A)
• Large commercial contracts between businesses

For real estate transactions, escrow provides additional security by ensuring that payment and ownership transfer happen according to the agreed timeline.

Additional Read: 50 Must-Know FAQs for Real Estate Investors in Cambodia

Who Can Open an Escrow Account?

Both individuals and businesses can generally use escrow services in Cambodia, provided they meet the participating bank's compliance requirements.

For individuals, banks typically require:

• A valid National ID card or passport
• A signed Sale and Purchase Agreement
• An existing savings or current account with the bank

For companies, additional documentation is usually required, including:

• Company registration documents
• Business licence
• Corporate resolutions
• Identification of authorised representatives
• The relevant transaction agreement

But remember, banks may request further documents depending on the nature and value of the transaction.

Additional Read: How do trust services work in Cambodia? 

How Much Does an Escrow Service Cost?

Escrow fees vary depending on the financial institution and the size of the transaction.

Generally, the processing fee represents only a small fraction of the property's value, making it a relatively affordable safeguard against the financial risks associated with large property purchases.

Before opening an escrow account, it's always advisable to confirm the latest fee schedule and service terms directly with your chosen bank.

Banks in Cambodia That Offer Escrow Services

Several licensed banks in Cambodia currently provide escrow solutions for individuals and businesses.

Some of the most recognised institutions include:

• ABA Bank
• Canadia Bank
• Wing Bank
• Vattanac Bank
• SBI Bank
• BRED Bank Cambodia

Each bank may have different eligibility requirements, fee structures, transaction limits, and documentation requirements. Buyers and sellers should compare the available options and choose the provider that best suits their transaction.

Is Escrow Worth Using?

For high-value property transactions, an escrow service can provide valuable peace of mind.

Instead of relying solely on trust between the buyer and seller, escrow introduces an independent third party to ensure that funds are only released when everyone has fulfilled their obligations.

While it does involve an additional processing fee, many buyers consider it worthwhile, especially when purchasing off-plan developments, high-value homes, commercial properties, or when dealing with parties they have not previously worked with.

If you're planning to buy property in Cambodia, it's also important to understand the legal process, title types, financing options, and current market conditions before making your decision.

Browse the latest property listings, explore neighbourhood guides, and access expert real estate insights on realestate.com.kh. You can also speak with one of our property specialists for guidance on finding the right home or investment opportunity in Cambodia!