Despite the huge growth in the Cambodia real estate industry, there are still many operators that are conducting real estate scams and misinformation for a quick profit.
Given the loose regulation of the industry, and the mixed standard of agent ethics, many of these scams do not come to light until it is too late. If you are not wary of these types of scams and misrepresentations, it could damage you financially.
Here is a list of the most common scams in the market, thanks to Realestate.com.kh. Keep these common real estate scams in mind when you are searching for property from both private sellers and agents in Cambodia, and protect yourself and your property assets. If you ever think you might be getting scammed, seek professional legal advice!
The Double Title Scam:
Properties in Cambodia come with soft titles and hard titles. Sometimes a property may have both. This scam involves an owner selling the house to two buyers. One buyer gets the soft title and the other gets the hard title. The person with the soft title loses the house because soft titles are only recognized in the local government, while a hard title is recognized at a national level. There has also been cases of multiple titles being issues, or forged - and sellers selling the same property to multiple people. There is a possibility that the buyer with the hard title is involved in the scam, but that is not always the case.
You can avoid this scenario by making an inquiry with the Ministry of Land Management, Urban Planning and Construction and the local government office managing property registration. Get a copy of the title from the seller and check it against official records.
Another safety precaution is to check whether the neighbors have hard titles. If they do, this means that the government has already titled the area. Buying a soft title in a place where most neighbors have hard titles is not advisable.
Hidden Land Disputes:
Having a soft or hard title in this scam is hardly relevant. This scam involves the property standing on a land with an ongoing dispute. Talking to neighbors usually reveals this issue. But you should also conduct a title search through a commune council official or the Ministry of Land just to be on the safe side. A professional real estate agent will do this on your behalf, or a lawyer with experience in property transactions.
Deposit Disappearance Act:
This scam is done by a fake owner. A buyer is asked to pay a deposit to secure the property. The seller then disappears after receiving the deposit. You may opt to pass the deposit through a reliable third party or an intermediary escrow bank account until everything is settled to protect yourself from this.
This scam involves someone pretending to be the owner of a property. These properties are mostly vacant properties. What you can do is ask or have someone ask the neighbors and village chief about the property and its history and owners. Then cross-check whether there are discrepancies with their stories and the seller’s story. Again, a title check is crucial - if the owner can’t produce the title, something is wrong. Go to the relevant authority and find out whether or not they are the real owner before you give them any money.
Hidden House Lease:
There are instances where a house has a fully-paid long term lease. It could also be registered as a separate entity from the land. It may also have rooms sold that utilized soft titles. This is a very complicated situation and should be approached with caution. A title search should reveal the facts. Hard titles should have all the necessary details.
You should seek help from local authorities if there’s just a soft title in place. As a preliminary check, note if there are rooms inside the property that the seller cannot open. If they intend to sell the house, they must be willing to force the door open or should have the key to open it.
One of the reasons people sell their properties at a lower cost is because there are damages you may not be able to see. Some of them are not really visible until after you’ve made the purchase and started moving in. It’s advisable that you bring an expert with you who can check the plumbing, electricity, and the structural strength of the property before you put any money down for it.
“No flooding” seems to be one of the selling points in property listings. Sellers will advertise it being in a flood free area even when it’s not. This can be detrimental once the rains come pouring in. One of the things you can check is whether there are flood lines; that is, where the lower half of a wall is darker. You can also ask around on forums or to neighbours in the area whether it really is a flood-free zone.
This is when a so-called developer advertises a new project and collects money that they say they’re going to use for construction, and then they suddenly vanish into thin air. This might be a landed housing project, a borey project, a plot land venture or a condo development.
This can be avoided by doing a thorough background check on the developer’s previous projects. Trusted developers usually already have a good track record. Note, this doesn’t necessarily mean that new developers are scammers.
You can also try looking for news articles regarding the development project from major and trusted publications. They mostly indicate prior achievements by the developer and whether it’s been approved or not. Take note though, positive media coverage should not be relied upon solely - as it is not full proof.
You can verify with the involved ministries as well – such as the Ministry of Land Management, Urban Planning, and Construction – if there are any approvals and certifications in place for the developer. They should have a company license for their development company. They should also have a master hard title for the land on which they are developing, a license for the development including a master plan of the full development from start to finish, and they should have a construction license. If the developer won’t present these things when asked, this is a clear warning sign. If you can’t buy with a hard title, or a strata title for high rise units, this is a clear warning sign.
These real estate scams involve declaring a property larger than it actually is and then selling it. The seller might say the property size is at 6x16 when it’s only 4x10. Buying in this condition sets you up to potentially get part of your house demolished in the future. Sometimes the owner will be aware of the issue, and sometimes they won’t - so this isn’t always a deliberate scam.
Checking the title at the relevant authority for these sizes will clarify this situation. Properties with an LMAP title have had the borders defined and GPS coordinates prescribed. These are the safest titles, and they can be executed at cost. The additional cost, however, will guarantee you are buying exactly what you think you are.
Working in Tandem:
These type of real estate scams involve two entities or people working together to increase a property price. One person buys undeveloped land and the second person announces a new development nearby. The development usually doesn’t specify a specific location. The other person then sells the undeveloped land at a higher price. They then both split the profit. Nothing is ever built after that.
Avoiding this is easier than the other scams because big developments need the approval of several ministries and are undertaken by companies with an established portfolio. Scammers usually do not also have physical offices. Again, always check if there are any approvals and certifications in place for the developer. They should have a company license for their development company. They should also have a master hard title for the land on which they are developing, a license for the development including a master plan of the full development from start to finish, and they should have a construction license. If the developer won’t present these things when asked, this is a clear warning sign.
Don’t let these scams scare you too much - just be aware…
Buying property in Cambodia can be beneficial if you do it right. A trusted real estate agent is a great start if they understand the transaction process and the market tricks well - but even some agents may not be working in your best interest. If you are concerned that you are being scammed, seek legal advice before you put any money down!