With Strata titles being the more popular choice to enter into the Cambodian real estate market, some foreigners are not aware that they are actually able to utilize other means to own, or at least control, landed properties and land. Grant Fitzgerald, Country Manager of Independent Property Services, reveals – in his interview with Realestate.com.kh – other ways of buying land as a foreigner in Cambodia.
Buying Land as a Foreigner in Cambodia via Nominee:
Although a bit riskier than buying in your own name, Fitzgerald says that a widely-used method of buying land as a foreigner in Cambodia is through a nominee structure.
He explains that “essentially, the nominee structure works by the foreigner buying for the property. However, the title is held in a Khmer national’s name.”But he clarifies that there are security measures that foreign nationals can take in order to protect their investments.
He says that you need to secure four documents as a foreigner to buy through a nominee – 1) a mortgage agreement, 2) a loan agreement, 3) a lease agreement, and 4) a security agreement.
1. Mortgage Agreement:
He explains that a mortgage agreement is registered through the Sangkat and transforms the buyer into a bank, granting property activity by the Cambodian Citizen only through the approval of the foreign national.
2. Loan Agreement:
Meanwhile, he says that a loan agreement is a “paper loan that accrues interest over time” and is made between the foreigner and the nominee.
3. Lease Agreement:He continues, the lease agreement “essentially allows the foreigner to live on the property” through a 50-plus -50-year lease agreement.
4. Security Agreement:And the security agreement just basically sets out the obligations and limitations of each party. What Types of Titles Can Foreigners Own Through the Nominee Structure?
Fitzgerald expounds that through this structure, foreigners are able to own any type of property or title. He says, “It’s all about setting it up correctly and using those security documents. When it’s done properly, it’s really safe and really effective.”
Can Business Entities Own Land in Cambodia?Fitzgerald says that it is possible to own land as a company in Cambodia through a process similar to a nominee structure, but you have to set a specific type of business that you need to do through a lawyer. These are called land holding companies.
He explains that a Cambodian national would still need to hold 51 percent of the company, but there are also legal documents these business entities can secure to gain majority of the power and rights, even with just 49 percent of the company shares.