VLP Legal Press #38: Key Points for Owners and Purchasers of Units in Co-Owned Buildings
Condominium is a type of co-owned building which has become a popular housing option for Cambodia's younger generation and an attractive investment for both local and foreign purchasers.
Whether you are considering purchasing a condominium unit or already own one, it is important to understand the legal nature of the property, the requirements that apply to the purchase and transfer, and the obligations that come with ownership. Understanding these points can help purchasers identify potential risks before entering into a transaction and manage their responsibilities after becoming an owner.
🔎 Before Signing the Sale and Purchase Agreement
Know What You Will Own
Unlike a landed property, where ownership generally concerns a plot of private land registered and owned by the named owner under a certificate of ownership title, a condominium unit is a privately owned unit within a co-owned building constructed on a plot of land. The ownership of such a unit is commonly evidenced by a “strata title” or, formally, a certificate of ownership over a private unit.
The legal framework distinguishes between:
Private units – individually owned by purchasers; and
Common areas – areas and facilities subject to collective ownership and management by the co-owners.
Therefore, a purchaser should understand not only the unit itself, but also:
what forms part of the private unit;
what constitutes common areas;
how the common areas are managed and maintained;
what fees and other obligations the owner must contribute; and
what restrictions apply to the use or alteration of the unit and common areas.
This is particularly important because ownership of a private unit does not give the owner unrestricted control over the entire building or its facilities.
Know Whether You Can Own the Unit
Cambodian law generally permits Cambodian nationals to own land in Cambodia. Foreign ownership of land, however, is generally restricted. We see an exception on foreign ownership of property in the Law on Providing Foreigners with Ownership Rights in Private Units of Co-Owned Buildings which provides a legal framework allowing qualifying foreigners to own private units in qualifying co-owned buildings.
Key restrictions to the legal framework include:
Eligible property
The property must be a qualifying private unit in a co-owned building.
Foreign ownership of the private unit does not give the foreign owner the same ownership rights over the underlying land as a Cambodian owner.
The purchaser should verify that the specific unit can be registered in the foreign purchaser's name and should not rely solely on a developer's or seller's statement that the unit is “foreigner eligible.”
Floor restriction
Foreigners generally cannot own private units located on the ground floor or underground floors.
The purchaser should therefore verify the actual location and classification of the unit.
70% foreign ownership limit
Foreign ownership is generally limited to 70% of the total surface area of all private units in the co-owned building.
The calculation is based on the total surface area of private units and exclude common area, rather than simply the number of units.
A building may have many units available for sale while having little or no remaining foreign ownership quota.
A foreign purchaser should confirm the remaining quota before signing or completing the purchase.
Foreign purchasers should therefore confirm that the particular building and unit satisfy the requirements for foreign ownership before signing the transaction.
Know Whether It Is Safe to Purchase
Once the purchaser has confirmed that the unit can legally be acquired, the next step is to conduct legal due diligence.
The purpose of due diligence is to confirm that the purchaser is acquiring the property represented by the seller, that the seller has the authority to transfer it, and that there are no known legal issues that could affect ownership or future use.
At a minimum, the purchaser should verify:
Building status: the building is legally recognized and registered as a co-owned building.
Ownership certificate: the certificate is valid and the unit details correspond with the property being purchased.
Seller's authority: the seller is the registered owner and has the legal right and authority to transfer the unit.
Encumbrances: the unit is checked for mortgages, security interests, disputes or other restrictions affecting the property.
Common areas and management: the purchaser understands the relevant management arrangements, fees and building regulations.
Transfer and registration: the transfer can be properly completed and registered with the competent authorities.
These checks should ideally be completed before signing the SPA or making a substantial payment.
🫱🏼🫲🏻Completing the Sale and Purchase
Know when ownership is transferred
Once due diligence is satisfactorily completed, the parties can proceed with the sale and purchase agreement (“SPA”).
However, signing the SPA and making payment should not be confused with completion of the legal registration of ownership – where ownership over the unit has to be transferred from the seller and properly registered with the competent authorities in the purchaser’s name under the strata title.
For purchase of private unit within a new project directly from the developer, purchasers must note that the strata title is not automatically issued in the purchaser’s name upon completion of the project. The purchaser needs to approach the developer to request for the transfer of the strata title (usually registered in the developer’s name) to the purchaser.
Why a strata title matter
Properly registered ownership provides greater certainty regarding the purchaser's legal interest in the unit and may be important for future transactions involving the property.
It can provide greater clarity concerning:
Ownership – legal recognition of the purchaser's ownership of the private unit;
Transferability – the ability to sell or transfer the property, subject to applicable law;
Investment value – greater confidence in the property's legal status;
Financing – clearer documentation for potential secured transactions;
Inheritance – clearer succession of the registered property interest; and
Exit strategy – a clearer basis for future resale or transfer.
🏢Becoming the Owner
Registration of ownership is not the end of the purchaser's responsibilities. As an owner of a private unit, the purchaser also has obligations relating to the management, maintenance and use of the co-owned building.
Management and Maintenance Fees
Owners may be required to contribute to the costs of managing, maintaining and operating common areas and facilities.
Before purchasing, the purchaser should understand:
the amount and basis of management and maintenance fees;
when the fees are payable;
what services or expenses the fees cover; and
how additional or major maintenance costs are allocated.
These recurring costs should also be considered when assessing the overall cost and investment return of the property.
Building Rules and Use of Common Areas
Ownership of a private unit does not give an owner unrestricted control over the building or its common facilities. Owners should review and comply with the building's internal regulations, which may govern matters such as:
use of common facilities;
renovation or alteration of the unit;
noise and other activities affecting other owners;
parking;
access to shared facilities; and
other matters relating to the operation and management of the building.
Such rules may directly affect how an owner can occupy, renovate, use or rent out the unit.
⭐Conclusion
When purchasing a condominium or other private unit in Cambodia, investors should look beyond the purchase price and ask: “What exactly am I legally acquiring?” and “What do I need to do after becoming the owner?”
The information in this article reflects the law as at the date of publication and is for general reference only. It does not constitute comprehensive legal advice. If you need further guidance, feel free to reach out to us at connect@vlplaw.co.