Logo of Phnom Penh Post newspaper Phnom Penh Post - Selling and purchasing condos remain problematic



Selling and purchasing condos remain problematic

Selling and purchasing condos remain problematic

The act of selling and purchasing houses and condominiums in Cambodia continue to throw up challenges, partially due to complicated co-ownership laws which were introduced in 2010.

When purchasing a condo unit, some Cambodian citizens practise the transference of co-owned property through the local authority to avoid paying a four per cent tax on the price of house they have purchased.

This spurs a conflict between the buyer and the seller, as the buyer needs a hard title certificate, which they are unable to obtain because it has been mortgaged by the developer.

Michael Nhim, former manager of The Bay condo, said the Cambodian government had encouraged and attracted investors to Cambodia by permitting projects to be sold before their construction.

Nhim continued, suggesting the government should require investors to hold 70 per cent capital of their total investment outlay, as one year of pre-selling could earn them anywhere from 30 to 60 per cent of the budget costs.

Therefore, if they mortgage their hard title certificate to the bank for 30 per cent of the investment, they will be able to get the certificate back, and transfer the ownership to their clients when the project is finished.

He added, “The government should strengthen this case. However, this problem is not a new one. Vietnam also faced similar problems, but they are one step ahead of us.”

Seng Lot, a spokesman for the Ministry of Land Management, Urban Planning, and Construction, said the land administration’s job is to require developers to divide each unit in a co-owned building and to pay a four per cent tax on it.

As for the land for any condominium, it is a co-ownership land. The ownership must be divided according to the price of each unit, Lot said.

He added, “The local authority does not have the authority to transfer any residence in any co-owned property or real estate property.”

“The government has decided through Sor Chor Nor (sub-decree) number 134 which states that purchasing, selling or transferring of any ownership is to be done through the Land Administration with a 4 per cent tax.”

CEO of Focus Property, Po Eavkong said he has talked about this problem in the past, dating back even before the 2008 Global Financial Crisis.

“The development system is complicated,” he said, adding that some co-owned property purchasers do not want to deal with the specialised authority because they do not want to pay for the four per cent tax.

He continued, “Cambodia has a sub-decree dealing with boreys and condominiums which requires that developers must abide by construction standards. However, that sub-decree states that ‘condominium and borey owners have the rights to alter their project without informing the ministry or authority’.”

“We are living in transitional times because if a developer mortgages their property ownership certificate, then puts their project up for sale, that means it’s duplicated. This is a point of catastrophe,” said Eavkong.

He also noted that some borey and condo developers do have the hard title certificate in hand, but they would rather issue out soft-titled certificates that are only signed by local authority to their clients.

“If you buy a borey or condo, you must have a hard title certificate. Sellers must provide hard title certificates to their clients to avoid further complication.”

Kim Heang, president of the Cambodian Valuers and Estate Agents Association said this was not a new problem for condos.

Heang said that if you have 200 units, you must issue 200 hard title certificates to your clients.

However, the current trend is that developers only issue out certificates to their clients that are signed by the local authority, as issuing hard titles is expensive.

“It’s a disease that needs to be cured because it cannot be left in this situation anymore. Condo developers must pay the bank to issue out hard title certificates to their clients,” Heang said.

“The thing is some developers are aware of this problem, but they pretend to not know about it. We don’t know how the ministry will deal with this issue.”

MOST VIEWED

  • Hun Sen: Full country reopening to be decided in two weeks

    Prime Minister Hun Sen has announced that if the Covid-19 situation remains stable for 15 consecutive days from the end of the October 5-7 Pchum Ben public holiday, Cambodia will reopen fully, albeit in the context of Covid-19 whereby people have to adjust their lives to

  • Cambodia sets new Covid-19 quarantine rules

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Cambodia unveils new quarantine regulations

    The government has modified Covid-19 quarantine requirements, shortening the duration for, among others, Cambodian officials, foreign diplomats and delegations, investors and inbound travellers in general. According to an official notice signed by Minister of Health Mam Bun Heng late on October 16, quarantine length for Cambodian

  • Hun Sen: Cambodia set to fully reopen

    Prime Minister Hun Sen concludes that the October 5-7 Pchum Ben public holiday, during which many people either flocked to their hometowns for family reunion or gathered at tourist attractions across the country, has not caused an outbreak of Covid-19. In a special address to

  • Will Evergrande change the way Chinese developers do business in Cambodia?

    China’s property sector policy has exposed the grim financial condition of real estate developers including those operating in Cambodia, which raises questions over the viability of their projects and business going forward The dark blue netting draping over one of Yuetai Group Co Ltd’

  • Cambodia seeks probe into 'false reports' on Hun Sen's alleged Cypriot passport

    Minister of Justice Koeut Rith on September 6 wrote a letter to his Cypriot counterpart Stephie Dracos requesting cooperation in investigating and providing the truth in relation to the "exaggerative and false allegations" that Prime Minister Hun Sen holds a Cypriot passport. In his letter, the