Taking control of land through a lease.
- 3 months ago
Long-term leases are another common way for foreigners to control land in Cambodia. For instance, the super-luxurious Phnom Penh Raffles Le Royal Hotel is held on a long-term lease. A long term lease gives the lessor all necessary rights to develop the land - e.g., he can get construction permission in his own name.
This is a very simple structure, but is less secure than the company structure.
There is no maximum term for which land can be leased from a private owner - the period is indefinite in the Land Law. Leases commonly last 50 years, 70 years, or 99 years. Leases longer than 15 years must be registered at the Land Office. On state land, there is a 40 years maximum, with the possibility of extension.
A background check on the owner is essential, as in the case of the landholding company structure. Leasing from a greedy, politically well-connected owner can be disastrous.
Safeguards typically built into the lease contract involve:
- Dispute resolution is often placed by contract outside Cambodia, e.g. in Singapore. This is less effective than widely believed, as many land disputes do not involve disputes over the contract itself, but over other matters. In addition, Cambodian courts often refuse to recognize foreign arbitration, or revisit issues already decided in the Court of Arbitration.
- A clause is often inserted requiring the owner to get the lessee´s permission to sell. Or preventing the owner from selling, unless the new owner recognizes the lease.
- In addition, a ´block sale notice´ can be registered with the Land Office, instructing the office not to sell the land without the lease owners´ permission.