Comparing Two Types of Real Estate Business Licenses in Cambodia

• 13 April 2021
• Uncategorized
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All development business for condominiums, land lots, office buildings, malls and residences for the purpose of selling or long-term leasing must be licensed by the Ministry or permitted by the Provincial-Municipal Department.

All real estate development businesses are divided into three categories: 1) residential development building apartments and villas for sale, 2) co-ownership building business referred to as the business of building or construction of condominiums, office buildings and malls, which are owned or occupied by many owners and 3) lot development businesses for sale.

According to a Prakas regarding the Management of Real Estate Development Business by the Ministry, licenses and permits of residential and co-ownership development business are divided into two types:

• Type 1: A license or permit granted to any person or company who has just completed construction and is ready to announce it for sale.

• Type 2: A license or permit granted to any person or company who announces a project for sale while working on the construction at the same time.

For type 1, it is not strictly regulated as the sales can only be done after the construction is completed, which causes less risk for buyers. With this type of license, the developer can build the project with their own funds or outside financing.

Meanwhile, the type 2 license is strictly regulated. The law requires developers to open and register a bank account. Besides, developers must also show evidence of the source of capital that is at least 20% of the total construction costs. In addition, to get the license, the project owner must also deposit 2% of the total construction cost.

Therefore, as buyers especially when you want to buy a property from projects that have yet to finish construction, you may want to ask to see their permit and whether or not it is type 2, to avoid future dispute. (Read more)

• Laws and Regulation