Knowing legalities of real estate investment important, experts say
Understanding the legal aspects of investing in real estate is vital for every prospective property buyer to ensure that the investment is both profitable and safe, said experts at the ‘Legal Aspects of Real Estate Investment and Dispute Resolution under Commercial Arbitration Mechanisms’ event held at the Royal University of Phnom Penh on Thursday.
Real estate development in Cambodia has increased significantly in the last 10 years, along with the country’s economic growth.
Kieu Mealy, Arbitrator at Sok Siphana and Associates Law office, said, “Only natural persons or legal entities of the Khmer nationality have the right to own land. Thus, persons of foreign nationalities, even natural persons and legal entities, don’t own land.”
“A Cambodian subsidiary company formed as a joint venture between Cambodian and foreign investors can own land. By establishing a joint venture, foreign investors can legally invest in the country. But they must clearly define the purpose of investment and the responsibilities of investors, to avoid future disagreements. Also, a joint venture company can receive additional resources,” she said.
Unclear business goals, imbalances of skill level or resources, and divergent management methods of investors could increase risks for a joint venture company, Kieu Mealy said.
“When investing in real estate by setting up a Cambodian company that can own land, the key point to consider is to choose the best potential partner by examining all the details including their background and resources,” she said.
Another important point while discussing a joint venture is to consult your partners, seek the advice of experts, including legal and financial professionals, and clearly define the obligations of each party, intellectual property clauses, and dispute resolution methods.
Sotheara Ieng, President of the Cambodia-Japan Association for Business and Investment (CJBI) told Khmer Times, “real estate investments take a long time to get high returns. To buy a land or house with the hope that the price will go up, investors must look at a number of factors, including development plans and the government policies
All investments follow a boom-bust cycle, which repeats every 10 years. “If the economic situation is likely to improve in the next 3-5 years, the price of land will already be high.”
Chay Chandarvann, a Professor of Law, told Khmer Times, “The out-of-court dispute resolution offers many benefits, such as lower costs, legal fees, and paperwork and filing fees.”
In addition, the Commercial Arbitration Lab is efficient and fast in resolving disputes with flexibility, with the consent of the parties, and voluntary resolution at any time.
Dispute resolution requires keeping confidentiality and privacy without the participation of the public and the media. Maintaining good relations between the parties based on the principle of equity is a win-win strategy.
- tags: investment, real estate