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The Cambodian legislature recently approved a sub-decree that will allow foreigners to own 70% of co-owned buildings. This new policy compliments the recent repeal of the prohibition against any foreign ownership of private units above the ground floor, under the hope that such changes will spur foreign investment. Given these new circumstances, it might behoove the aspiring non-Cambodian property mogul to review his or her rights of co-ownership and to consider a few tips.

The rights of co-ownership embraced by the 2009 Law on the Management and Use of Co-Owned Buildings are similar to those of Thailand, Australia, and the UK, as well as many other jurisdictions. Co-owners receive an ownership right to their private unit and have ‘use rights’ to common areas, meaning that co-owners share the benefits and maintenance costs of the common areas. Common areas include courtyards, stairs, shared walls, entrance ways, etc…

This split system of ownership also means that a co-owner’s rights are limited in several respects. The 2009 law requires any building with five or more co-owners to have a management board composed of co-owners that must establish and follow a set of internal regulations for the building’s occupants. Any change in established regulations requires an absolute majority approval from all co-owners. The law provides an example of acceptable, minimum standard, regulations. Constraints placed upon co-owners, generally fall into two categories. The first, use, deals with what the co-owner can and cannot do in their private units, e.g. the co-owner can’t modify their unit in a way that will damage the structure of the building. The second, alienation, deals with how a co-owner may transfer his or her interests; e.g. the co-owner’s right to lease (or not), and the duties of the transferee to pay association fees.

Although the 2009 law is similar to the laws seen in other jurisdictions, it lacks definition on certain rights that have been established elsewhere. For instance, the law fails to mention a co-owner’s right to information. Such a right would be useful in verifying the building’s financial stability or insurance policy. The 2009 law also fails to discuss the co-owner’s right to be free from nuisance or discrimination.

Furthermore, before a purchaser rushes out to buy up property in a co-owned building, the purchaser should ask five questions.

First, is the building’s management board functioning properly? A good management board will collect maintenance fees on time to ensure proper maintenance of common areas and will ensure compliance with internal regulations from other co-owners.

Second, is the building’s maintenance reserve fund adequate? A building with an adequate reserve fund will have common areas kept in good condition and will not need to make special assessments often.

Third, are the building’s internal regulations something by which you can live?

Fourth, is the building adequately insured? A good policy should cover the estimated cost of rebuilding and bringing the building up to code if necessary.

Finally, are the owners satisfied? Simply talking with the owners can give you a good feel for whether that building is right for you.

The flood gates are open. Non-Cambodians can now privately own significant portions of co-owned buildings in Cambodia. However, although the system of co-ownership seems similar to those in several countries, there are still gray areas where a co-owner’s rights aren’t so certain. And in general, prospective buyers would be wise to follow the old adage: Look before you leap.

The Post has an interesting story about a new law firm, reportedly the first public interest firm in Cambodia:

On the surface, Samreth Law Group is a private firm and does much of its work for private clients. But instead of pursuing the profit motive, funding from the private practice is reinvested in public interest legal advocacy. […] [T]he firm uses a sliding pay-scale fee structure that takes into account its clients’ ability to pay meaning that they often work pro bono.

The biggest issue, as the article points out, is the potential for conflict between their paying private clients, and their pro-bono public interest clients:

“Because working on high-profile land dispute cases can put them up against powerful interest, the firm must ensure that it treads carefully in order to preserve he flow of private work it depends on. ‘So, the strategy of case selection is important’, [senior lawyer] Ly Ping said. ‘We try to take medium-level cases, ones that are not too big.’ ”

Best of luck to them.

We’ve blogged before on the best way to handle a traffic accident – basically make sure you have insurance, and call your insurer to negotiate on your behalf.

According to a Post article yesterday, car insurance might soon become mandatory:

Vehicle insurance could become compulsory under amendments to the Land Traffic Law currently under consideration by an inter-ministerial working group, officials said.

Preap Chanvibol, director of the land transport department at the Ministry of Public Works and Transport, said in June that his working group had finalised the amendments to the law, and was planning to send them to the Minister of Public Works later in the month.

Though I haven’t seen the draft proposal, in principle mandatory insurance would be a very good development, continuing the Cambodian Government’s recent efforts with regard to road safety.

As it is now, most accidents are settled on the side of the road, too often with little consideration to the law itself. If all drivers were insured, the insurance companies would presumably negotiate amongst each other to settle claims, and bring suit to court when they can’t reach an agreement.

Hopefully claims would eventually be decided with reference to the traffic law.

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The work of a handful of attorneys at BNG Legal, this blog's mission is to keep the world up-to-date on legal issues in the Kingdom of Cambodia.

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