Behind the Fine Print: Understanding the Sales and Purchase Agreement in Cambodia

At IPS Cambodia, we believe that a well-informed buyer is a protected buyer. Whether you’re investing in a condo, landed property, or off-plan unit, understanding the Sales and Purchase Agreement (SPA) is the first step to a secure transaction. Here’s everything you need to know, including the questions clients most frequently ask our team.

What is a Sales and Purchase Agreement (SPA)?

The SPA is a legally binding contract between the buyer and seller (or developer) that outlines all terms and conditions of the property sale. In Cambodia, it is a required document for all property sales and must be in writing. Signing the SPA formally confirms your commitment to buy the property, making it a critical document that protects both parties.

In Cambodia, the SPA is usually drafted by the developer or the seller’s legal team. At IPS, we have an experienced internal legal team that carefully reviews every document for our clients to ensure fairness and accuracy. While buyers have the option to use their own legal advisor, many prefer the practical and straightforward support provided by IPS to avoid unnecessary complications and ensure a smoother transaction process.

Legal Requirements for SPAs in Cambodia

• In Writing & Witnessed: The Cambodian Civil Code mandates that the SPA must be in writing and signed with witness to ensure validity of the agreement.
• Multiple Purchasers Allowed: Yes, you can have multiple names on the SPA, making it ideal for family purchases or investment groups.
• Bilingual Documents: SPA’s can be written in either Khmer or English language, though if challenged in court, it will be the original Khmer language version, or the English-languages’ Khmer translation that is used by the court.

What’s Included in a Standard SPA?

• Full Details of Buyers and Sellers: Full legal names, ID/passport numbers, residential address, contact number, and in some cases, nationality. The SPA also includes bank account details of the seller or developer, specifying where payments must be sent. This ensures clear identification of all parties involved and reduces the risk of payment errors.
• Property Description: Exact property details, address, unit number, land area, and title type (Hard, Soft, Strata).
• Price & Payment Terms: Total purchase price in USD or KHR, deposit amount, payment schedule, and any penalties for late payment.
• Transfer of Ownership: Timeframe for title transfer, who covers transfer taxes, and how ownership will be officially recorded.
• Handover Details: Expected completion date for off-plan, handover process, and warranty periods.
• Dispute Resolution: Method of resolving conflicts, usually through agency mediation, or through Cambodian courts or arbitration, if required.

Common Questions Buyers Ask (With Straight Answers)

Foreign Companies Buying Property in Cambodia: SPA & Title Explained

Can a company be the buyer on the SPA?

Yes, both local and foreign companies can be listed as buyers on the SPA, though only Cambodian land holding titles can be registered on the title as owning the property

Strata Title (Condominiums):

• Foreign companies can be listed on the SPA and the final strata title will also be issued in the company’s name, in Khmer script.
• This is valid as long as the building stays within the 70% foreign ownership quota.

Landed Property (Hard Title Land):

• Foreign companies cannot legally hold hard title land in Cambodia. Even if named on the SPA, they cannot register land title in their name.
• Alternatives for foreign buyers include:
  • Setting up a Cambodian company (minimum 51% Khmer ownership), allowing the company to legally hold land title.
  • Using a trust structure where the title is held by a licensed trust company, with the foreign company as the beneficial owner.
  • Nominee structures where a local Cambodian holds the title on behalf of the foreign company.
  • Perpetual leases, where foreign individuals or companies can secure long-term use rights (up to 50 years, renewable), offering practical control without direct ownership.

Summary Table:

IPS can guide you through the best route based on your ownership goals, whether that’s maximizing flexibility with a strata title or securing land via secured structures.

IPS Pro Tip

Never sign an SPA without a thorough review. Here’s what we always advise checking:

• Penalty Clauses: Understand the financial penalties for late payments or cancellations. These can sometimes be disproportionately high if you don’t clarify them upfront.
• Handover Obligations: Know exactly what condition the property will be in at handover, finished units, furnishing, utilities connected, and common area access.
• Title Guarantees: Verify the type of title you will receive and ensure it’s clearly stated in the SPA. This directly affects your ownership rights.
• Refundability Terms: Be crystal clear on deposit terms, refund options in case of project delays, or contract breaches.
• Payment Triggers: Check if payment triggers are tied to fixed dates or completion milestones. For most condominium purchases, payments follow a fixed date schedule, while landed property purchases often follow construction progress. Make sure this is clear in your SPA so you can plan your finances accordingly.
• Transfer Costs & Taxes: Clarify who pays the 4% transfer tax, and whether any fees are shared or waived.
• Dispute Resolution: Look for clauses explaining how disputes will be handled: court or arbitration and in which jurisdiction.

A rushed SPA is one of the fastest ways to lose money in Cambodia. At IPS, we don’t just glance over documents, we actively protect our clients by walking through every clause, raising red flags, and ensuring the SPA works in your best interest.

And most importantly, ALWAYS conduct due diligence on your property before signing an SPA. IPS provides due diligences to ensure your property is not burdened with legal or financial issues that will later cause you problems.

Making Your Property Purchase Safer

The Sales and Purchase Agreement is the backbone of any property transaction. Done correctly, it protects your rights and defines your ownership. With IPS Cambodia’s experience, you won’t navigate this process alone, our team can guide you from the first payment to the final handover.

Thinking of buying in Cambodia? Contact IPS today and get your SPA reviewed by professionals who know the local market inside-out.

📞 Contact us at inquiry@ips-cambodia.com or visit our Investors Guide for more resources.