Lease vs Nominee Ownership Structures in Cambodia: Legal Comparison for Foreign Investors (2025)
Navigating Cambodia’s property market as a foreign investor often means choosing between two workaround options: leasehold agreements and nominee ownership structures. With direct land ownership prohibited for non-citizens under Cambodian law, these legal pathways offer alternative routes to control, develop, or profit from real estate assets. This 2025 guide compares the benefits, risks, and registration processes of lease vs nominee ownership structures, helping investors make informed decisions on how to secure land, villas, or commercial properties in Cambodia with minimal legal exposure.
Introduction
Foreigners looking to invest in Cambodian real estate often face a legal roadblock: direct land ownership is prohibitedunder the Constitution. To navigate this, two alternative structures have emerged—long-term leases and nominee ownership arrangements.
Each offers a workaround, but they differ significantly in legal risk, control, and long-term viability. This guide compares lease vs nominee structures in Cambodia, helping you choose the safest and most strategic path for property investment in 2025.
Legal Background: Why Ownership Is Restricted
Cambodia’s Constitution (Article 44) prohibits foreign nationals from owning land. While strata title condos are allowed above the ground floor, land, villas, and hard-titled properties remain off-limits unless structured through:
- Long-term lease agreements
- Nominee ownership with security contracts
- Land Holding Companies (LHCs) or trusts (complex and costly)
What Is a Long-Term Lease?
A long-term lease is a registered rental agreement between a foreign investor and a Khmer landowner, granting exclusive use of the property for up to 50 years, with renewal options.
Key Features:
- Minimum term: 15 years (per Cambodian Civil Code)
- Renewable up to 50 years or more
- Can be registered at the Cadastral Office
- Grants exclusive use, development rights, and sublease potential
- Foreigners retain control without owning the land
Example: A foreign investor leases land in Kampong Speu for 30 years to build an agro-processing facility.
What Is a Nominee Ownership Structure?
A nominee structure involves a Cambodian citizen holding legal title to a property on behalf of a foreign investor. The foreigner retains control through a series of security agreements, including:
- Lease Agreement
- Loan Agreement
- Mortgage Agreement
- Security Agreement
These documents bind the nominee to act only under the investor’s instructions, preventing unauthorized sale or transfer.
Comparison Table: Lease vs Nominee Ownership
| Feature | Long-Term Lease | Nominee Ownership Structure |
|---|---|---|
| Legal Ownership | Khmer owner retains title | Nominee holds title on investor’s behalf |
| Foreign Control | ✅ Full use rights | ✅ Full control via security docs |
| Registration | Lease registered at Cadastral Office | Title in nominee’s name; agreements private |
| Duration | 15–50 years (renewable) | Indefinite (until resale or nominee change) |
| Risk Level | ✅ Lower legal risk | ⚠️ Higher risk if nominee breaches |
| Tax Filing | Required annually | Not required unless income generated |
| Succession Planning | Lease can be transferred | Requires nominee’s will or reassignment |
| Cost | Lower setup cost | Higher legal fees ($1,500–$2,000) |
When to Choose a Lease Structure
Long-term leases are ideal for:
- Foreigners seeking legal clarity and lower risk
- Investors developing industrial or agricultural land
- Projects with defined timelines (e.g. 30-year factory)
- Buyers without a trusted Khmer nominee
📌 Tip: Register the lease at the Sangkat and Cadastral Office to protect your rights.
When to Choose a Nominee Structure
Nominee ownership may suit:
- Foreigners with trusted Khmer partners
- Buyers seeking villa or land ownership feel
- Investors wanting indefinite control
- High-value properties where lease limitations apply
⚠️ Warning: Always use security agreements to protect your investment. Avoid verbal arrangements.
Key Legal Documents in Nominee Structures
- Lease Agreement – Grants exclusive use for 50 years
- Loan Agreement – Simulates debt owed by nominee
- Mortgage Agreement – Ties property to loan terms
- Security Agreement – Binds nominee to investor’s control
- Will or Succession Clause – Ensures continuity if nominee passes away
Learn more from Phnom Penh Real Estate’s nominee guide
Risks to Watch Out For
Lease Structure Risks:
- Khmer owner may refuse renewal
- Lease may not be properly registered
- Limited resale flexibility
Nominee Structure Risks:
- Nominee may breach agreement
- Legal disputes over title
- Succession complications if nominee dies
- Government scrutiny or policy changes
FAQ Section
Can foreigners own land in Cambodia?
No. Foreigners cannot directly own land, but can use lease or nominee structures.
Is a lease safer than a nominee?
Yes. Leases are legally recognized and registered, while nominee structures rely on private agreements.
Can I build on leased land?
✅ Yes. You can develop, sublease, and use the land as long as the lease permits it.
What happens if my nominee dies?
You must ensure the nominee’s will includes succession instructions or appoint a new nominee via agreement.
🔗 Related Reading
- Can Foreigners Own Land in Cambodia?
- Cambodia Strata Title Transfer Process
- Understanding Cambodian Property Titles
Conclusion
Choosing between a lease and a nominee structure depends on your risk tolerance, investment timeline, and access to trusted local partners. Leases offer legal clarity and lower risk, while nominee arrangements provide deeper control—but require airtight documentation.
For foreign investors in Cambodia, understanding these structures is essential to protect your assets and unlock long-term opportunities in real estate.
