Purchasing Property Through a Trust in Cambodia

Cambodia’s real estate market has seen significant growth and interest from foreign investors. While many prospective buyers begin their journey by asking, “ Can foreigners truly own land in Cambodia? ", the reality is that direct freehold ownership for non-nationals is restricted to co-owned buildings (condominiums) above the ground floor. However, since 2019, alternative structures like trusts have offered a safe, legal, and viable pathway to secure landed property.

Understanding Trusts In Cambodia

Cambodia formally recognized trusts with the promulgation of the Law on Commercial Trusts in January 2019, followed by the Sub-Decree on Commercial Trusts in July 2021. These regulations establish a legal framework for the creation, operation, and enforcement of commercial trusts, providing a more secure environment for investors.

A trust involves three key parties:

• Settlor: The person or entity who transfers assets (in this case, property) into the trust.
• Trustee: A licensed entity responsible for holding and managing the trust assets for the benefit of the beneficiary. In Cambodia, trustees must be licensed by the Non-Banking Financial Services Authority (NBFSA). Just earlier in 2025, IPS Cambodia signed strategic parentship with Stronghold Trustee , one of the leading trustees in Cambodia.
• Beneficiary: The person or entity for whom the trust is established and who ultimately benefits from the trust assets. This can be a foreign individual or company.

Types Of Property That Can Be Held In A Trust

The Cambodian trust law allows for various types of assets to be held in trust, including immovable property. This means foreigners can indirectly “own” landed property, such as villas, shophouses, or land, through a trust.

Benefits Of Using A Trust For Property Purchase

• Circumventing Foreign Ownership Restrictions: This is the primary benefit. While foreigners cannot directly own land in Cambodia , a trust allows a licensed Cambodian trustee to hold the legal title on behalf of a foreign beneficiary.
• Asset Protection: Trusts can offer a layer of asset protection. The assets held within a trust are separate from the personal assets of the settlor and beneficiary, providing protection against personal liabilities or judgments.
• Estate Planning and Succession: Trusts facilitate smoother intergenerational transfer of property. The trust deed can specify how the property is to be managed and distributed upon the death of the beneficiary, avoiding complex probate processes.
• Privacy: Property held in a trust can offer a degree of privacy, as the beneficiary’s name may not appear directly on the title deed.
• Flexibility in Management: The trust deed can be structured to provide specific instructions on how the property should be managed, leased, or eventually sold, aligning with the beneficiary’s investment goals.
• Potential for Long-Term Leases: While not direct ownership, trusts can secure long-term control over property, like the benefits of long-term lease agreements, but with potentially greater security and flexibility.

Risks And Considerations

• Regulatory Compliance: It is crucial to ensure the trust and trustee comply with all Cambodian laws and regulations. Using an unlicensed trustee can lead to severe legal repercussions.
• Trustee Reliability: The success and security of the investment heavily depend on the integrity and competence of the chosen trustee. Thorough due diligence on the trustee is paramount.
• Cost: Establishing and maintaining a trust involves various fees, including trustee fees, legal fees, and regulatory compliance costs. These costs need to be weighed against the benefits.
• Complexity: Setting up a trust requires legal expertise and a clear understanding of Cambodian trust law.
• Enforcement of Trust Deed: While the legal framework exists, the enforcement of trust deeds in Cambodian courts is still a developing area. Clear and unambiguous drafting of the trust deed is essential.
• Tax Implications: Understanding the tax implications for both the trust and the beneficiary is crucial. This includes property taxes, rental income tax, and potential capital gains tax upon sale.

Procedural Steps For Purchasing Property Through A Trust

1. Identify the Property: Locate the desired property in Cambodia .

2. Engage Legal Counsel: Appoint experienced legal professionals specializing in Cambodian real estate and trust law. They will guide you through the entire process.

3. Select and Vet a Licensed Trustee: Research and choose a reputable trustee company licensed by the NBFSA. Conduct thorough due diligence on their background, experience, and financial standing.

4. Draft the Trust Deed: Your legal counsel will work with you and the trustee to draft a comprehensive trust deed. This document is critical and will outline:

• The parties involved (settlor, trustee, beneficiary).
• The specific property to be held in trust.
• The terms and conditions for managing the property (e.g., leasing, maintenance).
• The rights and responsibilities of the trustee and beneficiary.
• Provisions for dispute resolution.
• Conditions for termination of the trust.
• Instructions for the distribution of assets upon trust termination or the beneficiary’s death.

5. Formalize the Trust Agreement: The trust deed must be properly executed and registered with the relevant Cambodian authorities, including the NBFSA.

6. Property Transfer to Trustee: The property title will be transferred from the seller to the licensed trustee. The trustee will hold the legal title on behalf of the beneficiary.

7. Ongoing Management: The trustee will manage the property according to the terms stipulated in the trust deed, acting in the best interest of the beneficiary. Regular reporting from the trustee to the beneficiary is typical.

8. Compliance and Reporting: Ensure ongoing compliance with all Cambodian trust laws, tax obligations, and reporting requirements.

Due Diligence Checklist

When considering a property purchase through a trust, ensure the following due diligence steps are taken:

Property Due Diligence:

• Verify the authenticity of the title deed and ownership history.
• Check for any encumbrances, liens, or disputes on the property.
• Confirm zoning regulations and land use restrictions.
• Assess the physical condition and structural integrity of any existing buildings.

Trustee Due Diligence:

• Verify the trustee’s NBFSA license and good standing.
• Review their track record, reputation, and client references.
• Understand their fee structure and service level agreements.
• Ensure they have adequate professional indemnity insurance.

Legal And Tax Advice:

• Obtain independent legal advice on the trust deed and Cambodian property law.
• Seek advice from a qualified tax consultant on all relevant Cambodian tax implications.

Purchasing property through a trust in Cambodia offers a compelling solution for foreign investors seeking to secure interests in landed property. While providing significant benefits in terms of overcoming ownership restrictions, asset protection, and estate planning, it is imperative to approach this strategy with thorough due diligence and professional guidance.

By carefully selecting a licensed trustee, meticulously drafting the trust deed, and ensuring full compliance with Cambodian law, foreign investors can confidently navigate the Cambodian real estate market and protect their valuable investments.

Thinking of buying in Cambodia? Contact IPS today and consult our professionals who know the local market inside-out.

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