The rental system is pro-landlord
December 11, 2006
Rents: Can landlord and tenant freely agree rents in Cambodia?
The parties to a property rental contract may freely negotiate the terms - the rent, period of lease, rental fees, other legal rights and obligations, renewal, rent increase, and the conditions for the termination of the contract.
Cambodian Laws do not regulate increases in the rent at renewal of the contract, or specify any method. The landlord shall inform the tenant if he wants to increase the rent within a reasonable time (as specified in the contract). Both parties can then negotiate the new rent. If the negotiation fails, the contract may be terminated.
There is no legal restriction on security deposits or rental deposits. Rental deposits are normal, the most common being from three months to six months’ rent, depending on the lease duration: short or long term. Security deposits are rare.
What rights do landlords and tenants have in Cambodia, especially as to duration of contract, and eviction?
A lease contract can be made for an undetermined period (though an undetermined lease may not exceed 12 years), or a determined period, which can be long term (15 years) or short term. There can be an option to renew, by mutual agreement between the parties.
A lease contract can be oral if the lease is less than one year, but must be written if the lease is longer than one year. Any oral lease agreement is considered to be a temporary lease, and can be terminated at any time by giving prior notice equal to the rental payment period.
If no prior notice is given by either party and there is no clause mentioning the automatic termination at the end of contract, in the case of both determinate and indeterminate contracts, the contract is automatically renewed.
Termination of the contract by either party is not easy, if the lease contract does not contain a termination clause. Cambodian Laws do not set out a suitable prior notice period for eviction at the end of a lease, except in the case of the undetermined lease contract, which requires at least one or two months prior notice for its termination. Therefore it is very important to insert a termination clause in the contract, providing a suitable prior notice for termination of the contract.
Termination before the contract’s date of expiry by the landlord is possible if:
- The tenant does not perform his obligations or
- The tenant improperly uses the lease property in a manner inconsistent with its normal function or
- The tenant uses the property in a manner which causes damages to the leased property.
Subleasing is prohibited, unless explicitly permitted by the contract.
Clauses for terminating the contract before its expiry date may be included in the contract. In the absence of such a clause, the suffering party shall be entitled to remedies and damages, in accordance with the lease contract and/or the court’s decision.
The contract ends if the tenant dies, unless the tenant’s heirs want to continue it. But the contract remains in effect if the landlord dies.
The effectiveness of the legal system
Disputes between landlord and tenant are resolved through the ordinary provincial or municipal courts. Two attempts at reconciliation in front of a handling court clerk or judge are required, after the filing of the complaint, before the trial hearing.
The timeframe for the trial process is not clearly defined by law.
If one party is unsatisfied with the court’s decision, he can appeal to the higher courts.
Laws and Regulations which cover Landlord and Tenant issues:
- Land Law dated August 30, 2001; and
- Decree-Law No. 38 dated October 28, 1988.
- Circular No. 01 Dated January 18, 1990 regarding the management of Residences and Land Leased to International Organizations, Foreign Companies and Foreigners.
Cambodia does not have one law which entirely states the rights and obligations of landlord and tenant. There are two different laws (Land Law, dated August 30, 2001, and the Decree-Law No. 38, dated October 28, 1988). There are also regulations (such as Circular No. 01SR on the management of residence and land leased to International Organization, Foreign Companies or Foreigner dated January 18, 1990), which authorizes Cambodians to lease their real properties to international organizations, companies and guests.
Decree-Law 1988 defines the validity and types of frequently used contracts, and has governed contract law in all transactions since the 1993 election.
The 2001 land law provides only general provisions. Detailed formalities regarding real property leases will be issued later, by Sub-Decree of the Royal Government of Cambodia.