Kampot Chronicles 2 – Paperwork

I hope none of my friends who’ve paid outrageous sums for property in Kampot and elsewhere in Cambodia took offense at my calling the practice wacky. It isn’t wacky to spend 100 grand on a $50,000 piece if someone else comes along in a year or two and pays 200. It isn’t wacky, it’s called astute investing.

It’s totally natural to want to buy low and sell high. Everybody, or nearly everybody, aspires to wealth and comfort, what could be more obvious? Who would sell low when they could make a killing?

What’s wacky is macro systems which distort reality, which encourage flush foreigners to think that $200,000 shophouses, which can only fetch $200 per month rent, as bargains because they are cheap compared to property in their own countries. Property here had been stuck at a low level for a long time because of the country’s instability so part of today’s rise is totally expected and reasonable. Still values must be related to the reality of a country where most people are still happy to work for two or three dollars a day.

One action that could further distort reality, feed the property bubble, would be to open Cambodia’s real estate market to foreign ownership. The PM recently scotched that idea saying Thais and Vietnamese would buy up land on the country’s borders. It would also have had a speculative effect on all of Cambodia’s more desirable areas.

For a long time I had been under the impression that non-citizens could purchase apartments but not land or ground floor apartments because that would’ve involved land, but no, we are not allowed to buy any form of real property. There is the possibility of minority ownership but I assume that involves some type of incorporation or separate legal documents outside of the title process.

It certainly would have made my life easier if I could’ve bought my place outright. If you’re not related to a Khmer you find a friend who you trust to purchase it in their name and then lease it to you long term, in my case, fifty years with an automatic twenty year extension.

Needless to say, land ownership in Cambodia is somewhat murky. The Khmer Rouge abolished all private property and then torched most of the records. In addition, I imagine, many whole families were wiped out leaving much land without legal owners or heirs.

I insisted, therefore, that the seller produce a legal title as a condition of the sale. This, mind you, costs a cool grand and involves a GPS determination, a sign-off by all adjacent property owners and the involvement of the Ministry in Phnom Penh. I expect that most of the thousand dollars goes into the pockets of the honchos at the Ministry. Alternatively for a relative pittance one could register the land at the commune level but that wouldn’t carry anywhere near the force of law as a Ministry registered title. The authorities are in the process of registering all land in the country. I assume when that is done legal titles will be a lot cheaper and easier to come by.

The title is supposed to take one month, mine took two. The first set of papers were off on the size of the land – its very odd shaped – and so after the GPS determination showed that discrepancy, a second set needed to be submitted. Then the Ministry official who gives the final approval got really busy so the title sat in Kampot for two weeks waiting for him to get the time to personally sign off on it.

Legal fees for a lease range upwards of $600; I’ve heard as much as $1500. Didn’t make sense to spend that much on a property purchased for only fourteen grand so I paid a Khmer woman, who sells real estate and does leases, for a copy of a lease she had paid $600 for. In order for the lease to have legal status it must be signed off by the village chief. I paid her $200, probably too much, but she provided the documents and helped to fill them out, escorted me to the chief, paid the customary bribe – in this case a mere $10; she was worried it might be a lot more since she didn’t personally know the fellow – and made it all happen easily.

Seems to me the only time you could get screwed is between receiving the title and signing the lease. Once the lease is official and the term maintained, the leaser has no means to renege on the deal. In order for the lease to be legitimate there needs to be an annual lease payment; sixty to one hundred dollars will do. Also, generally, upon sale of the property there is a payment of 3% to 5% of the sales price to the legal owner. Both help to keep them on your side.

It’s been two weeks since the transaction was finalized and I still haven’t been able to get started on the construction. At the front of the property is a rice paddy. In order to get vehicles to the building site I need to construct a driveway. I’ll dig pond in the paddy to get the fill. Problem is there’s a construction boom happening in the area making the excavators all quite busy so I’m still waiting to start the first stage.

I also need to find a local to do yard work – digging, cutting branches and other fun work. Considering my feeble Khmer language skills I’m hoping for someone who can speak even a little English – evidently not so easy. Anyway I’m comfortably ensconced in a nice little house at the edge of Kampot so not at all in a hurry.

Meanwhile, in light of commuting three times a month, I’m buying a car – old Camry – hoping to make my life a little easier. The taxi to Kampot is pretty fast – about 2 1/2 hours – but very uncomfortable and many of the drivers learned to drive in hell. Meanwhile the bus, though it’s far safer and more comfortable, takes 4 1/2 hours because it goes round about through Kep and Kampong Trach. There’s not enough patronage on the direct route, which the taxis take, to warrant going that way.

I nearly always take the bus: the only exception being if I have to be at my destination during business hours. Problem with the bus is that it either leaves around 7AM or 1PM. Either too early to leave for my taste or too late upon arrival to do anything. The bus also sometimes makes you sit through hours of karaoke or comedy TV. Also both taxi and bus drivers are excessive horn blowers, which drives me (pun intended) to distraction.

I’m hoping the car will simplify my life, though it’s possible that driving in Cambodia will cause me to run screaming, and tearing my last few hairs out, back to the bus. Kampot is such an easygoing place that tooling around there will be no problem. Most of the route to the capitol is also pretty laid back; but driving in Phnom Penh, that could be a killer. The only thing, it seems to me, that will make it possible is that you can drive maddeningly slowly here and not induce life-threatening road rage. We will see.

Meanwhile the train should be running again this August. It won’t be as fast as the taxi but it will be a pleasure. Even if I used the train between PP and KP I’d still need the car in Kampot. While riding bicycle is one of the city’s great attractions for me, the dogs of night make it problematical. There are large numbers of untethered dogs which make returning home late at night like running a gauntlet. I often carry a big rock to threaten them with, but it also puts me off balance, one time causing a spill and lots of cussing. Riding all the way out to the land at midnight just seems too difficult.

Now getting bids on construction – will keep you posted.

Stan Kahn