Scandals and problems are mounting in land sale deals

Unfinished construction projects are causing problems within the real estate industry.  SRENG MENG SRUN
Unfinished construction projects are causing problems within the real estate industry. Sreng Meng Srun

Scandals are beginning to brew now that the real estate market is expanding with more affordable housing and cheaper land prices. The situation has been exacerbated by the lack of laws governing the sector and managing stakeholder disputes.

Bou Socheat recently clashed with Thep Chantrea and his Sahaka Dai Ku company, which specialises in dividing land that has been put up for sale.

Socheat said his sister, Pi Yun, signed a sales contract with Sahaka Dai Ku involving a plot of land in Phum Knea and Phnum Chambok Poang villages in Kandal province. The contract says the company is required to pay 50 percent of the total price of the 6.2 hectares of land within two months. According to Socheat, the company failed to pay within the two-month span and despite a one-month extension, the company still failed to come up with their half of the funds.

“Even as a dispute arose, the company still continues to sell the divided land and even filed a lawsuit asking for protection rights over the land, which pits the land owner as the debtor,” he said. “In the middle of a dispute like this one, he warned all buyers of the divided land to halt the transaction in case any problems might arise. Thep Chantrea also sued my sister for breach of trust and property damage.”

Socheat added that his sister was forced to file a lawsuit in Kandal Provincial Court asking for the contract between the two companies to be dissolved and for the land to be returned to its rightful owners.

In a separate but similar case, Chantrea took over Taing Namsrun’s land in Khum Tuol Prech commune, but did not make the required payments while continuing to sell the land. He even filed a lawsuit asking for protection rights over the property, which prevented Namsrun from operating his business on the land.

Experts say people must do research before purchasing any property. SRENG MENG SRUN
Experts say people must do research before purchasing any property. Sreng Meng Srun

Namsrun filed a lawsuit to the Appeal Court to dissolve the owner’s protection rights over the land, and as a result, the appeal court will do just that, he said.

Chantrea could not be reached for comment. Tuol Prech Commune Chief Yun Sokhom said that in his commune, three large companies were in charge of dividing plots of land. Others operated businesses on their land. But one company is currently in a dispute with a land owner because they refuse to pay him a fee for offering to divide and sell his land. There has been intervention in the issue by commune and district-level officials, but a solution has not been found. The issue is currently making its way through the court system, he added.

“I urge buyers of divided plots of land to come and contact the commune authorities for more information before deciding to buy anything in order to avoid issues, because up until now, they won’t contact the commune unless they have already been met with problems,” he said.

Land ownership issues are only one part of the bigger picture. Public housing developers have also run into problems with their interactions with customers. Some have even gone so far as to accuse public housing developers of taking advantage of customers.

Chan See, head of the operations team at 5S Realty Group, said his company was suffering from this very issue. 5S Realty Group provided real estate advertising services to housing developer Bun Chan Krishna, whose company was promoting an affordable housing project named Phum Toab Bos in Sangkat Prey Veng commune, Phnom Penh.

“The project owner tricked his customers into giving him money when he hasn’t even started the development as promised, because the owner of the land that this individual wants to build on won’t allow him to proceed with the development,” he said. “Due to this problem and the uncertainty of everything, not to mention being unable to pay back the money he took, Bun Chan Krishna has avoided the problem up until now.”

The Phum Toab Bos housing project consists of 190 houses and has already received deposits from buyers. There was a wide range of deposits from buyers, some of whom deposited as little as 10 percent of the asking price. Some have already paid full price for their homes.

“I’m just the advertising agent responsible for advertising the project on the market, and I get 5 percent from each unit sold. They were selling houses for $17,000, with instalments of $300 to $500 per month and an initial deposit of $200,” Chan See said.

Buyers paid money directly to the Bun Chan Krishna, but suspicions were raised when he did not seem to be proceeding with the construction plan. It was then revealed, according to Chan, that Bun Chan Krishna did not intend to construct any houses and had stolen $24,000 of his customers’ money.

There are unfinished developments across Phnom Penh. SRENG MENG SRUN
There are unfinished developments across Phnom Penh. Sreng Meng Srun

Customers who had been robbed of their money turned to Minister of Land Management, Urban Planning, and Construction Chea Sophara, but they have not received any response yet.

“Some customers have accused me of being an accomplice, but I want to stress that I am also a victim in this case, because I did not invest with Bun Chan Krishna, I just acted as a marketing agent for 5S Realty Group,” Chan See said.

“On October 19, I lodged a complaint against Bun Chan Krishna to the Phnom Penh authorities in order to subpoena this individual to explain the dispute and repay the money to the victims.”

Chan See added that the buyers who had been robbed should band together and find a way to solve their problem by finding Bun Chan Krishna. In general, he said, people should be cautious before buying into a development project and they should look into the background of the developer. For those in situations like his own, he said companies acting as real estate agents should also be cautious before tying themselves to a development project. In order to avoid risks, they should do their homework on who they are going into business with, he continued.

Post Property was unable to contact Bun Chan Krishna.

Kim Heang, head of the Cambodian Valuers and Real Estate Agents Association, said there have been many cases of land “invasion” that had resulted in disputes. Many people, he said, have been deceived by people purporting to be the head of a construction or development company in order to take peoples’ deposits. Once they have acquired a significant amount of money, they abandon the project and leave the land owners and buyers to deal with the fallout.

“In order to avoid risks in this scenario, buyers need to ascertain whether the land they are buying is the direct property of the land owner and whether it has an official certificate from local authorities. They have to make sure that it is sold by a legal and trustworthy company with the correct licence,” he said.

“It is easy to obtain divided land, because you only need an arrangement between the company and the buyer, a copy of the land title and an installment payment plan via the company. Therefore, all customers should be cautious and consider all aspects before deciding to buy a certain property in order to avoid risks.”

Seng Load, spokesperson for the Ministry of Land Management, Urban Planning, and Construction, could not be contacted for more information.