Draft Civil Code Sets Up Clash With Land Law

Tucked between the 331 pages of the draft Civil Code there’s a one-sentence article that, if adopted, could mean many more years of confusion and legal squabbling over land ownership in Cambodia.

The small, but immensely significant, Article 133 states that in relation to land: “The creation, transfer and alteration of a real right shall take effect in accordance with those agreed upon between the parties.”

In other words, land can be legally transferred through a contract between the buyer and the seller—once agreed and their transaction concluded, the new owner has legal rights to the land.

Article 134 of the draft code notes the need to record the change of ownership with government authorities, in order to prevent a third party from laying claim to the land.

But as the Civil Code states, land legally changes hands when two parties conclude their contract, and, importantly, not when they record the change with government authorities.

The concept is simple enough in itself; however, it clashes head on with the huge project the government launched last year with the support of various donors, including the World Bank, Germany and Finland, to establish a system of land titles by official registration.

The Ministry of Land Management, Urban Planning and Construction has also embarked on the mammoth task of surveying every parcel of land in the country and issuing titles for each plot.

The project is expected to take about 15 years to complete. In each town and village, teams survey all the land and put up maps in public areas for villagers to review and correct if necessary. Then, the ministry registers each land owner by name, along with the size and boundaries of his lot, and issues an official title accordingly.

Under the registration system, a person becomes the legal owner of the land when his title is registered with the ministry’s Cadastral Administration office.

While his sale agreement alone would serve as legal proof of ownership under the Civil Code draft, the registration system now being implemented makes title registration at the Cadastral office a person’s proof of ownership.

A team of Japanese legal experts wrote the original draft of the Civil Code in Japanese with funding from Japan. But ever since a Khmer-language version of the law was presented to the Council of Ministers in June, international land law experts have been fighting over it, even debating wording versus intent of the law.

Though disagreement divides both sides, they do agree on one point: Land ownership procedure is crucial for the country.

The writing of the Civil Code started in 1999. The text, which contains 1,302 articles, is meant to define every possible legal issue of a noncriminal nature. The land ownership section goes as far as stating that, when a tree’s branches or roots extend on a neighbor’s property, the neighbor has the right either to collect its fruits or to cut the branch or root.

Civil codes are designed to give basic rules while specific laws address target issues, such as forestry or domestic violence, said Yasuda Yoshiko, legal expert for the Japan International Cooperation Agency in Cambodia.

The problem is that, under pressure from international donors who have been pressing for land reform for years, the government adopted the Land Law in 2001, before the new Civil Code, she said.

Legally, the latest law prevails and supersedes the old, so if the Civil Code is adopted, it would replace ownership by registration with ownership by contract, which lawyers call a “land recordation” system.

In land recordation, it is not mandatory to register land ownership with the authorities to legally prove one’s right to a property, said Yoshiko.

In Japan the land recordation system works extremely well, she said. Even though it is not required, about 99 percent of land owners do register, which makes government records quite accurate, said Yoshiko.

Defending their choice of system in the draft code, Japanese officials argue that the Land Law, which was meant to bring order to Cambodia’s land-ownership chaos, does not necessarily signify title by official registration.

Article 69 of the Land Law states: “The transfer of ownership shall be considered valid upon registration of the contract of sale with the Cadastral Registry Unit.”

“It is normal for people coming from one system that works in their country to want to apply it to another,” said Patricia Baars, a lawyer and team leader of the Land Law Implementation Project, which is managed by East West Management Institute and funded by the Asian Development Bank.

If recording ownership is just a formality, with no legal obligation involved, some people may decide not to do it for various reasons, including the desire to avoid taxes, she said.

In addition, records in the land recordation system only indicate the name and address for a property, unlike title-by-registration records that list size, boundaries, claims and mortgages for each lot.

This is why, in countries with recordation systems, a buyer must check public records and all past transactions over decades, to make sure the seller actually owns the land and that there is no financial claim by banks or individuals on it, said Martin Desautels, international legal adviser for the law firm of DFDL/Mekong Law Group in Phnom Penh.

In the US, the recordation system has created a virtual industry—surveyors, title search people, real estate attorneys—to handle this work, Baars said. But Cambodia does not have the specialized professions a recordation system would require, she said.

Given Cambodia’s situation, it would be nearly impossible with that system to guarantee an investor or a bank that a parcel of land could be purchased free of any claim, Desautels said.

But the land registration system would offer greater assurance for buyers.

“Title by registration is a very strong system, a very good system for countries with a weak institutional support, such as Cambodia that is still developing a reliable judicial system,” said Baars.

John Bruce, senior counsel in charge of land law at the World Bank’s headquarters in Washington, said title by registration addresses the insecurity many people have regarding their rights to their land.

Many villagers have no documents to prove ownership, or have been embroiled in disputes over their land, he said. “The 2001 Land Law provides a legal basis that will give them security,” Bruce said.

Systematically surveying the country and issuing titles will be a long and painstaking, but necessary, process, Bruce added.

“The challenge is to have a process with some integrity and accuracy to establish people’s rights to the land,” in an open and transparent manner, he said.

Still, a person whose area has not been surveyed and who needs title without delay because he wants to sell his land can, for a set fee, have it surveyed and his title issued by the cadastral office.

Thailand and Laos have adopted the system, Bruce said. Countries starting over, such as Russia and numerous countries of the former Soviet Union, have also chosen title by registration, he said.

In Cambodia, registry offices at district, provincial and national levels must be put in place to offer a minimum of services, and make it possible for anyone from the general public to consult title records, he said.

In addition to listing mortgages and other claims on each parcel, there should be a way to add a notification when a person is in the process of purchasing a lot, Baars said.

The matter of compensation in case of error also must be discussed, Bruce said. Compensation varies from country to country, some of them applying only if the error was intentional or the result of fraud, he added.

“However, titles must be firm. If you allow for corrections, many will be made for the wrong reasons,” said Bruce, who has worked on land laws in more than 50 countries.

In many countries, flexibility has created opportunities for bribery and corruption, Bruce said.

Yasuda Yoshiko doesn’t agree with these arguments.

Ownership by registration will make it more difficult to rectify errors than with the land recordation system in which people have their land-ownership contract papers to prove their claims, she said.

“In any system, somebody ends up losing,” said Baars.

“The question is what system will protect most people, most of the time,” she said.

The Council of Ministers is considering the issue, said Lim Voan, deputy general director for Cadastre and Geography at the Ministry of Land Management.

Such consideration may involve sending the Civil Code draft back to the Japanese team for modifications.

However, once the Council of Ministers has made a final decision on which ownership system should remain, it will be sent to the National Assembly.

Then it will be up to parliamentarians to reconcile the text of the Civil Code with the 2001 Land Law.

In the meantime, the program to survey and title Cambodian land continues, Lim Voan said.

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