NovAsia

How to Avoid Buying a Cambodian Condominium with Hidden Building Debts

NovAsia · updated July 19, 2026

Prepared by the NovAsia Editorial Team

A completed apartment can appear almost free of development risk.

The strata title exists.

The seller has the keys.

The tenant has moved out.

Furniture remains.

The buyer checks:

After closing, management reports:

Some of those liabilities may remain legally personal to the seller.

The new owner still acquires an apartment inside a building system that:

A clean resale therefore requires more than title due diligence.

It requires operating-liability due diligence at a defined cut-off date.

The central closing principle is simple:

Every known liability should be:

Nothing material should remain between the parties as an undefined future argument.

This article provides general information, not legal, tax or property-management advice. Liability transfer, management rights, tax and closing mechanics should be checked under the specific building documents and current Cambodian law.

The building rules continue after ownership changes

Sub-Decree No. 126 requires the seller to provide the buyer with the internal regulations.

The buyer should accept those rules as part of the transaction.

The sample internal regulations also state that rights and obligations connected with the co-owner position pass to the transferee or new owner.

That makes building liabilities a material closing issue.

The wording does not necessarily mean that every old invoice becomes the new buyer’s personal debt regardless of the sale agreement.

It does mean that the buyer enters the existing governance and contribution system.

After registration, the new owner is expected to:

If the old account has not been closed, management and the buyer may disagree about the opening balance.

The issue is cheaper to solve before title transfer.

Different liabilities attach in different ways

Not every amount has the same legal or commercial character.

Personal liability of the seller

Examples can include:

Unit-level building account

Examples can include:

Co-owner obligation

Examples can include:

Government liability

Examples can include:

Tenant-related liability

Examples can include:

The closing process should classify every amount.

A clause saying all seller debts remain the seller’s responsibility does not explain how the buyer will obtain:

Service charge must be checked through the full ledger

A seller may show the last monthly receipt.

That proves only one payment.

A complete owner ledger should show:

Payment allocation matters.

The seller may have transferred USD 1,000.

Management may have applied it to old arrears, leaving the current months unpaid.

A receipt without a statement does not reveal the result.

The buyer should request the ledger directly from authorised management where possible.

One cut-off date should control the economic settlement

A resale can contain several dates:

The parties need one clear economic cut-off for recurring charges.

For example:

Different items can use different dates where necessary.

The closing statement should make that explicit.

Without a defined cut-off, the parties can create:

Prepaid service charge should be verified before it is treated as value

The seller may have paid a year of service charge in advance.

That can benefit the buyer only where the credit:

Management should confirm:

The buyer should not reimburse the seller for an alleged prepaid balance based only on a bank-transfer screenshot.

The management ledger should show the credit available after closing.

A special assessment can exist before it becomes due

The owners may approve a facade, lift or waterproofing project in March.

Payment begins in June.

The seller closes the sale in May and says:

There are no arrears today.

That can be technically true while a known unit liability already exists.

The buyer should ask about:

A special assessment approved before closing should be allocated in the sale agreement.

Possible solutions include:

The due date should not conceal the economic burden.

Proposed major works matter before a formal charge exists

A building may have:

No assessment has yet been approved.

The buyer still faces a probable future cost.

A management clearance letter normally confirms the current account balance.

It may not confirm that no major works are under discussion.

Review:

A zero balance today does not equal zero capital risk.

The sinking fund can be unpaid, insufficient or depleted

The seller may owe the original sinking-fund contribution.

The building may have collected it and already spent a large portion.

The buyer should distinguish:

Sinking fund paid answers only whether the seller made the original payment.

It does not prove that:

Utilities can be billed through different systems

Electricity and water may be billed by:

The buyer should obtain:

The seller may have paid the direct public invoice while owing management for submetered consumption.

Management may hold a utility deposit that should transfer or be credited.

Dated meter photographs at handover are essential.

Parking can create a separate account

Parking may be:

Check:

Parking included is not a complete closing statement.

An unpaid parking account can block access even where the apartment service charge is clear.

Keys and access cards have monetary and operational value

A building may charge for:

At handover, count:

Missing devices should be replaced by the seller or credited in the settlement.

The amounts are small individually.

Access problems can delay move-in and create avoidable disputes.

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A renovation deposit can remain tied to unresolved work

A seller may have paid a refundable renovation deposit.

Management may retain it until:

The buyer should establish:

If the renovation was unauthorised, the buyer may inherit a requirement to reinstate the apartment.

A retained deposit should not be treated merely as the seller’s personal receivable without checking the underlying work.

Building fines and rule violations require separate disclosure

Possible issues include:

The validity of a fine depends on:

A zero financial balance does not prove that no enforcement issue exists.

The buyer should ask for:

An unresolved physical violation can be more expensive than a small invoice.

Property-manager balances sit outside building management

The seller may have a private property manager holding:

A condominium management clearance does not address those balances.

The buyer should obtain a separate final statement from the property manager.

Where the buyer retains the same manager, the new agreement should state:

Where the relationship ends, client money should be reconciled before closing.

A tenant deposit is a liability, not seller income

If the tenant remains, the security deposit should:

The buyer should receive:

A seller who has spent the deposit transfers a future repayment liability without transferring the money.

That is a common hidden balance in rented property.

Where the tenant has already left, the seller should provide:

Old rent arrears are not automatically an asset

A tenant may owe the seller USD 1,200.

The seller may say that the buyer can collect it after closing.

The buyer should not value the debt at face amount without:

The tenant may have a repair or set-off claim.

The amount may be impossible to collect.

A doubtful receivable should not be treated as cash.

Property tax needs current evidence

The buyer should review:

Tax rules and relief can change.

A developer’s old handover estimate should not be relied upon for a later resale.

The closing should use current General Department of Taxation information and professional advice.

Transfer tax and transaction costs should be separated from old debts

A resale can involve:

The parties should distinguish:

A clause stating that the buyer pays all transfer costs should not be used to conceal the seller’s old liabilities.

Government charges and private arrears are different categories.

Clean management account and clean title are separate

A private unit can be subject to:

A management clearance does not prove clean title.

A clean title does not prove a clear management account.

A safe closing requires both:

  1. Cadastral and legal due diligence.
  2. Building and operating clearance.

Neither replaces the other.

The management clearance letter should be specific

A stronger clearance should identify:

A letter saying only no outstanding management fee is too narrow.

The buyer should verify that the signatory is authorised.

A receptionist or sales employee may not bind the management body.

Clearance should be refreshed at closing

A letter issued two months earlier can become outdated.

Between due diligence and closing:

A stronger sequence includes:

Where title registration occurs later, the economic closing and legal transfer may require an interim allocation.

A holdback protects against uncertain amounts

Some liabilities cannot be finalised immediately.

Examples include:

Part of the price can remain with:

The agreement should state:

A proportionate holdback is not a punishment.

It converts uncertainty into a manageable closing mechanism.

The closing statement should show every line

A useful statement can allocate:

ItemSellerBuyer
Purchase priceReceivesPays
Service charge to cut-offPays—
Prepaid service chargeCreditReceives benefit
Special assessmentPays or creditsAssumes if agreed
UtilitiesPays to meterFrom meter
Tenant depositTransfers fundsAssumes liability
Property taxPays agreed periodFuture period
Transfer costAs agreedAs agreed
HoldbackDeferredProtected

The exact result is negotiated.

The important feature is visibility.

The buyer becomes part of the building system

Under the sample internal regulations, a new lawful co-owner becomes part of the building-management organisation.

The buyer should receive:

Management records should be updated promptly.

Otherwise:

Seller warranties should continue after closing

The sale agreement can include statements that:

The agreement should also specify:

A broad as is clause can weaken the buyer’s ability to recover after a hidden liability appears.

Agents are useful but not the final source

An agent can collect information.

They do not normally control:

The buyer or lawyer should obtain direct confirmation from the relevant source.

That does not mean the agent is unreliable.

It means the person paid to close the transaction should not be the sole verifier of every closing condition.

Red flags

Concern increases where:

One red flag does not prove hidden debt.

Several together justify delay, additional documents or a holdback.

A safer closing sequence

  1. Review title and seller authority.
  2. Obtain the internal regulations.
  3. Request the management ledger.
  4. Review recent minutes and budget.
  5. Identify special assessments and major works.
  6. Reconcile utilities and meters.
  7. Reconcile parking, cards and deposits.
  8. Review the tenant and property-manager account.
  9. Verify tax receipts.
  10. Draft a detailed closing statement.
  11. Obtain final management clearance.
  12. Use a holdback for uncertain amounts.
  13. Pay and file the transfer.
  14. Update the management register.
  15. Receive the complete handover package.

The sequence can be adjusted.

Operating due diligence should be completed before the full purchase price is released.

Conclusion

Hidden condominium liabilities include much more than unpaid monthly service charge.

They can include:

Sub-Decree No. 126 requires the buyer to receive the internal regulations.

The sample rules also place the new owner within the existing co-owner and management structure.

That makes the cut-off date and management clearance central to a resale closing.

A strong buyer obtains:

Known liabilities should be paid, credited or held back.

A clean title answers who owns the apartment.

A clean closing statement answers what the apartment and its ownership position owe.

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Sources

  1. Royal Government of Cambodia — Sub-Decree No. 126 on the Management and Use of Co-Owned Buildings, 12 August 2009.
  2. General Department of Taxation of Cambodia — current official guidance on Tax on Immovable Property and Stamp Duty on transfers of ownership or possession of real estate.
  3. General Department of Taxation — Guidebook on Stamp Duty on Transfer of Ownership or Possession of Real Estate.
  4. EuroCham Cambodia White Book — Charge Collection in Co-Owned Buildings.
  5. RICS — Property Agency and Management Principles, effective 1 January 2025, used as best-practice context rather than mandatory Cambodian law.

Frequently asked

Do unpaid service charges pass to the new owner?

The sample internal regulations provide for the transfer of a co-owner’s rights and obligations to the new owner. The allocation of amounts already accrued should nevertheless be dealt with expressly in the sale agreement, management clearance and closing statement.

Is a management letter stating that there are no arrears enough?

No. The letter should have a cut-off date, cover every relevant category, be signed by an authorised person and be checked against the owner ledger, invoices, bank records and any approved upcoming special assessment.

Which liabilities are most often overlooked?

Special assessments, sinking-fund contributions, parking, access cards, utilities, renovation deposits, property-manager balances, tenant deposits, taxes and unresolved damage to common property.

Who pays a special assessment approved before the sale but due after closing?

The sale agreement should allocate it expressly. Economically, it is a known liability affecting the unit, so the parties should agree payment, a price credit or a holdback.

Can management deny access because of the seller’s debt?

The practical response depends on the internal regulations and building procedures. Even where the seller’s legal liability remains disputed, missing clearance can delay registration in management records, access, parking, voting or handover, so the issue should be resolved before closing.

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