What to Do If a Cambodian Developer Stops Construction

Prepared by the NovAsia Editorial Team

Construction rarely stops with one clear public announcement.

First, fewer workers appear on site.

Then the facade looks unchanged for several reporting periods.

The sales team explains the slowdown through a contractor change, public holidays, rain or revised scheduling.

Buyers continue paying because they do not know whether they are watching an ordinary delay or the beginning of a financial failure.

This is the point at which expensive decisions are made.

Stopping instalments without a legal basis can allow the developer to accuse the buyer of breaching the SPA.

Continuing to pay without investigation increases the capital exposed.

Immediate termination may appear to protect the buyer, but a legal right to repayment still has to be converted into money.

There is no universal solution for every Cambodian project.

The buyer’s position depends on:

• SPA wording;
• construction stage;
• land rights;
• mortgages;
• development licence;
• project company assets;
• insolvency status;
• guarantees;
• payment structure.

The analytical sequence is nevertheless consistent:

1. Establish the true condition of the project.
2. Preserve evidence.
3. Identify contractual rights and deadlines.
4. Determine which assets could satisfy those rights.
5. Avoid creating a buyer-side default.
6. Decide whether continuation, restructuring or termination offers the best recovery.

This article provides general information, not legal or financial advice. A stalled project requires prompt review by a Cambodian lawyer, and often an independent technical and financial specialist.

Delay is not always a shutdown

Construction progress is not visually even.

After the structure is complete, work can continue inside the building through:

• mechanical systems;
• electrical work;
• partitions;
• lifts;
• testing;
• fire systems;
• internal finishes.

These stages are less visible from the street.

One quiet photograph does not prove abandonment.

Concern rises where several signs appear together:

• workforce and equipment fall substantially;
• no measurable progress appears over several reporting periods;
• the contractor leaves without a confirmed replacement;
• official updates stop;
• deadlines move repeatedly without a recovery programme;
• suppliers or staff report unpaid amounts;
• the developer offers a major discount for accelerated payment;
• regulator action affects the licence or project account;
• access is restricted and the site is mothballed.

Even these facts do not automatically establish contractual default.

The SPA may contain:

• grace period;
• extension rights;
• force-majeure provisions;
• long-stop date;
• milestone definitions.

A useful distinction is:

The transition between categories may not be publicly announced.

That is why site evidence must be combined with the contract and corporate records.

The SPA comes before general anxiety

The Civil Code provides general remedies for non-performance.

The SPA determines which obligations are already due in this transaction.

Important clauses include:

• completion date;
• handover date;
• grace period;
• long-stop date;
• force majeure;
• construction milestones;
• payment dates;
• notice procedure;
• cure period;
• delay damages;
• termination;
• refund timetable;
• dispute resolution;
• governing law;
• language priority.

A calendar-based payment plan differs from a milestone-based plan.

Where instalments are due on fixed dates, slow construction may not automatically postpone them.

Where each instalment is linked to verified progress, failure to reach the milestone may mean the payment has not yet become due.

The buyer should also distinguish between:

• signed contractual change;
• sales-team promise;
• messaging-app update;
• informal owner-group statement.

A new timetable circulated in a chat does not necessarily amend the SPA.

An agent’s promise of refund may not bind the project company without authority and proper documentation.

As the situation worsens, communication should move from the sales channel to the legal entity that signed the agreement.

Stopping payments requires a legal basis

Cambodian Civil Code principles include concepts similar to simultaneous-performance defence and insecurity defence in bilateral contracts.

These principles can become relevant where:

• the seller has failed to perform a due obligation; or
• there is a substantial risk that the seller will not perform a major future obligation.

That does not create a universal right to stop every payment.

The result depends on:

• whether the seller’s obligation is already due;
• whether the buyer agreed to pay earlier;
• how serious the risk is;
• whether the developer offered security;
• whether the buyer gave notice;
• SPA wording.

A contract may expressly require substantial payment before completion.

In that case, the developer may argue that its handover obligation has not yet fallen due.

A general feeling that the site is slow may not satisfy a legal test of substantial insecurity.

Stronger evidence includes:

• empty site over time;
• expired or suspended licence;
• unpaid contractors;
• missing financing;
• formal default notices;
• frozen account;
• inability to explain the restart budget;
• land enforcement.

Stopping payment without a written legal basis can lead to:

• default interest;
• forfeiture;
• SPA termination against the buyer;
• resale of the unit;
• loss of previous instalments;
• weaker litigation position.

A safer approach is a written notice identifying:

• factual basis;
• contractual clause;
• amount withheld;
• condition for release;
• deadline for response;
• security requested.

A formal notice creates the chronology

In a distressed project, every party may later tell a different story.

The developer says buyers stopped paying first.

Buyers say construction had already stopped.

The agent refers to a promised investor.

The bank points to earlier defaults.

A documented timeline helps establish sequence.

Useful records include:

• SPA and amendments;
• payment receipts;
• official construction programme;
• progress reports;
• dated photographs;
• handover notices;
• delay notices;
• correspondence with seller;
• contractor information;
• licence data;
• land title;
• known encumbrances;
• refund or restructuring proposals.

A formal notice serves two purposes.

First, it records when the buyer raised the issue.

Second, it gives the seller an opportunity to cure, provide security or present a credible recovery plan.

Civil Code principles concerning material breach can consider whether the non-performing party failed to perform within a reasonable additional period.

Some breaches may be serious enough to justify immediate action.

That requires careful analysis.

A message in an owners’ group is not normally a substitute for notice delivered under the SPA.

Termination does not guarantee recovery

Cambodian Civil Code principles allow termination after a material breach.

Following termination, future obligations can end and restitution or damages may become available.

That creates a legal claim.

It does not create cash.

The project company may already have spent buyer funds on:

• land;
• construction;
• contractor payments;
• marketing;
• interest;
• operating expenses.

A development account may be frozen while holding less than the combined buyer claims.

A guarantee deposit may be only a small percentage of project cost.

Even a favourable judgment cannot create assets that do not exist.

Before termination, the buyer should examine the likely recovery path:

• What money remains?
• Who owns the land?
• Is the land mortgaged?
• What value does the unfinished building have?
• Is there a parent guarantee?
• Which creditors rank ahead?
• Could another investor complete the project?
• Has insolvency begun?
• Can the seller refund in instalments?
• Is assignment to another project possible?

In one case, continuing under a funded restructuring may produce more value than a claim against an empty SPV.

In another, further payments may only increase loss.

The decision is not merely legal.

It is also an asset-recovery decision.

Regulatory action has a different purpose

Cambodia’s real-estate-development framework uses licences or permits, capital requirements, guarantee deposits, development accounts and business plans.

Published commentary on Prakas No. 047 indicates that the competent regulator may apply measures that include:

• restrictions;
• suspension;
• licence revocation;
• account freeze;
• guarantee freeze;
• publication of violations;
• other administrative action.

This can provide an important source of information and pressure.

Regulatory enforcement is not the same as completing the project.

A frozen account preserves the remaining balance but does not decide:

• which buyer receives how much;
• whether money should complete construction;
• whether contracts are terminated;
• whether secured banks have priority.

Revoking a licence can stop unlawful activity while also making construction harder.

A regulatory complaint is strongest where it identifies a specific documented breach:

• operating without current licence;
• incorrect payment recipient;
• prohibited activity;
• non-compliance with regulator order;
• disappearance of the licensed business.

The regulator’s role and the buyer’s contractual claim should not be confused.

Insolvency changes the procedure and priority

Formal insolvency differs from an ordinary contract dispute.

Once insolvency proceedings begin, control over assets may move to an administrator and a stay can restrict individual enforcement.

Creditors must submit claims through the prescribed process.

A buyer who paid for an off-plan unit but has no registered property right may hold a monetary claim against the SPA seller.

Where the claim is unsecured, it can compete with other general unsecured creditors.

A bank with registered security over land or project assets can be in a stronger position.

The buyer’s recovery can depend on:

• assets of the exact SPA seller;
• bank debt;
• value of land and construction;
• validity of security;
• recognised claim amount;
• administrator’s treatment of the SPA;
• any restructuring plan;
• guarantees from other entities.

A buyer should not assume that a famous parent brand, agent or contractor becomes part of the insolvency estate.

The claim must be filed on time and with evidence.

Old chats with the sales team are not enough.

A new investor may create more value than liquidation

An unfinished building can have greater value as a continuing development than as land and concrete sold under distress.

A replacement developer may be able to:

• complete the project;
• preserve buyer contracts;
• sell remaining inventory;
• use existing permits;
• retain part of the brand.

This can support a restructuring or compromise instead of immediate liquidation.

Buyers may be offered:

• extended handover;
• new payment schedule;
• additional contribution;
• replacement unit;
• partial refund;
• transfer to a new seller;
• continued SPA under revised terms.

A new investor does not enter for free.

If original prices were too low or completion costs are high, the proposal may require buyers to contribute more or accept a changed product.

Before signing a restructuring agreement, establish:

• who becomes liable;
• whether old claims are released;
• where completion funds come from;
• whether permits remain valid;
• what happens after a second default;
• whether existing security changes;
• whether the buyer can choose between continuation and claim.

A new agreement can replace a strong old claim with a weaker promise if drafted poorly.

Collective action is useful but not uniform

A buyer group can:

• compare SPA versions;
• collect progress evidence;
• identify land ownership;
• trace contractors;
• share legal and technical costs;
• approach the regulator;
• negotiate collectively.

Collective action has limits.

Buyers may have:

• different contract dates;
• different payments;
• different guarantees;
• different default positions;
• different objectives.

One buyer wants termination.

Another wants completion.

A third wants assignment.

Group communication is valuable for facts and leverage.

Each individual claim still needs its own supporting documents.

Particular caution is required where an informal group leader:

• promises guaranteed recovery;
• collects original documents;
• signs without authority;
• requests funds without transparency.

The technical completion cost matters

A stalled project cannot be evaluated only through percentage complete.

A tower described as 70% complete may still require more than 30% of the budget because the remaining stages include:

• facade;
• lifts;
• mechanical and electrical systems;
• fire safety;
• fit-out;
• common areas;
• testing;
• title;
• occupancy approval.

An independent technical review can estimate:

• actual completion;
• work quality;
• deterioration;
• safety;
• cost to complete;
• time to remobilise;
• missing permits;
• contractor liabilities.

This can change the recovery strategy.

A structurally sound project with a manageable funding gap may attract a new developer.

A defective structure with disputed land may not.

The asset map matters more than the brand name

The buyer should identify assets belonging to the exact contractual seller.

These may include:

• cash;
• receivables from buyers;
• development rights;
• land;
• construction;
• unsold inventory;
• claims against contractor;
• insurance;
• guarantees.

Critical assets may sit in other companies.

For example:

• landowner is separate;
• project account belongs to parent company;
• licences belong to another SPV;
• brand belongs to a foreign entity;
• contractor owns materials not yet paid for.

The economic project can appear substantial while the SPA seller itself holds limited assets.

This is why corporate due diligence becomes especially important after a stoppage.

A recovery plan should be measurable

A credible recovery plan should state:

• new funding source;
• amount;
• committed or proposed status;
• contractor;
• mobilisation date;
• revised programme;
• critical milestones;
• title and occupancy plan;
• buyer-payment treatment;
• security;
• reporting frequency.

A weak plan says only:

• new investor is coming;
• work will resume soon;
• discussions are positive;
• management remains committed.

The buyer should distinguish:

• memorandum;
• term sheet;
• signed funding;
• funds received;
• contractor mobilised;
• visible work.

A credible recovery plan should also explain whether previous delays or contractor debts remain.

Worked decision scenarios

The table is not an automatic decision rule.

One situation can change into another within weeks.

A serious decision usually requires three perspectives:

• legal;
• financial;
• technical.

When continued payment may be rational

Continuing to pay is not always unreasonable.

It may make sense where:

• the instalment is genuinely milestone based and the milestone is achieved;
• a strong lender funds completion;
• the buyer receives security;
• the project is near completion;
• suspension would create a damaging buyer default;
• a restructuring is fully funded and documented.

The buyer should avoid paying merely because the sales team says stopping will cause the project to fail.

That argument shifts project-finance responsibility entirely to existing buyers.

Any additional contribution should produce a corresponding protection such as:

• escrow;
• registered security;
• enhanced guarantee;
• revised long-stop;
• priority right;
• defined completion milestone.

When termination may be stronger

Termination may become more compelling where:

• long-stop date has passed;
• no credible funding exists;
• the unit cannot be delivered as promised;
• seller no longer communicates;
• land or licence position has deteriorated;
• further payments increase exposure materially;
• a refund source is identifiable now;
• the buyer has a strong enforceable guarantee.

Even then, the buyer should assess:

• recovery timing;
• enforcement cost;
• creditor priority;
• risk of insolvency before payment.

A legally valid termination can still result in a long and partial recovery.

Common mistakes

Stopping payment without notice

This can shift the dispute to buyer default.

Continuing all payments based on reassurance

This increases exposure without obtaining protection.

Treating the agent as the contractual seller

The agent may lack authority to bind the project company.

Signing a restructuring quickly

The buyer may waive stronger existing rights.

Waiting for an official bankruptcy announcement

Assets and evidence can deteriorate before formal insolvency.

Relying only on site photographs

Technical work may continue invisibly, while legal and financial problems remain hidden.

Failing to file an insolvency claim

A valid claim can be lost or impaired by missed procedure.

Conclusion

A construction stoppage does not create one universal buyer remedy.

The SPA determines which deadlines have passed, how notice must be delivered, whether instalments can be withheld and when termination becomes available.

Cambodian Civil Code principles can support simultaneous-performance and insecurity defences, damages and termination for material breach.

They should not be used without comparing them with the payment structure and facts.

Termination creates a refund claim.

It does not guarantee cash.

In insolvency, the buyer may enter a collective creditor process where secured lenders have a stronger position than an unsecured SPA buyer.

The regulator can restrict activity and freeze accounts without automatically completing the building or compensating every buyer.

The buyer’s strongest position comes from acting early, preserving evidence, avoiding their own default, identifying the assets of the contractual seller and evaluating both the legal remedy and the practical recovery source.

Sources

1. JICA Legal and Judicial Development Project — Civil Code of Cambodia.
2. Kingdom of Cambodia — Law on Implementation of the Civil Code.
3. Kingdom of Cambodia — Law on Insolvency, 2007.
4. Non-Bank Financial Services Authority — Prakas No. 047 on Real Estate Development Business Licences and Permits, 26 September 2023, as summarised by DFDL and Sithisak Law Office.
5. Royal Government of Cambodia — Sub-Decree No. 50 on the Management of Real Estate Development Business, 2 March 2023.
6. Kreston Cambodia — Insolvency or Liquidation Procedure in Cambodia, 19 February 2026.

Frequently asked

Can the buyer stop paying when construction has stopped?

Not automatically. The right to suspend performance depends on the SPA, due dates, severity of the risk and surrounding facts. Stopping instalments without a legal basis can place the buyer in default.

When does delay become a ground for termination?

The contractual completion date, grace period, notices and materiality of the breach all matter. Cambodian Civil Code principles permit termination for material breach, but the specific SPA must be analysed.

Are buyer funds returned immediately after termination?

A legal refund claim and actual recovery are different. The outcome depends on the project company’s assets, bank accounts, security interests and any insolvency process.

What happens to a buyer if the developer becomes insolvent?

The buyer must submit a claim through the applicable procedure. Where no registered property or security right exists, the monetary claim may compete with other unsecured creditors.