On February 1, 2024, Laos’ Decree on Condominiums No. 352/GOV took effect. This decree expands on the Law on Land (2019), which introduced the concept of condominiums into the Lao regulatory framework and opened the possibility for foreigners to own apartment units (redefined as “condominium units”—see below). The Law on Land revolutionized concepts of property ownership and investment in a country where foreign ownership is still uncommon.
The recent Decree on Condominiums elaborates on the law by clarifying definitions, outlining procedures for acquiring a unit, setting requirements for operating a condominium business in Laos, and addressing issues related to ownership of condominiums.
Definitions
Condominium: The Decree on Condominiums defines a condominium as a multistory building containing several units and various facilities. The construction must be on a parcel of land registered as “condominium land.” The units composing the condominium can be sold or assigned to domestic and foreign individuals, legal entities, or organizations.
Unit: This refers to any of the units that compose the condominium and whose ownership can be by Lao or foreign individuals, legal entities, or organizations.
The decree classifies units into three categories:
- Residential units for living in;
- Office units for working spaces for enterprises; and
- Commercial and service units that serve as a trade or service center, such as for department stores, restaurants, fitness centers, and so on.
Unit owners must register the unit in accordance with its specific purpose, which must be in line with any applicable urban planning restrictions on certain types of units.
Apartment building: This is a building composed of several floors and rooms that cannot be sold to Lao or foreign nationals. According to the Decree on Condominiums, rooms composing the apartment building can only be offered for rent by the owner. This is the main difference between “condominium” and “apartment.”
Condominium Registration
Only buildings constructed on condominium land can acquire condominium status and have their units sold. The construction of a condominium must be initiated by the “condominium company,” the developer of the condominium project. This developer must satisfy the following requirements:
- The developer must be a legal entity incorporated in Laos with the Ministry of Industry and Commerce.
- Once the incorporation is complete, the developer must obtain a business operating license from the relevant department of the Ministry of Natural Resources and Environment to operate a condominium.
- The condominium developer must thereafter request a construction permit for the construction of the condominium from the relevant department in the Ministry of Public Works and Transport.
- After obtaining the construction permit, the condominium developer must register the land on which the condominium will be constructed as condominium land. A specific land title for the condominium will then be issued by the Department of Natural Resources and Environment (DONRE).
The Decree on Condominiums also provides that individuals, legal entities, and organizations who own an apartment building must request and obtain a business operating license to conduct condominium activity if they want to sell units. Though not explicitly stipulated, it is likely that, in addition to this, the land on which the apartment is constructed will also have to be registered as condominium land before the units can be sold.
Unit Ownership Registration
While the Law on Land offered the possibility for foreigners to become owners of condominium units, no procedure was stipulated for the ownership registration. This led to a lack of clarity and transparency as to how and when a proprietor may take ownership of a unit. The Decree on Condominiums now details this procedure.
The required application, which must be filed with the DONRE, must include documents detailing the condominium project that the unit is part of, along with all relevant titles for the land on which the condominium is constructed, which must be under the name of the condominium project.
Ownership is achieved once the DONRE issues two documents:
- Unit ownership registration certificate kept at the DONRE, which includes information that will be registered in the Unit Registry of the DONRE and is stamped by the deputy head of the DONRE. Every transaction (e.g., rental, sale, security) involving the unit must be registered at the DONRE.
- Unit ownership certificate, which serves as evidence of ownership of the unit and is an extract of the unit ownership registration certificate.
Management of Condominiums
Management of a condominium is handled either by the condominium developer, the company that initiated construction of the condominium, or a company specially hired for managing the condominium with the approval of a meeting of the unit owners.
The other important entity in the management of a condominium is the committee responsible for the condominium, composed of condominium unit owners elected in a meeting of the unit owners. The committee is composed of a president, a vice-president, and the committee members. The term of the committee is set out in the internal regulations of the committee responsible for the condominium. The committee gives its opinion on the repair, construction, and expansion of the condominium and considers the amendment of the internal committee regulations along with technical feasibility studies for the condominium. It also presents the condominium manager with opinions and suggestions regarding the management of the condominium. The committee also calls meetings of the unit owners, which must be held at least once a year. The first meeting of the owners of the condominium will be called by the condominium company within six months of the condominium company selling more than 30% of the number of units in the condominium.
Conclusion
The stipulations of the Decree on Condominiums provide clarity to the provisions of the Law on Land. This was expected for some time and is welcomed by the real estate industry, which can now reassure buyers by pointing to a transparent procedure for obtaining an ownership certificate.
For more information on the Decree on Condominiums, the Law on Land, or any aspect of real estate transactions in Laos, please contact Tilleke & Gibbins at lao@tilleke.com or +856 21 262 355.
