Purchasing or Leasing Land in Laos as a Foreign Individual or Foreign-Owned Company

Many foreign individuals and foreign-owned companies consider purchasing or leasing land in Laos for residential or commercial purposes. While foreign ownership of land in Laos is prohibited, even if only a single share is foreign-owned, there are legal structures available that allow for limited foreign interest in land.

Whether your objective is to build a residence or to operate a hotel or other business, it is essential to structure the legal arrangements carefully to protect your rights with respect to the land. Below, we outline a possible legal structure. This structure can be adapted to suit different situations.

Possible Legal Structure

In this scenario, a foreign investor, either an individual or a company registered outside of Laos ("For Co"), sets up a company in Laos ("Lao Co A"). Funds are transferred from For Co to Lao Co A via a shareholder loan, which must be approved by the Bank of the Lao PDR (BOL).

Lao Co A then lends money to a 100% Lao-owned company ("Lao Co B") for the specific purpose of purchasing the desired land ("Land"). Unlike a loan from a foreign company to a Lao company, a loan between two Lao-registered companies generally does not require BOL approval.

To secure the loan, Lao Co A may enter into a security agreement over the Land and a share pledge agreement over Lao Co B’s shares. Additionally, a long-term land lease agreement between Lao Co B and Lao Co A can be executed.

Key Agreements and Steps

1. Conduct Land Due Diligence

Before proceeding, the foreign investor or their legal representative in Laos must submit an application to the land authority to investigate the Land Title Certificate. This step is necessary to confirm ownership and check for any encumbrances, such as mortgages, easements, or other rights registered on the land.

2. Land Sale-Purchase Agreement

A Land Sale-Purchase Agreement must be executed between the current owner of the Land and Lao Co B. This agreement must be:

• Witnessed by the Village Chief,
• Registered with the relevant land authority, and
• Notarised by the Notary Office.

3. Lease Agreement

A long-term lease agreement between Lao Co B and Lao Co A may then be entered into. This lease should also be notarised and registered with the appropriate land authority.

4. Loan and Security Agreements

The loan from Lao Co A to Lao Co B, intended to finance the land purchase, can be secured by:

• A mortgage over the Land, and
• A share pledge over Lao Co B’s shares.

These agreements should be:

• Notarised by the Lao Notary Office,
• Registered with the land authority (for the mortgage), and
• Registered with the Ministry of Finance (for the share pledge).

This process ensures that the mortgage is registered against the Land Title Certificate and the share pledge is properly recorded.

How We Can Assist

Our land law experts can support you with the following:

• Drafting, reviewing, and negotiating lease agreements, loan agreements, and security agreements;
• Advising on land use rights and securing interests in land in Laos;
• Notarising agreements with the Lao Notary Office;
• Registering loan agreements with the Ministry of Finance; and
• Registering lease and security agreements with the land authority.