Real Estate

Advice on buying Real Estate Mongolia Property

You have found a property you wish to purchase in Mongolia what next?

Buying Property in Mongolia - Costs of Purchasing Property

Mongolia Property Buyer's Guide explains the legal fees, legal procedures, real estate purchase taxes and mortgage procedure.

How difficult is the buying process in Mongolia?

Land in Mongolia is under state ownership, and this affects condominiums, since ultimately they sit on land.

Although the Constitution provides for the possibility of private ownership of urban and arable land, till recently the existing legislative framework did not provide a mechanism for introducing such private land ownership.

Mongolia is a country of nomadic herders, accustomed to pastureland being under common ownership.

However, the reality is that developed freehold property can be bought and sold, by foreigners and by Mongolians, but that the terminology is not that of a sale of land, but that of a 'lease', or alternately, of an 'Immovable Property Ownership Certificate'.

In Mongolia, most private holders of land presently hold their land either through possession rights, or use rights.

In general terms:1. Holders of use rights may not sell or lease their rights.

2. Holders of possession rights may lease their rights (but not sell). Mongolia has taken important steps to make possession rights more transferable, and to make lease rights equivalent to private ownership.

Possession requires a licence. The latest Law is the Law of Mongolia on Land of 7 June 2002. Under it, a patchwork of bodies have the right to take over land, and to take decisions regarding land use and possession.

In practice, there are three major ways of holding land.

1. Every Mongolian is allowed to have a plot of land to live on for free for life. The government allocates that plot of land, generally where people already live.

2. The 'priority land lease'. If a plot of land comes to auction, priority and lower prices are given to public good institutions such as hospitals, schools, libraries etc...

3. Developers buy a Construction Lease, generally for 5 years with conditions. The buyer must submit architectural plans for the land within one year, start foundations within 2 years, and complete construction within 5 years.

Some developers take a 60 year lease, but most prefer to hand the land back to the government after 5 years.

Once the building has been completed and approved, the developer receives Immoveable Property Ownership Certificates for each unit in the building, which are then issued to the buyers of the units. From that moment the land is "locked" to that property, and those certificates are legal tender. The certificates can be used for loans, mortgages etc.

Maintenance of common parts is decided by the owners' association just like any other building in the world, the details depending on the terms of the owners association. Every building has an owners association.

The purchase process is simple. Everyone must sign the contract as provided by the notary, no changes can be made in it.

In the case of a new property the buyer goes to see the notary, signs the contract, takes the contract and the ownership certificate to the registration office, and has it registered.

If the slightly more expensive 'urgent procedure' option is chosen, the initial steps can be done in a day.

Purchase procedure (some of the following steps are simultaneous):

1. Obtain a non-encumbrance certificate from the Immovable Property Registration Office - normally takes 3 days/1 day (urgent)

2. Notarization of the contract of purchase - 1 day

3. Payment of income or transfer tax at a commercial bank - 1 day

4. Submit application to the Immovable Property Registration Agency - 7 days/1 day (urgent)

5. Transfer of the land use right - 7 days.

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These guidelines are meant for guidance only and describe a straightforward purchase scenario. However this information is not meant to replace proper legal advice, which we always insist you take.

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