The Singapore-listed developer that entered into a purchase agreement for 1.3 hectares of land at Boeung Kak lake – the site where thousands of families have been evicted to make room for development – has said the deal still needs legal approval before the sale can be completed.

The company, HLH, announced via a June 20 statement on the Singapore stock exchange that its subsidiary, D’Lotus Development, bought the land at Boeung Kak in Daun Penh district for $14.9 million from local developer Shukaku.

D’Lotus has already paid a 10 per cent deposit for the land, the statement says.

Executive deputy chairman and CEO Johnny Ong Bee Huat said Thursday that his firm was guided by international property giant Knight Frank, which had brokered the deal. But the agreement was still subject to due diligence, and HLH lawyers were currently looking in to the legal terms of the land purchase.

“I did not specifically choose Boueng Kak lake. We were introduced by the property agency; they recommended it to us and we just got introduced [to Shukaku],” Huat said.

“But we cannot be investing in any land [with] conflict or any sort of problem like that. We told our lawyer, you need to do all the due diligence, and [then] the court is doing the court order, and make sure the land is acceptable to invest in. Then we can enter.”

Knight Frank confirmed on Thursday that it was involved in the property sale, but declined to comment further, citing a client confidentiality agreement.

In 2007, the government agreed to a 99-year lease worth $79 million with Lao Meng Khin, a ruling Cambodian People’s Party senator and owner of Shukaku Inc, to develop 133 hectares at Boeung Kak. Not long after, the company began filling the lake with sand and residents were forced to leave. Many still contest the compensation offered with protests still ongoing today. Rights groups say that more than 4,000 families have been affected by the development.

In 2011, the World Bank suspended lending to Cambodia until the land disputes at the lake were resolved. Not long after, the government issued a sub-decree granting 12.44 hectares to families with legal ownership remaining at the development. There are still more than 40 families waiting for land titles, rights groups said last week.

Since HLH’s announcement to buy a piece of Boeung Kak, NGOs have questioned the legal right of a freehold purchase on government leased land, particularly if the original lease was contingent on Shukaku developing the land.

HLH CEO Huat also said last week that the specific location of the plot had yet to be defined and that it was common practice in Cambodia to check the legal status of the land after the deal had been brokered, and the security had been paid.

But Ros Monin, president of the National Arbitration Center, a body that works to resolve commercial disputes more efficiently, on Thursday cautioned that companies should complete a risk assessment prior to entering in to an agreement and before committing any deposit.

“To do due diligence, it is an individual’s commitment and is not required by law,” Monin said. “But it is more common that an investment company will want to do due diligence to check if the land is controversial or is really the possession of the one who is selling the land to them. If not, they might end up buying a controversial plot and find themselves paying for the court to settle the case.”

Monin added that not pre-defining the location also puts the agreement at risk.

“It is very unusual for a standard company to enter a land purchase agreement without knowing the exact location of the land. The purchase agreement can be taken as invalid since the subject matter of the agreement is not clear.”