A second home under the Aruban sun, an apartment to rent out, or a permanent move: more and more foreigners are looking to Aruba for their real estate plans. The good news is that the island is surprisingly accessible. Aruba has no general prohibition on property ownership by foreigners, and as a foreign buyer you essentially follow the same procedure as a local purchaser. Still, the Aruban legal system is just different enough from what you may be used to at home to hold a few surprises. This guide sets out the main legal points to watch.
Yes. Aruba allows both residents and non-residents to purchase real estate, and there are currently no nationality restrictions on ownership. You do not need a residence permit to buy. One important caveat: owning a home does not in itself grant any right of residence. As a non-resident you may generally stay on the island for up to 180 days per year; if you wish to settle permanently, that runs through a separate procedure at DIMAS, the immigration department. Purchase and residence are two separate tracks, best aligned in advance.
Where foreign buyers most often stumble is the difference between freehold (eigendom) and long lease (erfpacht). With freehold you own both the land and the building outright. With long lease the land belongs to the Country of Aruba and you hold a long-term right to use it, often for a period of around 60 years, renewable, against an annual fee known as the canon.
Both forms are common in Aruba and both are readily marketable, but the legal and financial consequences differ. With long lease, pay attention to the remaining term, the amount and review dates of the canon, and the conditions for renewal and transfer. Some banks apply different financing terms to leasehold parcels than to full ownership. Always have it recorded exactly which form of title you are buying before you sign.
As in the Netherlands, the transfer of real estate in Aruba is by law reserved to a sworn civil-law notary. Aruba has only a small number of notaries, and the notary is the pivot of the transaction. The notary verifies the title, checks whether mortgages, attachments or tax debts encumber the property, holds the deposit in escrow, draws up the deed of transfer and registers the transfer with the land registry (Kadaster).
In practice a purchase runs roughly as follows: you submit a written offer, sign a purchase agreement, typically deposit around 10% in escrow, complete the mandatory identification and source-of-funds checks (KYC, partly under Aruba's anti-money-laundering legislation, the Lwtf) and finally sign the deed. Expect about 8 to 12 weeks from offer to registration.
Budget for buyer's costs on top of the purchase price. The main item is transfer tax. At present the rate is 3% for real estate valued up to and including Afl. 250,000 and 6% where the value exceeds that threshold, calculated on the purchase price or the assessed value, whichever is higher. In addition you pay notary and deed fees, which depending on complexity generally run around 1% to 2%. Altogether, total buyer's costs often come to roughly 5% to 8% of the purchase price, but this varies per transaction, so ask for a full quotation beforehand.
Do not forget the annual ground tax (grondbelasting). It is levied on the value of the property; non-residents currently generally pay a flat rate in the order of 0.6%, while residents are subject to a progressive scale. Financing through a local bank is possible, but non-residents should usually expect to contribute a larger down payment.
This article contains general information and does not constitute legal advice. For advice on your specific situation, please contact Glas & Glas.
No. Owning property does not automatically confer a right of residence. Residence and residence permits run through a separate procedure at DIMAS. If you are buying with a view to relocating, align both tracks in advance.
Besides the distinction between freehold and long lease, it is mainly the tax structure and the strong, central role of the notary. The concepts may look familiar, but the rates, thresholds and procedures differ.
Often yes, but permits, tourist levy and profit tax may come into play. Seek advice beforehand, especially if rental income is to form a significant part of your return.
Have us check the title, the lease terms and the full cost picture before you commit, so you know exactly what you are buying.
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