Eigendom vs. Erfpacht in Aruba: Understanding Property Ownership Differences
When buying property in Aruba, one of the most important distinctions is Eigendom (freehold) versus Erfpacht (long lease land). Both are legally secure—here's how they differ and what to consider.
Both ownership structures are common and legally secure, but they differ in ownership rights, duration, annual costs, and long-term considerations. Understanding these differences is essential before purchasing real estate in Aruba.
What Is Eigendom (Freehold Property)?
Eigendom means full private ownership of both the land and the building. With freehold property in Aruba:
- You own the land indefinitely.
- There is no lease term.
- Ownership can be sold, transferred, or inherited without restrictions related to time.
- The property is registered in your name in the public registry.
- The primary recurring government charge is annual property tax (grondbelasting).
What Is Erfpacht (Long Lease Land)?
Erfpacht is a long-term lease agreement where the government owns the land, and you own the structure and the right to use the land. Key characteristics:
- Standard lease term of 60 years
- Typically renewable for another 60 years
- Annual lease fee (canon) applies
- Lease rights can be sold, transferred, or mortgaged
- Although you do not own the land itself, your leasehold rights are legally protected and transferable.
Eigendom vs. Erfpacht: Side-by-Side Comparison
| Feature | Eigendom (Freehold) | Erfpacht (Long Lease) |
|---|---|---|
| Land Ownership | Buyer owns the land | Government owns the land |
| Building Ownership | Buyer owns the building | Buyer owns the building |
| Duration | Unlimited | 60-year term (renewable) |
| Renewal Required | No | Yes, at end of lease term |
| Annual Government Fee | Property tax (grondbelasting) | Annual lease fee (canon) + possible property tax |
| Ability to Sell | Yes | Yes |
| Ability to Mortgage | Yes | Yes |
| Transferable to Heirs | Yes | Yes |
| Long-Term Certainty | Permanent ownership | Subject to lease renewal |
| Common in Aruba | Found island-wide | Found island-wide, including established areas |
Financial Considerations
Freehold (Eigendom)
- Annual property tax based on assessed value.
- No lease payments.
- No renewal process.
Lease Land (Erfpacht)
- Annual lease fee payable to the government.
- Lease rate remains fixed during the initial term.
- Renewal may include revised lease conditions.
- In some cases, lease land properties may have a slightly lower purchase price compared to similar freehold properties.
Mortgage and Financing Impact
Local banks in Aruba typically finance both freehold and lease land properties. However:
- Lenders may review remaining lease duration.
- Shorter remaining lease terms could affect financing conditions.
- Buyers should confirm lease details before applying for a mortgage.
Is Erfpacht Safe in Aruba?
Yes. Lease land is a long-established legal structure in Aruba. Rights are recorded in public registers and reviewed by the notary before transfer.
Before purchasing lease land, buyers should verify:
- Remaining lease years
- Annual lease fee amount
- Renewal conditions
- Any additional government requirements
The notary performs these checks during due diligence.
Which Option Is Better?
There is no universal answer.
Freehold ownership may provide:
- Greater long-term certainty
- No renewal concerns
- Strong resale appeal
Lease land may provide:
- Access to established neighborhoods
- Competitive pricing
- Secure long-term usage rights
The right choice depends on your investment goals, financing strategy, and long-term plans in Aruba.
Final Thoughts
Understanding the difference between Eigendom and Erfpacht in Aruba is essential when purchasing property on the island. Both ownership structures are legally secure and widely used. The key is evaluating how each option aligns with your financial goals, time horizon, and investment strategy. Proper due diligence ensures transparency and confidence when investing in Aruba real estate.
Frequently Asked Questions (FAQ)
What is Eigendom (freehold) in Aruba?
Eigendom means full private ownership of both the land and the building. You own the land indefinitely, with no lease term, and the property is registered in your name. The primary recurring government charge is annual property tax (grondbelasting).
What is Erfpacht (long lease land) in Aruba?
Erfpacht is a long-term lease where the government owns the land and you own the structure and the right to use the land. Standard term is 60 years, typically renewable for another 60 years, with an annual lease fee (canon). Lease rights can be sold, transferred, or mortgaged.
Do banks in Aruba finance both freehold and lease land?
Yes. Local banks typically finance both. However, lenders may review remaining lease duration, and shorter remaining lease terms could affect financing conditions. Confirm lease details before applying for a mortgage.
Is Erfpacht safe in Aruba?
Yes. Lease land is a long-established legal structure. Rights are recorded in public registers and reviewed by the notary before transfer. Verify remaining lease years, annual lease fee, renewal conditions, and any additional government requirements.
Which is better: Eigendom or Erfpacht?
There is no universal answer. Freehold may provide greater long-term certainty and strong resale appeal. Lease land may provide access to established neighborhoods and competitive pricing. The right choice depends on your investment goals, financing strategy, and long-term plans.