Are you weighing lease land against property land in Aruba? The choice shapes how much control you have, what you pay over time, how lenders view your purchase, and how easy it is to resell. If you are buying from abroad, the terms may look different from what you know at home. In this guide, you will learn the real differences, the key clauses to verify, and a clear checklist to move forward with confidence. Let’s dive in.
What each ownership type means
Freehold property land
With freehold, you purchase full title to the land and any buildings. You control use and development within zoning and permit rules. You can sell, lease to others, or use the property as collateral for financing, subject to local regulations and any registered encumbrances.
Buyers often value freehold for stronger long-term control, simpler financing, and typically better marketability at resale.
Leasehold land
With leasehold, you purchase a long-term right to use and develop the land under a lease. The land usually remains owned by the government or a private lessor. Your rights are defined by the lease and last for the remaining term. You will owe ground rent and must follow usage and maintenance rules in the contract.
At the end of the lease, what happens to buildings and improvements depends on the specific agreement. Renewal and reversion terms are central to value and must be reviewed in the full lease document.
Rights and control at a glance
- Freehold: Broad control over use and development, subject to zoning and permits.
- Leasehold: Control is set by the lease. Expect conditions on permitted uses, improvements, subletting, and sometimes the need for lessor consent to transfer or mortgage your interest.
What to verify in a lease:
- Is the lease assignable, and what approvals are needed on transfer?
- Are subletting or short-term rentals allowed, and under what conditions?
- Do you need lessor approval for renovations or major improvements?
- Who approves building plans, the lessor or the municipality, and in what order?
Lease length, renewal, and end of term
Lease length affects value, financing options, and resale. A long remaining term usually improves flexibility. Renewal language is key. Renewal can be automatic, discretionary, or negotiated, and the ground rent may reset.
What to check in writing:
- The exact expiry date and any renewal or extension provisions.
- Whether renewal is automatic or at the lessor’s discretion.
- The basis for any rent reset at renewal, for example indexation or market review.
- The end-of-lease clause for buildings and improvements, including compensation or removal obligations.
Costs and ground rent
Leasehold typically includes ground rent that may be fixed, indexed, or periodically renegotiated. Some leases also involve upfront premiums or key money. Clarify all recurring costs and who pays them.
Confirm in the lease and recent invoices:
- How ground rent is calculated and how it is adjusted over time.
- Any caps or formulas for increases.
- Responsibility for property taxes, utilities, insurance, and community fees.
- Remedies and penalties for missed payments.
Financing in Aruba
Banks commonly accept freehold as collateral under standard underwriting. Leasehold can also be financeable, but lenders often require a minimum remaining lease term that comfortably exceeds the mortgage term. Some leaseholds may need lessor consent to grant a mortgage.
Before you offer:
- Ask local banks about their appetite for your specific title and the remaining lease term they require.
- Confirm the lease allows you to mortgage the leasehold interest.
- Check whether lessor consent is required for the mortgage and whether fees apply.
Resale impact and exit planning
Freehold generally commands higher pricing and broader buyer demand. Leasehold can offer a lower purchase price, but marketability depends on remaining term, ground rent level, and renewal clarity.
Plan ahead by:
- Reviewing how similar leasehold properties have sold, including time on market.
- Considering your exit horizon. Short remaining lease terms can limit buyer pools and financing.
- Confirming any assignment approval requirements or fees in the lease.
Development and permitted uses
Both freehold and leasehold are subject to zoning, building permits, coastal setbacks, and environmental rules. Lease contracts may add design standards, use restrictions, or development timelines.
Ask and verify:
- Zoning and permitted uses from the municipal planning and building department.
- Who holds building permits during construction and how approvals are sequenced.
- Any obligations to maintain, upgrade, or restore the property.
- Environmental or coastal restrictions, especially for waterfront parcels.
Taxes and closing costs
Buyers should confirm transfer taxes, registration and notary fees, and ongoing property taxes for their situation. If you plan to rent the property, get clarity on any licensing requirements and how rental income is taxed as a non-resident.
What to confirm with local professionals:
- Applicable transfer taxes and registration fees for the transaction.
- Ongoing property tax obligations for owners or leaseholders.
- Any withholding or reporting rules relevant to non-residents.
Due diligence checklist
Use this list before you make an offer, especially for leasehold:
- Certified title search from the Aruba Land and Property Registry confirming freehold or leasehold status, encumbrances, easements, and any mortgages.
- Full lease agreement with all annexes and amendments. Do not rely on summaries.
- Clear terms for start date, expiry date, renewal, ground rent, indexation, assignment, mortgage consent, default remedies, and reversion.
- Identify lessor. If it is the state, contact the relevant government department to understand standard renewal practices.
- Recent ground rent invoices and payment history.
- Municipal zoning confirmation and past building permit history.
- Current survey or parcel plan matched to the registry.
- Check for outstanding municipal or utility liens.
- Written legal review by a local notary or real estate attorney on title marketability and mortgageability.
- Term sheets from at least two local lenders showing financing options and lease-term requirements.
- Estimated closing costs and ongoing taxes, confirmed by a local tax advisor.
- If you plan to rent, verify tourist rental rules and licensing for the location and property type.
Red flags to pause on
- Short remaining lease term relative to your ownership or loan horizon.
- Vague or discretionary renewal clauses without clear timing or formulas.
- Ground rent subject to wide-open market revaluation with no caps or staged increases.
- Lease terms that restrict transfers or mortgages or require onerous approvals.
- No clear clause on who owns improvements at expiry or how compensation works.
- Unpaid municipal charges, utility balances, or other liens.
- Conflicting title entries or an unclear chain of title in the registry.
Who to involve and when
- Licensed real estate agent experienced with leasehold and international buyers to coordinate searches, viewings, and market context.
- Notary to verify title, draft the deed, and register the transfer.
- Real estate attorney to interpret lease clauses, renewal and reversion, and any special conditions.
- Surveyor to confirm boundaries and highlight discrepancies.
- Mortgage lenders to confirm mortgageability and lease-term cutoffs.
- Tax advisor to model closing costs and ongoing tax implications.
Bring these professionals in early so you can shape contingencies and timelines around verified facts, not assumptions.
Choosing what fits your strategy
- If you want a long-term, low-complexity hold with broad financing and resale flexibility, freehold often aligns best.
- If you prioritize a lower entry price and are comfortable with contract terms, indexation formulas, and renewal procedures, leasehold can work well. Focus on the remaining term, rent burden, and renewal clarity.
- For development or investment, ensure the lease and permits cover your project timeline and debt structure, and confirm lender requirements up front.
The right choice is the one that matches your intended use, hold period, and financing plan, backed by documents you have reviewed in full.
Your next step in Aruba
You deserve clear answers before you commit. Our team pairs local market know-how with disciplined, international transaction support so you can move quickly and confidently, whether you are buying a beachfront condo, a villa, or an income-producing asset.
Ready to compare specific parcels or have a lease reviewed alongside financing options? Contact Bold Real Estate Aruba to Request a Private Consultation. We will align your goals with the right path, the right professionals, and a clean, verifiable set of facts.
FAQs
Can foreigners buy freehold property in Aruba?
- Foreign buyers can often purchase freehold, but you should verify parcel-specific eligibility and any restrictions with the registry and a licensed notary before you commit.
Will banks finance a leasehold purchase in Aruba?
- Many lenders consider leasehold if the remaining term exceeds the loan maturity by their required margin, and the lease allows mortgaging; confirm exact requirements with local banks early.
How is ground rent set and adjusted on lease land?
- Ground rent is defined in the lease and may be fixed, indexed, or periodically reviewed; check the formula, the timing of increases, and any caps or renegotiation provisions.
What happens to buildings at the end of a land lease?
- Outcomes are contract-specific; leases may require removal, provide compensation, or confirm reversion, so read the improvements and expiry clauses closely with legal counsel.
Can I run short-term rentals on a leasehold property?
- This depends on municipal rules and the lease; verify local licensing and the lease’s subletting and use provisions before planning vacation rentals.
Which documents are essential for leasehold due diligence?
- Obtain a certified registry search, the full lease with all addenda, recent ground rent statements, zoning and permit records, a current survey, and written opinions from a notary, lender, and tax advisor.
