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Freehold vs. Land Lease: The One Thing to Understand

The single concept US and Canadian buyers don't have at home, and the one that quietly makes or breaks a deal. Here's what land lease actually is, why it isn't scary, and the two numbers you must always ask for.

By Jakob Jakubov, every winter on Aruba since 2021 · Updated August 2026 · 11 min read

What freehold and land lease actually mean

Back home (in the US, Canada, most of Europe) when you buy a house you buy the dirt under it too. That's freehold, and it's so normal you never think about it. Aruba has that, but it also has a second flavor, and nobody warns you about it until you're staring at a listing that says erfpacht.

Freehold (eigendom). You own the land outright, indefinitely. Nothing to renew, no ground fee. It's exactly what you expect ownership to mean.

Land lease (erfpacht). The government (or occasionally another landowner) owns the underlying land, and grants you a long-term, renewable right to use it, while you fully and genuinely own the building on top. In exchange you pay a modest annual ground fee, called the canon, and the lease runs for a fixed term, commonly 60 years, after which it's renewed.

The key mental shift: with land lease, you own the house completely. What's leased is the ground. You're not renting your home: you're holding secure, long, renewable rights to the land beneath it.

Why land lease exists in Aruba

This isn't some scheme aimed at foreigners: it's how a lot of Aruban land has been organized for generations. The government has historically kept ownership of large tracts and issued long land leases for building, which let it guide development and keep some public control over the land while still letting people build permanent homes and businesses on it.

The upshot is that erfpacht is woven right through the island, in good neighborhoods and ordinary ones alike. It carries zero stigma locally. Which is exactly why a foreign buyer shouldn't panic at the word, but also shouldn't wave it through without reading the specifics.

The two numbers that decide everything

Forget the word erfpacht and focus on two figures. Get these in writing before you get attached to a place:

A place with, say, 55 years left and a canon of a few hundred florin a year is, for practical purposes, as good as freehold for most of your ownership. A place with 9 years left and an unclear renewal? That's a genuinely different, and cheaper, asset, whatever the listing says.

Land lease isn't a red flag. An expiring land lease is.

How renewal works

Here's the part that reassures most buyers once they hear it: land leases in Aruba are renewable, and renewal is the normal, expected outcome, not a cliff you fall off.

When a term nears its end, the lease is generally extended for a further period, typically with the canon reassessed to reflect current land value . So the two things to understand about renewal are:

1. It's expected, not exceptional. These leases are designed to roll over. An outright refusal to renew is unusual.
2. The fee can be reset at renewal. The ground beneath a beachfront villa is worth more than it was decades ago, so a renewed canon can step up. On a short remaining term, that potential reset is exactly what you want your notary to dig into, see the notary process guide for where this check happens.

The realistic risk with land lease isn't "the government takes your house." It's "the fee resets higher than you planned" or "a very short term complicates resale and financing." Both are manageable, if you know the numbers going in.

What it does to price and resale

Two ways land lease shows up in money:

At purchase. A comparable land-lease property should generally price a touch below its freehold twin, all else equal: you're not buying the dirt outright, and you're carrying an annual fee. With a long term, that gap is small. With a short term, it should be large, because a buyer down the line inherits the ticking clock.

At resale and for financing. This is where a short remaining term bites. A future buyer, and a future lender, will look hard at the years left. Local banks lending on land lease often want the term to comfortably outrun the loan , so a short lease can shrink your buyer pool and complicate a mortgage. If you might sell in ten years, the lease term ten years from now is the number that matters. This feeds directly into your financing plan.

Should you avoid land lease?

No, not as a blanket rule, and doing so would rule out some of the island's best streets, including a lot of Malmok and plenty of good condo buildings. The right posture is neither fear nor blind acceptance:

• Long term + modest fee? Treat it much like freehold. Buy the place you love.
• Medium term? Fine, but let it show in the price, and know the renewal mechanics.
• Short term + unclear renewal? Proceed only with a real discount, a clear renewal path from the notary, and eyes open about resale.

The buyers who do well here don't have a rule against land lease. They have a habit: ask for the two numbers, every single time.