Rental market is strongly pro-tenant
June 06, 2006
Rents: Can landlord and tenant freely agree rents in Aruba?
In general, parties may freely determine the rent in a tenancy agreement. Also the increase of such rent can be freely determined.
However, certain classes of real estate are subject to mandatory rules of law (Ordinance On The Rent Assessment Advisory Committee (1991), known as the “Ordinance”) as regards the determination of the applicable rent. These mandatory rules apply to houses with a building value (including the ground value) of less than AWG 100,000 (approx. US$55,000), which include residential housing, shops, bars, restaurants, hotels and offices, with the exception of buildings located in hotels, airports and seaports. According to the mandatory rules of law, the Rent Assessment Advisory Committee - known as “the Committee” - is charged with the determination of the rent and with any requests to increase such rent. The Committee will base the rent on the percentage of the buildings costs.
In practice, despite these mandatory rules of law most landlords do not turn to the Committee to determine the rent. They often enter into agreements with tenants and determine the rent with mutual consent.
Neither the Ordinance nor the Civil Code of Aruba contain provisions regarding security deposits or rental deposits (In Aruba there is no distinction between security or rental deposits).
What rights do landlords and tenants have in Aruba, especially as to duration of contract, and eviction?
There is a distinction between contracts for indefinite periods of time and contracts for a specified period of time.
Contracts for indefinite periods of time
The landlord needs first to receive permission from the Committee to end an indefinite period tenancy. The tenant should observe the agreed term or notice or, if parties did not agree to a term of notice, a reasonable term of notice.
Contracts for specified periods of time
The landlord cannot terminate the tenancy agreement even after the date of expiry without permission from the Committee, where the tenant wishes to extend. However, the tenant can terminate the tenancy agreement after expiration of the term.
Premature termination of the tenancy agreement is in principle only allowed by mutual consent between the landlord and the tenant.
If a written tenancy agreement has expired, but the tenant is still actually living in the rented house, this will be seen as a renewed tenancy agreement. The renewed tenancy agreement will be a tenancy agreement for an indefinite period of time.
The landlord can request the Committee permission to terminate the tenancy agreement. The Committee will give permission on the following grounds:
- The tenant does not pay the rent in time, or does not use the house as a good administrator;
- Under special circumstances the Committee may accept other grounds, if the landlord has a legitimate interest in the termination of the tenancy agreement.
Both landlord and tenant can also request the Court of First Instance of Aruba to dissolve the tenancy agreement because of default of the other party or exceptional circumstances.
After expiration of the tenancy agreement (due to termination or dissolution), the landlord can initiate eviction proceedings before the Court of First Instance of Aruba in case the tenant is not willing to surrender the premises. In principle, the landlord should first give notice to the tenant before initiating such eviction proceedings.
If the landlord wishes to sell the house, the tenancy agreement will not be terminated, except in case this has been agreed upon beforehand between landlord and tenant.
How effective is the Aruban legal system?
In case a tenant does not pay the rent, the landlord can request dissolution of the tenancy agreement by court proceedings. Furthermore, the landlord can start legal proceedings to collect the rent.
Also the landlord can request eviction of the tenant. He may start summary proceedings, which will take approximately 2 to 6 weeks, to obtain an eviction judgment. However, to dissolve a tenancy agreement the landlord should initiate proceedings on the merits, which may last approximately one year.
Ordinance of the Rent Assessment Advisory Committee of 1991 Civil Code of Aruba.
Brief History: Recent changes in Aruban landlord and tenant law
The Netherlands Antilles are an autonomous civil law territory of the Kingdom of the Netherlands located in the Caribbean, and consist of two island groups, the southern group of CuraÃ§ao and Bonaire (north of Venezuela), and the northern group of Sint Maarten, Saba and Sint Eustatius (east of Puerto Rico). Aruba used to an island of the Netherlands Antilles, however, in 1986, after a referendum, the island of Aruba was constitutionally separated from the Netherlands Antilles, but it still remains part of the Netherlands.Aruba introduced the Civil Code of Aruba, which is in many aspects, similar to Civil Code of the Netherlands Antilles. In Aruba there has not been any radical intrinsic de-regulation or re-regulation in the past few decades in the rent legislation.