New protective provisions for the buyer of a residential property
The Aruba Civil Code (ACC) was drastically refurbished as per September 1st of 2021.
The new ACC introduces mandatory provisions that protect the buyer of a residential property in Aruba provided the buyer is a natural person, not acting in a professional capacity or as a business (article 7:2 paragraph 2 ACC).
The protective provisions are set out in the new articles 7:2, 7:26 and 7:765-769 ACC.
The buyer may cancel the purchase agreement within 3 days
After the purchase agreement is concluded, the seller must provide (a copy of) the signed purchase agreement to the buyer. As of the date of receipt, the buyer may cancel the agreement without cause within 3 days (article 7:2 paragraph 2 ACC).
Of mentioned 3 days, only 1 day may be a Saturday, a Sunday or an official holiday. For instance, if the signed purchase agreement is received by the buyer on a Saturday, then the buyer has until Tuesday before 12 AM to cancel the agreement. The cancellation must reach the seller within said period (article 3:37 ACC).
The buyer may only cancel the purchase agreement once (1x), provided the second agreement for the same property is concluded within 6 months of the first agreement (article 7:2 paragraph 5 ACC).
Furthermore, the buyer cannot cancel if the residential property is purchased at auction (article 7:2 paragraph 5 ACC).
Advances on the purchase price are not allowed
The seller may not require the buyer to make an advance on the purchase price. The buyer may only be required to pay a deposit to a notary’s escrow account not exceeding 10% of the purchase price to ensure the fulfillment of his obligations (article 7:26 paragraph 4 ACC).
Prefinancing is not allowed
Prefinancing, i.e., prepayment by the client to the contractor of a percentage of the contract price per construction phase prior to the start or completion of said phase, is not allowed under the new ACC (article 7:767 ACC). The client is only required to pay the contractor an amount that is (roughly) equal to the completed construction phase. Furthermore, the client may only be required to pay a deposit to a notary’s escrow account not exceeding 10% of the contract price.
For instance: a 10% deposit payable to a notary’s escrow account prior to the start of the construction work, followed by payment of 20% of the contract price after completion of the ground floor; payment of 20% of the contract price after completion of the second floor; payment of 20% of the contract price after the roof is made waterproof; payment of 20% of the contract price after completion of the tilework; payment of 10% for the final delivery of the house (memorie van toelichting).
The right to cancel within 3 days is also applicable to the construction agreement. The client may only cancel the construction agreement once (1x), provided the second agreement for the same house is concluded within 6 months of the first agreement (article 7:766 paragraph 2 ACC).
The protective provisions are not applicable if the house is built on a plot of land that is already owned by the client, unless there is a connection between the construction agreement and the plot of land (article 7:766 paragraph 3 ACC).
The purchase agreement for all real estate must be in writing
The protective provisions require a written purchase agreement for all real estate (article 7:2 paragraph 1 ACC). Hence, residential and non-residential property. A verbal purchase agreement is voidable (vernietigbaar). A party should expressly invoke the nullity of the verbal agreement before the property is transferred to the buyer in ownership (article 7:2 paragraph 1 ACC), or at least within the statutory period of 3 years (article 3:52 ACC).
Construction agreements in relation to a house must also be in writing (article 7:766 paragraph 1 ACC).
Final notes
The protective provisions are not limited to the purchase of 1 residential property and apply to the purchase of a second property as well (memorie van toelichting).
The protective provisions also apply to the purchase of limited rights on the residential property, e.g., right of long lease, right of apartment, right of superficies, right of usufruct (article 7:47 ACC).
The protective provisions regarding construction agreements in relation to a house are not applicable if the construction agreement was concluded before September 1st, 2021 (article 163 paragraph 2 Transition Ordinance).
The protective provisions for the buyer of residential property are not applicable to timeshare agreements which have their own set of mandatory protective provisions under articles 7:48a-g ACC. For instance, timeshare agreements must also be in writing and the buyer has 5 days to cancel the agreement without cause.