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REAL ESTATE & CONSTRUCTION LAW | Private property ownership, long-term land lease & short-term land lease

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Private property ownership (eigendom)
A private individual and/or a legal entity can be owner of real estate property in St. Maarten. The owner of a real estate property has the right to freely enjoy and dispose of the real estate. The owner must observe encumbrances, if any. Real estate property can also be jointly owned, which joint ownership occurs when two or more private individuals or legal entities jointly purchase the real estate property. Ownership of real estate in St. Maarten must be recorded in the public register for real estate property (Kadaster). The civil law notary who executes the deed of transfer will have to register the new ownership in the register.

Long-term land lease (erfpacht)
A long-term land lease is the right to hold and use someone else’s real estate for a fixed or unlimited price or time, normally against a(n) (annual) payment. The long-term land lease is constituted by having land owned by one party leased out to another party for a long period of time. Different than the normal lease, long-term land lease is a proprietary right, which can e.g. be mortgaged as security for a loan. The long-term land lease is primarily granted by the government and is mainly created because:

• the government wishes to encourage house-building by persons who cannot (easily) afford to buy land;
• the designated use of land can be regulated by incorporating special requirements into the long-term lease contracts;
• it ensures the government of a fixed annual income; and/or
• any increases in the value of the land will be for the benefit of the government.

With a long-term land lease the lessee can use the real estate and dispose of it with it (e.g. sell it, establish a right of mortgage) as if he were the owner of such real estate, subject to any applicable restrictions on the long-term land lease.

Long-term land lease can usually be terminated by the lessee, unless determined differently. The lessor can only do so if the (annual) payment, if any, is not paid for two consecutive years or with other severe breach of contractual obligations e.g. if the land is not developed as required.

Short-term land lease (huurgrond)
In case of short-term land lease, the land is usually owned by the government and is leased out short term to third parties for agricultural or recreational purposes. This form of lease is usually granted for a relatively short period (e.g. between one up to five years) and is difficult to obtain.