Analysis: The context of Cuban real property rights

Big U.S. developers have visited Cuba and returned with a mostly negative view over investing there. It’s up to them to make that call, but a correct reading of the reality would tell them that Cuba’s institutions are geared differently.

Palli column headThis is the second in a two-part series about Cuba’s title recording system

By José Manuel Pallí

Recent articles on Cuban real estate are making a number of assertions that, even if truthful, fail to be relevant once we understand the reality that provides context to Cuban real property rights.

This lack of understanding is also perceptible in the U.S.-Cuba negotiations since Dec. 17: our “American” side seems unable to look at things from Cuba’s perspective, bent as we are on changing or conditioning that reality. Unless we learn to understand that reality – grounded in over half a century of decision-making by those “in possession” of Cuba — whether we like those decisions or not — and work with it, negotiations will be endless and possibly fruitless.

Some “star” developers from our real estate scene have visited Cuba and returned with a mostly negative view of their chances of venturing into the forbidden island and seeding its coasts with skyscrapers, at least until the Castro brothers are both out of the picture.

It’s up to them, obviously, to make that call. But a correct reading of the reality would tell them that Cuba’s institutions are not geared towards the kind of high-priced speculative construction our developer “stars” crave for. And these institutions are the way they are, not just because of two elderly rulers who have called the shots for 56 years and counting. Those institutions are, to a greater or lesser extent, supported by a substantial number of Cuba’s inhabitants who, even though they may be critical of many aspects of their own society, are not eager to lay a welcome mat to all the excesses of a society not their own.

Many of the young professionals who will be calling the shots in Cuba for some time after the Castro brothers are gone will tell you they want to preserve housing in Cuba as something easily accessible to all Cubans, and refuse to simply copy what we Miamians allow to be done to our Brickell Avenue, Sunny Isles, or other “landmarks”, where foreigners set the prices at a level that is unreachable for most salaried workers and young professionals.

Borrowing a page from our real estate standard practices booklet, some of my fellow “dirt lawyers” complain there is no way to determine who owns what piece of real estate in Cuba, and cry over the unavailability of title insurance. Few regular people I know truly understand what title insurance is — and I mean here in the United States —, but they still pay for it since it is but a pittance, compared to other “closing costs”, and no bank will lend money without it. We real estate lawyers love it because it is both, our safety net and a very consistent and reliable source of income.

Well, I just attended a hemispheric conference in Havana where the Cuban land title registration system was showcased, and I can assure you all, my dear colleagues, that it is not that difficult to find out who owns what under Cuban laws and using its Registro Público de la Propiedad or recording office. So much so that I have a feeling our title insurance industry — beleaguered not too long ago in the foreclosure crisis (referred to as “mortgage-gate” in Spain and other countries with a much better land title recording system than ours) — could well be among the first to take risks with Cuban real estate, issuing policies to U.S. buyers of houses and condos in Cuba.

Another topic recently effervescent — I call it the Alka-Seltzer, because it bursts and fizzles every once in a while — is related to the claims (many of them comprising real assets in Cuba), certified by the U.S. government or otherwise, of those fellows whose assets were expropriated or nationalized in the early stages of the Cuban Revolution. To me, any resolution of those claims will, of necessity, involve a political agreement in which the Cuban people will play the capital role, even if Cuba itself is de-capitalized at the time that agreement is reached. The laws (and I mean Cuban laws) resulting from that agreement will be the ones under which those cases will eventually be resolved, and chances are those laws will resemble those presently in force in Cuba regarding expropriation, nationalization, confiscation, abandonment, usucapión and other legal institutions that will be adjusted to reflect such a political agreement.

Because you see, the key to understanding Cuba’s reality in all its breadth is to realize that the laws, good or bad, like them or not, are passed in Cuba, not in Washington D.C. nor in the independent sovereign state of Florida. We in Miami, and all our elected politicians, may rant all we want about it, but that is just the way it is. And it has always been like that, despite our pretense it could be otherwise. In fact, it is precisely that delusional pretense that has kept things as they are for more than half a century.

José Manuel Pallí is president of Miami-based World Wide Title. He can be reached a jpalli@wwti.net.

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