Analysis: Title recording in Cuba and beyond

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Palli column headBy José M. Pallí, esq.

For the first time, the Records Consultation Committee of Latin America (Comité Latinoamericano de Consulta Registral) held its annual meeting in Havana.

For a full week, most Latin American countries showcased their recording systems (for land titles as well as for other rights over diverse assets) in an informal and non-professorial environment that lends itself to interaction among different legal systems, enriching all participants through the experiences of their peers.

By peers I mean those in our hemisphere in charge of keeping in good order what we in the United States call the public records (pertaining to land, among other valuable assets) and making them accessible to the public at large.

Even if I regularly attend these meetings of the Comité since its creation in the late 20th century, I am not one of their peers. For one, I attend as a special invitee from the United States, a country that is not even a member of the organization; but more than anything, my interactions with recording offices around the world, frequent as they are, place me on the other side of the consultation window. I am part of that public that needs answers to questions such as ‘Who owns what?’, ‘Is it owned free and clear?’, and the like. And many of these interactions have been on behalf of foreigners who contemplate investing in a country they often know little about.

So it was in such a non-peer state of mind that I attended this first meeting ever of the Comité in Cuba, a state of mind that always mingles with a state of heart that makes my emotions hard to fathom every time I visit the land where I was born.

I had never attended a conference at Havana’s Palacio de Convenciones, and I was impressed by the efficiency with which the place is run, web access via Wi-Fi being the one deficit (it is extremely slow and unreliable).

The presentations by the Cuban delegates — most of them young and bright — were celebrated by many as thorough and soundly based on the well-known legal principles that sustain the world’s best practices when it comes to recording — specially land title recording — laws. This may be tough to swallow for some of my friends and colleagues in the U.S. real estate business, but our practices are not the best when it comes to real estate settlement procedures, and everyone in the global law community knows this, except for us.

Since 1998, Cuba has been working hard to restore the very functional recording system it had before the Cuban Revolution, while adapting it to the political and socio-economic model of the Revolution. It has been a long process, often shifting speeds, but a persistent and uninterrupted process nonetheless, in the same capable hands of a group of bright lawyers who work for Cuba’s Ministerio de Justicia, colleagues I have had the privilege to know since the foundations of the present recording system were laid.

My sense is that Cuba’s present recording system, the product of that process of recovery, has safely arrived at port. Its interaction with other aspects of Cuba’s legal system still has to be fluid enough for it to work, but it should be able, by itself, to provide the required level of legal safety (seguridad juridical) for commercial transactions on recorded rights and assets.

We in the United States have title insurance because our recording system cannot, by itself, provide that required level of legal safety to all transactions. My expectation is that our industry will jump at the opportunity to insure titles in Cuba under the present circumstances — if the U.S. government allows that — and even if Cuba rejects it (as it should, since Cuba should strive to have a recording system that stands on its own merits, as the Spanish system it is roughly modeled after does).

It was funny to see how the sole mention of ‘title insurance’ still drives some of my friends among the Spanish registrars out of their wits. One of them, extremely intelligent (and a very good and dear friend of mine), became apoplectic to the point of claiming, in a pedantic display of arrogance but still nonsensically, that the reason why only 5% of the title insurance policies issued in the United States end up in a claim is that the title insurance industry spends 90% of the money paid for each premium to overcome the limitations of our recording system and make sure the particular title they are insuring under each policy is kosher.

Can you imagine the stealth behemoth our title insurance industry is paying its indispensable agents and its even more indispensable lobbyists out of 5% of the money paid by their insured parties and still making the huge amounts of money they make?

Chill out, my friends! The Spanish real estate market is still too small after the early century crisis (crash) to attract this “only in America” industry. But if and when it recovers, I would not be surprised to find some of its present detractors selling title insurance policies in Spain; because if an investor wants it, the only sensible thing to do is selling it to him in order to close the deal. And Americans have been all but indoctrinated to want it: “Seremos como Stephen Ross”…

This is the first in a series of articles on Cuba’s title recording system. José Manuel Pallí is president of Miami-based World Wide Title. He can be reached a jpalli@wwti.net

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