The Helms-Burton threat

In Cuba Standard, a column of mine on the Administration’s consideration of allowing Title III of the Helms-Burton law to go into effect next February. Spoiler: It’s a bad idea.

Cuba's new real estate market

Brookings just published (pdf) a paper of mine on Cuba’s new real estate sector, which represents one of the most interesting new features of the Cuban economy.  After decades of limited, in-the-shadows transactions, a November 2011 law ended the prohibition on simple sales of residential property.  The result is a market where demand is bifurcated between those with normal incomes and those with high incomes or relatives abroad interested in making a purchase, and there is no mortgage finance to smooth over the difference.  Information is imperfect in this market, but in its way it’s a vibrant market with brokers operating on foot and on line, and money coming in from abroad.  A by-product of this change is that Cubans are registering their property titles in large numbers regardless of whether they intend to sell, and transactions carried out illegally in the past are being legalized and properly documented.  If you count property rights as an element of human rights, this is a step forward.  A property title only has full meaning if you can liquidate the asset it describes, and Cubans can now do that.

Housing: making the illegal legal

Cuba’s Supreme Court has ruled that illegal home purchases made before the law changed in 2011 can now be legalized. 

This article in Cubaencuentro, with links to the court decision and order, explains the decision and the case based on an interview with the plaintiff.  (The writer, Mirella Betancourt, happens to be my wife.)

It boils down to the following: Decree-Law 288, which legalized home sales in 2011, made no provision for past home sales even though it is common for new laws to contain transitional measures that apply new norms to past actions. 

One such past action, which resulted in the court case, is the 1998 purchase of a Havana apartment for $5,000 by Bertha Bouly Wilson, a woman from Guantanamo province.  Owner Ricardo Andux Barrueta vacated the home, and Bouly moved in.  In a legal maneuver typical of the time, they married, Bouly explained, with the intention of divorcing so that the property could pass to her in the divorce settlement.  But the divorce did not take place, and in time Andux tried to regain possession of the home and to have Bouly evicted.  Bouly turned to the courts to try to obtain full legal ownership of her home.

She and her attorneys fought a losing battle for six years.  After the new real estate law went into effect in 2011, Bouly argued in Havana’s top provincial court that the law should not penalize her for a transaction that was illegal in 1998 but would be legal  today.  She lost that case too, with the court deciding that since the new law did not address past real estate transactions, it had no basis to rule in her favor.

Only by continuing to litigate, “with hope for a miracle,” she says, did she fend off eviction.  Her last option, an appeal to the Supreme Court, gave her a complete victory.  Its February 28, 2013 decision declared the 1998 transaction to be valid today.  It ordered that she and Andux appear before a notario (a local Ministry of Justice official) to have her name inscribed on the property title and that of Andux removed.  It also ordered that in the event that Andux would not appear, the provincial court would appear in his stead to ensure that the transfer of title proceeds.

In its decision, the Supreme Court noted that Decree-Law 288 included no provision about pre-2011 home sales, and it repealed old statutes that made those sales illegal.  That, the court said, left only one legal norm in place, the new one, making home sales legal – past, present, and future.  Hence the Supreme Court declared that the lower court was “in error” on legal grounds in deciding against Bouly, and had failed to act with a “sense of justice that should be most important in a judicial decision when one puts in relief the defenselessness of the appellant [Bouly] in face of the antisocial conduct of the seller [Andux].”

The court then issued a circular to all courts, law firms, and government housing offices to order that the same standards and procedures applied to Bouly be applied to all.  It thus converts its decision into law.

The independence of Cuba’s judicial system is certainly debatable, and indeed the courts are rooted in the Cuban executive.  But regardless of what one thinks of Cuba’s legal system, this decision has impact.

Cuba’s government has already been urging homeowners to update and register their titles.  Now a large number of homeowners previously shut out will have the opportunity to do so.  To the extent that they do, Cuba’s property registry will become more accurate and up to date.  For persons in Bouly’s position, a clear and registered property title means security and protection – from a seller who took your $5,000 and then tries to take his house back, or from some other party, perhaps outside of Cuba, who might press a claim.  For the government, it broadens and consolidates what is one of its most popular reforms.

Odds and ends

·         Trabajadores on Cuba’s shrinking labor force; in 2018 there will be fewer Cubans of working age than dependents (young and old combined).

·         Trabajadores explains how to update residential property titles, a prerequisite to any transfer, by sale or otherwise.

·         The Council of State announces legislative elections October 21 and 28.

·      Cuba’s legislature will meet July 23, Granma reports, with no details about the agenda.  Rumored agenda items are tax and migration policies and a new cooperatives law.

·         Cuban New Yorker on a Chinese-Cuban restaurant, with a primer on Chinese immigration to Cuba thrown in.

Odds and ends

Some catching up to do…

·         A great article on Cuba’s Latin American Medical School from Catherine Porter of the Toronto Star.  The school has 116 Americans enrolled, she reports.

·         Repsol is “almost certain” that it’s done exploring for oil in Cuba; see stories from AP and the Herald.

·         Juventud Rebelde: The “social movement” of 52,000 Venezuelans who have received medical care in Cuba in the past 11 years has joined the coalition that aims to garner ten million votes for President Chavez in the October election.

·         AFP: Secretary Clinton had a meeting with Judy Gross, wife of jailed USAID contractor Alan Gross.

·         The Hill: Senator Rubio makes his first trip to Cuba by visiting the U.S. naval base at Guantanamo.

·         Internet investor Esther Dyson on a recent visit to Cuba.

·         A Cuban jurist intervewed by Trabajadores says that the labor code is being revised in ways that will favor the prívate sector.  Asked about the kinds of labor complaints that are emerging in the new private sector, she said no significant complaints have come about.

·         Radio Rebelde: From January through April, 92,500 homeowners registered the titles to their homes, and 140,000 did so last year according to Cuba’s Ministry of Justice.  That step, the story says, “guarantees greater legal security to property owners.”  If a property’s title is not updated and registered it cannot be sold or otherwise transferred. 

Odds and ends

• Dow Jones:  The “Section 211” case, named after a 1998 law that invalidated Pernod-Ricard’s registration of the Havana Club rum trademark in the United States, came to an end in the U.S. Supreme Court.  Pernod lost and, cutting its losses, announced the “Havanista” trademark for a Cuban rum that will enter the U.S. market when the embargo ends.  Cuba’s foreign ministry, citing a WTO decision in Pernod’s favor, continues to call on the U.S. government to register the trademark.

• Politico on the voting propensities of younger-generation Cuban Americans.

• EFE: University admissions in Cuba are down 26 percent, the national statistics office reports.  In today’s Granma, a story on the priority being given to technical education.

• Trabajadores: In large numbers, Cubans are updating and registering the titles to their homes, and in spite of the streamlined process government workers are straining at the workload.  A clean title is prerequisite to any sale or transfer of a property.

• AP on the “mystery” of the undersea fiber optic cable that connected Cuba and Venezuela last year and seems not to be working.

• The New York Times looks ahead to the promised reform of Cuba’s migration norms.

• AP: A Cuban official tallies the distribution of idle state lands since 2008: 1.5 million hectares to 163,000 producers, with 79 percent of that land now in use and 59 percent being used for livestock.

• Governor Romney issued a Cuban independence day statement charging that the late Damas de Blanco leader Laura Pollan died “at the hands of the dictatorship.”

• At Huffington Post, coverage of Café Laurent, a great new Vedado paladar.

• The New Yorker rounds up some of its Cuba coverage over the years, including dispatches from the island in the 1960’s and 1970’s.