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In its decision, the Supreme Court noted that Decree-Law 288 included no provision about pre-2011 home sales, and it repealed old statutes that made those sales illegal.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.

Havana real estate market

If you want to get a sense of Cuba’s real estate market, you can read this great roundup by Reuters or you can do what I did one day last month, which was to go stand in the Paseo del Prado on a Saturday morning and experience the market first-hand.

There, Cubans used to congregate to arrange permutas, the swaps that were the only legal option before residential real estate sales were legalized.

Now things are busier than before and with no effort at all you meet buyers and sellers, learn about their prices, their strategies, and the market forces behind the reacomodo in the housing market that the government predicted would occur.  There are even brokers who charge sellers a few percentage points of the sale price when they find a buyer.

Odds and ends

• Granma: 56,500 Cubans have registered and updated their property titles since new procedures went into effect last November.  The benefit, the article explains, is that the owner is “recognized before the law as legitimate owner of his property and gains legal protection in exercising any transfer of the property.”

• Sun-Sentinel: The offshore oil exploration rig continues to work in Cuban waters in the Gulf of Mexico, shifting westward to sites that would be, if something went wrong, more dangerous for Florida.

• La Jornada reviews a series of reforms approved and not yet implemented.

• El Mundo: Spain’s new ruling party rejects a 2.5 million Euro appropriation to pay for extended aid to former Cuban political prisoners and their families who now reside there.

• The New York Times on anti-AIDS efforts in Cuba, here and here.

Odds and ends

• Yoani Sanchez on the sight of new, renovated, and spruced-up houses, more common in Cuba these days than before.  In English here.

• The Los Angeles Times, from Santiago, on the different outlooks encountered among members of different generations of Cubans, including youth who want more opportunity.

• AP: A Cuban trade oficial says exports of goods and services grew 20 percent in 2011.

• Some of the commentaries on the Ozzie Guillen “I love Fidel” incident are much more interesting than the incident itself: see this from Wright Thompson at ESPN.com on changes in Cuban Miami, this from Univision’s Jorge Ramos on what he calls the “Miami baptism,” this from Andrew Johnson at Minnesota Daily arguing that it’s not a cut-and-dried free speech issue, and this from Carlos Frias of the Palm Beach Post on long-ago losses that still, for some, feel like yesterday’s.

• The Sun Sentinel on U.S. response plans in the event of a Cuban oil spill: the priority will be not beaches, but rather “shielding inlets and intracoastal waterways to protect the most vulnerable parts of the state's coastline.”

On O'Reilly street

The do-it-yourself push

The new policy that allows Cuban citizens to buy and sell homes was presented as the abolition of one more “unneccessary prohibition” and also as a way to address the housing shortage. 

It can certainly do the latter by helping to redistribute the current housing stock, allowing those few with too much space to sell it off.  But that only goes so far. 

How then to expand the housing stock?

Do-it-yourself is one way, probably with limited potential too, but the government is trying to promote it. 

Juventud Rebelde just reported that the government is disappointed that 2011 sales in stores that sell construction materials were 72 percent short of the forecast.  (Culprits included uneven supplies and some high prices.)  It also reports plans to open 39 more stores that sell hardware and home construction materials.  The profits from these sales, Cuban television reported (see Prensa Latina) are being used to provide home repair grants for low-income households; this is a new program that has provided more than 200 grants in the first month.  Beyond that, bank credits are also available.

Time will tell the impact of these measures.  In the meantime, the stores themselves look to be what many of Cuba’s small entrepreneurs have been waiting for.  I saw one in Havana’s Miramar neighborhood that opened in March 2011.  While it had some big-ticket items (compressors for paint spraying) and some that were way overpriced (plastic garbage cans, $30-$70), there was a big variety of useful products, many at good prices.  There were tools and materials for carpentry, painting, electric work, tile work, plumbing, and more.  Most items were from China, with some from Spain, Taiwan (!), and the United States.

Reforms, slow and steady

The website of the newspaper Trabajadores is placing news stories on the economic reforms in this useful section called “Sin pausa” (“without pause”). The phrase was used in a speech last July by Vice President Machado Ventura; he said the process is proceeding “sin prisas, pero sin pausa;” i.e. not hurrying, but not pausing. Which seems to be the case:

• Juventud Rebelde: 71 contracts have been executed between farm producers and tourism industry businesses. These are the first fruits of what the article calls an “incipient” policy, one announced last November that allows agricultural producers, including private ones, to contract directly with businesses in the tourism sector. It’s a winner all around, except for the government intermediaries rendered unnecessary by these new private transactions. And it’s a very clear sign of the government implementing its plan piece by piece, even in cases such as this where government is called upon to get out of a business that it had carried out for decades.

• On the road in eastern Cuba, Reuters’ Marc Frank does some colorful reporting on a great new entrepreneur with an establishment fronting the central highway, and on the development of the residential real estate market outside Havana. (Don’t tell Senator Rubio, but Cuban Americans are a big factor in that market.)

• More from Marc Frank, from Holguin: 211 state cafeterias in that province will be the subject of a pilot program where they will be leased to the workers, who will then run them on their own, as they see fit. Whether the enterprise will be constituted as a cooperative or another form of business remains to be seen. They will launch well after private restaurants and lunch stands have established themselves, Frank reports, providing “stiff competition on almost every block.”

• Bending the cost curve: Cuban health care spending dropped 7.7 percent last year, the health minister reported.

• The Cuban government says it’s not the complete solution to the public’s housing needs, but it will provide 160 million pesos in grants to support home repair or construction for families on the lower end of the income scale. That amounts to about 40 percent of last year’s revenues from the sale of construction materials, Trabajadores reports. The maximum grant will be 80,000 pesos, of which a maximum of 30 percent may be used to pay for labor. Recipients will enter a contract governing their use of the money. More here from Trabajadores and in English from AP.

• It’s tax return season in Cuba for private entrepreneurs (state employees do not pay income tax). This story in Granma explains that the season for filing returns is extended one month to March 30, and those who file by February 28 can deduct five percent from their tax payment.