A Dynamic Solution to Prior Claims in Order to Solve Cuba's Housing Problem

A DYNAMIC SOLUTION TO PRIOR CLAIMS IN ORDER TO SOLVE CUBA'S RESIDENTIAL HOUSING PROBLEM.

By Alberto Luzárraga.

futurodecuba.org

The residential housing crisis in Cuba is common knowledge: crumbling properties, crowding, and constant subdivision of limited space. The Castro government has also created a legal mishmash of competing claims by following diverse internal policies, some of which supposedly granted a murky title to urban property. It has also used housing grants as a reward for loyalty. If we add the prior owners' confiscation claims, and take a purely legalistic approach, there is no question that lawyers can be kept busy for decades while real estate deteriorates and collapses.

Investment in housing and the building of new units or repair of the existing ones is the only solution. Juridical security is required to make it happen. In this case a solution that follows the rule of law must incorporate respect for pre-existing rights and consideration of the Cuban reality.

It should not be so difficult to attain. Contrary to the Castro government demagoguery, there is not an army of 'radical exiles' anxious to move into their former homes. Most enjoy good or better housing and are comfortably ensconced in nice communities throughout the U.S. and elsewhere. They are also fully aware of the conditions in Cuba and know that people can't be thrown out in the street by any civilized government and much less by a provisional government confronting a myriad of social problems. Let us be clear: The castroite discourse is merely another form of psychological manipulation of the suffering Cuban people.

This document only pertains to property now occupied, that may be subject to prior owners' claims. It is a very complicated subject with many variables that must be well understood. Therefore we offer the following suggestions simply as ideas in order to start thinking about the bases of a useful legislation. For brevity we only deal with general principles.

v All prior owners must register their right at a register established for said purpose. A granted time limit shall be granted. After it has expired the presumption shall exist that there is no claim.

v Return to owners or their heirs or assignees all vacant lots. If a building has crumbled the land will be deemed a vacant lot.

v A 'permanence right' is recognized to all occupants of urban houses, which right will be freely negotiable for cash at a market price. High nomenclature apparatchiks with mansions or foreigners that trafficked in urban property are excluded. .Eligible occupants may also elect to transfer their right to the Bank and let it negotiate on their behalf as a fiduciary

v If the parties agree to the sale of the permanence right the moneys will be paid to a new entity: "The Housing Development Bank." Proceeds from the sale will be the down payment and the balance of the cost will be carried as a mortgage. In order to protect the occupants and insure transparency and fairness the Bank shall publish market information based on effective transactions.

v Occupants will agree to move to housing built by the Bank. Housing will be assigned on a first negotiated first assigned basis.

v Ownership of confiscated property is recognized with certain limitations. A right to negotiate with the occupants will be granted to registered owners, their heirs or assignees. There will be a time limit. After the time period is exhausted the right to negotiate shall expire and the Bank shall be subrogated in the place of the original owner.

v The bank will be responsible for urban planning and design. This will comprise both the renewal of old housing and the design of new units. It will provide several options according to family needs. Design will be open to competition in order to allow for the creativity of Cuban architects. In like form the Bank may subcontract construction through a transparent and competitive process. It will raise funds by gathering deposits and long term soft loans. Depositors will participate in lottery programs for free houses.

v If the owner is not interested in buying the permanence right, he may apply within a fixed date to have clear title transferred to him with all countervailing claims eliminated. In this case, as consideration, he must agree to render the property habitable according to code, pay expenses for moving the occupants to a suitable abode, and accept the occupants as future tenants subject to whatever rental legislation may exist. Failure to comply will mean forfeiture of the property right.

v If there is no agreement by the occupants or the original owner to sell their right within the established term, such right disappears and accrues to the Bank. The Bank can:

a) Sell the permanence right to the owner or his assignees, or an interested third party for a market price for the benefit of the occupants. In this case the occupants will have the same rights to buy the new housing built by the Bank. They will have only placed themselves on a slower track by their own choice. In all cases the occupants will retain the right to remain in their dwelling until a new housing unit is available

b) Sell the owners’ ‘nuda propiedad’ (civil law term for property devoid of possession) transferring the proceeds to the original owner or his heirs or assignees.

By these actions, the property will be free and clear and available for development.

v If nobody claims the property after a fixed period, the occupants can opt to enter into the Housing Bank program and have it sell their right, or remain living in the property and sell their right by themselves at a market price, or do nothing and receive clear title after a fixed period. If there are several occupants they may buy from the other occupants their pro rata shares (calculated in terms of square feet) and negotiate solely or as a group with the owner or the Bank.

The outline requires a well thought out and detailed legislation as it affects property and possession rights in that it limits the same and establishes peremptory time limits for action. However it would be justified considering that several worthy results, including avoidance of systematic conflict, could be achieved, to wit:

1- Recognition that there was an owner who had rights, an indispensable element for the return to the rule of law.

2- Recognition of an undeniable fact. There is a de facto occupant that has possession. That possession has an economic value for the owner and thus he pays for it.

3- Promotion of a peaceful, practical way to solve conflicts and creation of economic incentives to act and solve the problem. Not acting has practical and economic consequences both for the original owner and the occupants. For the owner lack of action would result in the sale of his ‘nuda propiedad’ at a presumably low price given the expenses the buyer must absorb. For the occupant delay would result in not acceding to a better unit sooner and delay in obtaining capital.

4- It releases property to the market, and promotes economic growth through new building and reconstruction, and incorporates urban planning.

5- It brings funds to the country.

6- It creates new proprietors and promotes optimism and hope.

7-The most important result: It creates juridical security. The return to the use and enjoyment of property is not questioned. The proposal only establishes the method and costs for regaining possession. Rights are only affected in the case of non performance or expiration of the action to exercise them.

8-Finally, it is well known that costs are unavoidable whether or not the possessor has some rights. Under a rule of law judicial proceedings are expensive and can also be stopped by populist laws. It is better to design a system wherein economic considerations and alternatives show the way to following order to avoid conflicts.

Other solutions have been offered. But they simply talk vaguely about maintaining the present status and/or compensating the owners. Compensation is not credible for a country that is broke. On the other hand to maintain property frozen and subject to claims does not help as urban renewal would face a considerable obstacle. In the end, progress in Cuba depends on doing new, just and positive things and not in hashing out the past. This is a way of going forward. Cubans are imaginative and have much initiative. Let us use these good qualities!