Cuba-New Market for Title Insurance?
On its face, the new law is limited to relatively few residential properties, but it comes with a couple of concerns very familiar to New York real estate practitioners: transfer taxes and land title problems. The tax will be 8% on transfers done pursuant to the new “market“ regime and 4% for deals done under the current “barter“ system that has prevailed in Cuba since the communist takeover.
More intriguing to “Constructive Notice,” however, is the range of land title issues that this move will inevitably stir up. The Times article mentions a common situation: where multiple families occupy a home, but only one has a state-granted “title” to the property. It’s also easy to foresee claims of “adverse possession” arising with regularity. And, there are always looming the claims of expatriate Cubans to property confiscated following the takeover (the Times reports that the new law “does not broach the subject”). Obviously, it will be a market ripe for fee insurance. The lack of capital available for financing will make inflows of money from abroad necessary, presumably giving rise to demand for lenders title insurance.
Of course, there are myriad issues that will need to be addressed as this transition to a free market continues. Whether it will happen as relatively smoothly as it did in the former Eastern-Bloc countries, or in the haphazard, conflicted manner in which so many other Cuba-related stories play out remains to be seen.