Cuba's title recording system,
part 1 – 2
By José Manuel Pallí, Esq.
Cuba's title recording system, part 1
By José Manuel Pallí, Esq.
I apparently raised more than a few eyebrows by claiming that Cuba's
land title recording system before Castro was much better than anything
we have ever had in the United States. At the risk of stepping on even
more toes, here is why I said what I said.
First, let me make clear that my statement is not born of any claim to
Cuban exceptionalism: Cubans can hardly brag about the recording system
they had back in 1959, since it was the creation of Spaniards in the
middle of the 19th century, who in turn followed ideas originally
developed in Germany. Of course, back then Cuba was part of Spain (it
was one of Spain's provincias de ultramar), and, as a matter of fact,
Cuba tasted this Spanish Recording Law (known in its original version as
the Ley Hipotecaria de Ultramar) even before it was in effect in the
And I am not saying that our court-run recording system in the United
States is not serviceable as it is. I am saying it can be very much
improved if we would only look at what other countries are doing — and
have been doing for eons — with theirs. By humbly acknowledging the
possibility that others may have a better answer for problems such as
mortgage fraud, certainty as to who owns a given secured loan when the
time comes to foreclose on it, or people entering into contracts they do
not understand the consequences of, we may begin to resolve some of the
issues that are keeping us mired in this never-ending "financial crisis"
and clogging our justice administration system.
There are two main varieties of land title recording systems. The United
States one is the less elaborate, and it simply records and publicizes a
private document, assigning a priority to it, based on its date of
recordation. All you need to do to have your document recorded is take
it to the courthouse and present it, making sure it meets certain
minimal formalities, which are the only thing the record keepers review
prior to recording it. It is a system that records and publicizes documents.
In the kind of Spanish (German-inspired) recording system in place in
Cuba before Castro, the registrar in charge of the recording office
reviews the (usually "public" or notarial) document presented for
recordation, checking on it from several angles, its completeness and
its abidance by the applicable laws among them. The transaction
contained in that same notarial document has been previously reviewed to
mostly the same extent by a Civil Law Notary, an independent or
third-party lawyer who makes sure that the parties (signatories) to the
document or transaction fully understand its meaning and consequences.
In essence, what this fellow does is make sure the document is legally
effective, so as to accomplish what the parties freely will to do. The
combination of this strictly reviewed notarial document (which in Civil
Law carries a high evidentiary value that makes it almost self-proving),
the pre-recordation review by the Registrar (calificación notarial y
registral), and the legal principles on which the Spanish recording
system is based, make the rights of the owner (of a piece of real
property, of the mortgage encumbering it, or of any other real property
rights he claims over it) of record virtually unassailable. So it is
said to be a system that records (and even more importantly, assigns)
real property rights, not just documents. The recording entries of such
a system are sort of iron-cladded against the claims of those who may
try to question the rights of the owner of record, which rights are
thusly said to be legitimized by their recordation.
There are other reasons why this "recordation of rights" system is much
better than ours:
•The information pertaining to each piece of land is concentrated in a
single entry (called a folio real), which rules out the need to resort
to extended and cumbersome searches through grantor / grantee indexes.
•Its emphasis on preventing legal disputes through the power of review
both civil law notaries and registrars have, results in there being
relatively few lawsuits over land titles in those societies that opt for it.
•Even if the system is not absolutely risk free – no system is, but, I
insist, this Spanish recording system is, conceptually, much stronger
than ours — it makes title insurance or other such products unnecessary.
And I happen to know a thing or two about how our title insurance-aided
system works when compared with these recording models in place on
almost every Civil Law jurisdiction in the world, having spent many
years trying to "extrapolate" title insurance into other cultures.
My many friends in the title insurance industry have always seen its
international expansion from the very American perspective of "if it
works for us, it should work for everybody else." While I was already
well into my project of acculturating title insurance to civil law
habitats, beginning with Mexico, an American working for one of the
largest American title insurance underwriters asked himself a very
simple question: 'Why don't they have it in Canada?', where he happened
to live. With dedication, well-honed selling skills and hard work, he
turned this underwriter's Canadian venture into a relative success.
But then it all became a matter of finding how to sell – an endeavor we
are still unquestionably number one at — American title insurance
abroad, and any need to acculturate it or translate it into other
people's needs became an afterthought. So even today, about 99 percent
of the very few policies issued over Mexican real property titles are
bought by Americans.
The real question is, why do we have title insurance when no other
advanced – nor underdeveloped — nation in the world has ever found any
use for it? And the answer brings me back to the theme of this little
essay: Because our recording system (and even our real estate
transactional system) is a lot more frail and uncertain than it should
be, or than we, as the Greatest Nation on earth, deserve it to be.
And this is not news to a lot of folks in the United States. The last
chapter of the first version of RESPA (the Real Estate Settlement
Procedures Act) contained suggestions about how to change and improve
our recording system. Nothing ever happened, of course, for the same
reason it is very difficult to rid our Internal Revenue Code of a long
list of loopholes and tax breaks.
Besides, title insurance is as wired into our financial system as the
so-called rating agencies are – hard to believe in them, but at what
price the disbelief. We do need title insurance, and we need it, even if
it does not always work as we expect it to work. It has not happened
yet, but I would not be surprised to read in the near future about the
industry's claims that their policies are only "opinions," just as those
of the rating agencies … And even then, we may still be unable to live
In my next piece, I will try to explain where the Cuban recording system
stands today – its operating guidelines were altered by some provisions
published by the Cuban government the same day they published Decreto
Ley 288/2011, the law that facilitated home sales in Cuba — and explore
whether title insurance might prosper one day in the still forbidden
Cuba's title recording system, part 2
By José Manuel Pallí, Esq.
Cuba's laws went through a tidal change as a result of the new
conception of socio-economic relations — property rights included — the
Cuban Revolution brought to the island. One of the early victims of this
process was the excellent title recording system Cuba inherited from
Spain, and which, by 1959, had served Cuba well for almost 80 years. It
was essentially dismantled.
A succession of laws and regulations containing provisions affecting the
recording system were adopted in order to set aside the "old" Registro
de la Propiedad. They included provisions in the Agrarian Reform Laws,
Urban Reform Laws and Housing Laws, which created new registries that
would replace the existing one, segregating the recording of titles to
urban lots from from that of rural land, for example. However, most of
these new recording schemes were never even implemented. The overseers
of this revolutionary (in name only) recording system were diverse. They
ranged from the Agrarian Ministry to the Housing Ministry to the
municipalities, but the registro's natural and sensible connection to
the legal system under the supervision of the Ministry of Justice called
for under pre-revolutionary law was eliminated. The result: For almost
30 years there was no land title recording activity in Cuba.
But in the early 1990s, as the world dramatically changed and Cuba was
left without the Soviet life support system, the consequent realization
that an opening of Cuban society was, eventually, inevitable, gave way
to a reassessment of a well-conceived and operated land title recording
system. Cuban lawyers were well aware that their 1880 Mortgage Law (Ley
Hipotecaria) remained part of their laws. It had never been formally
abrogated or rescinded, though technically, it appeared to be superseded
by some of the provisions I refer to above. They in turn, in my
understanding, resorted to it as a blueprint for the reform, if not
necessarily a re-birth, of their recording system.
This reform process began in 1998, with the sanction of Decreto Ley
185/98, which modified Cuba's Housing Law, just as the recent "Cubans
can now sell their houses" Decreto Ley 288/11did. And, subtly — even
unassumingly — Decreto 185, in my opinion, opened the door for the old
"Spanish model" Registro de la Propiedad to be brought back to life. The
Spanish seal was made even more evident by the fact that most of the
very bright and capable lawyers that were to be put in charge of the
Cuban land title recording system were being trained in Spain, by
Spanish registrars. The Colegio de Registradores de Valencia was
assigned this task through an agreement between the Spanish and Cuban
governments (Spain's government was then presided by don José María
Aznar). This was a teaching process that, surprisingly, seems to have
waned over the past almost eight years of Socialist government in Spain.
But the brand-new Spanish government is led by don Mariano Rajoy, a
politician who is also a Registrador de la Propiedad by trade, and
despite the fact that, amid the chaotic events that frame his
inauguration, Cuba may not be for him the Number One priority we Cubans
believe it should be, Rajoy's advent may turn out to be excellent news
for the reform of the recording system in Cuba.
This 1998 law also gave back to the Ministry of Justice the supervision
over the recording system. It marks the starting point of a careful,
stage-by-stage re-evaluation of Cuba's recording needs, and an even more
cautious implementation of what seems to be akin to the Spanish system
of old, as I could see for myself when I was allowed to visit the
recording office at La Lisa back in January 2003, one of the registros
then serving Havana (I felt as if I was at any small town recording
office in Spain). If you want to explore the topic any further — or if
you are having trouble with insomnia — you may browse (or drowse)
through these two pieces I wrote years back, when Cuba's reform of its
registros was in its early stages:
The same day Decreto Ley 288/11 was published in the Gaceta Oficial de
Cuba, and in the very same issue of the Gaceta, you will find Resolución
No. 324/11, issued by Cuba's National Housing Institute (Instituto
Nacional de la Vivienda or INAVI), which adopts a procedure for bringing
real property titles up to date (Procedimiento para la Actualización de
los Titulos de Propiedad y su Inscripción en los Registros de la
Propiedad), under the light of the changes brought by Decreto Ley 288.
This resolution from the INAVI — and the way it apparently interacts
with other recording rules and regulations in force in Cuba, mainly
Resolución 114/2007 of the Ministry of Justice, which establishes the
rules and procedures for the organization and operation of Cuba's land
title recording system (Normas y Procedimientos para la Organización y
Funcionamiento del Registro de la Propiedad) — will be the subject of my
next column here on Cuba Standard. I may even venture into crystal ball
territory and try to discern more clearly what the recording needs Cuba
pursues really are, what it is that is really driving this reform of its
recording system, and how effective the reform has been thus far. I may
not even have to borrow one of those tools of Miami based–meaning
without setting foot in Cuba — cubanology. I am told a couple of them
are already available in local pawn shops.