Wednesday, May 28, 2014

Cuba’s new real estate visa

Cuba's new real estate visa
By José M. Pallí, Esq.

The Cuban Interior Ministry (MININT) chose May 20, Cuba's independence
day, to publish Resolución No. 4/14, which lays out the procedure for
foreign real estate owners to obtain a visa.

Foreign individuals (personas naturales extranjeras) who want to invest
in "owning" or renting houses in Cuba can obtain a special visa that
makes them a Cuban resident for such purposes, since only Cuban
residents can hold title to housing in Cuba under the present state of
Cuban law. The status lasts one year, but can be renewed yearly, without
a limited number of renewals. This MININT resolution also sets the
conditions affecting the visa holder's residence in Cuba.

Before we begin hollering and casting stones at this latest example of
moral turpitude on the part of the Cuban authorities (how dare they sell
to wealthy foreigners the 'right' to live in Cuba!!??), we may want to
take note of the fact that this is precisely what the United States has
been doing under its investor-type visas for many years.

At about the same time Resolución No. 4/14 showed up in the Gaceta
Oficial, our local authorities in Miami were celebrating our Magic
City's designation as an "EB-5 regional center."

When U.S. laws created this Immigrant Investor Pilot Program back in
1992, regional centers were meant to be in areas that were among the
poorest and in need of more assistance in the country. Miami, where real
estate prices are way beyond the reach of the average Miamian's income,
proudly claims to be the first city in Florida and in the Southeastern
United States to be so designated.

In the smallest of nutshells (since this column isn't about U.S. laws),
an EB-5 visa gives green cards to foreign investors and their family
members under 21 years of age who invest a minimum of $500,000 into a
project that, within two years, creates at least 10 jobs in the United
States. If those 10 jobs are not created within two years, the investor
may lose his investment and must go back home.

I know of no statistics showing winners and losers in this game, but I
don't even want to think about the trouble I might get into if I were to
tell you how I believe these investments compare, risk-wise, with
investing, say, in Mexico (or dare I say Cuba?). And that was before the
'program' evolved — the creativity of my fellow lawyers is limitless —
into what now covers investment in fancy real estate products. This is a
field that, especially in Miami, historically tends to be of a highly
speculative nature.

The Cuban visa for real estate investors requires, just as many of our
visa types do, a petitioner: Cuba's Tourism Ministry (article 2 of
Resolución 4/14). Together with the other elements you usually present
to obtain a visa anywhere (passport, pictures etc.), you need to present
a letter from the ministry, asking the MININT to issue you one of these
real estate-related resident visas.

The migratory category Cuba assigns to the holder of this visa type is
called Residente de Inmobiliaria (article 3), which, at first glance,
seems to suggest that the 'real estate resident investor' needs to be
housed at, say, the offices of Pedro Realty or some other realtor's
headquarters. And the reference found in the first of the 'whereas'
clauses at the beginning of Resolución 4/14 to houses in complejos
inmobiliarios, or real estate developments, suggests the petitioner may
not be likely to petition you for one of these visas if what you want to
buy or rent is one of these beautiful Vedado mansions in Havana. But I
would give it a try, nonetheless.

If you get one of these visas, you will have to request and carry always
with you an ID document (articles 8 to 13 of Resolución 4/14) that says
you are a real estate resident investor (something Americans are often
inimical to but is quite common in many places). You will not need to
live in Cuba all the time; you can spend a year abroad, without setting
foot in Cuba and still not lose your status as a Resident de
Inmobiliaria (article 6), and even extend your absence for a longer time
by asking for a waiver at a Cuban consular office.

During your stay in Cuba under this migratory status, you will be able
to engage in pre-authorized touristic and/or business activities of the
kind Cuba's law allows (article 14), and travel anywhere in the island
(wow…) in pursuit of such activities (article 15).

You lose your real estate resident investor migratory status (a) when
you are no longer an owner or tenant of a house in Cuba, (b) when you
stay away from Cuba beyond the time prescribed in article 6, mentioned
above, or (c) if your behavior is found contrary to Cuba's constitution,
its laws, or the conditions the visa places upon your stay (article 17).

In the same edition of the Gaceta Oficial (No. 25 Extraordinaria de 20
de mayo de 2014), you can read another resolution, this one from the
Ministry of Tourism. In Resolución 47/14, you will find your bearings as
to how you get this dependency of the Cuban government to become your
petitioner for one of these visas. This resolution also describes what
happens when a visa holder in this category does something (any of the
three situations listed in article 17 of the MININT resolution) that
leads to his losing his status as a Residente de Inmobiliaria. Article
11 of the Tourism Ministry resolution tells us that it is the
responsibility of the head of the entity that administers the real
estate development where the house or apartment in question is situated
to report to the Ministry of Tourism the circumstances affecting the
status of the visa holder who occupies that dwelling. The Tourism
Ministry then must, within three working days, report the situation to
the MININT explaining why the reasons behind the issuance of that
particular visa do not hold water any longer under those new
circumstances (article 12). After that, my impression is sayonara could
be just around the corner.

This Tourism Ministry Resolution also contains, in my personal opinion,
a strong indication that these visas will only be used for those who buy
or rent housing in a certain type of real estate development (and not
for isolated pieces of real property); the recurrent reference in the
two resolutions commented here to "el complejo inmobiliario donde está
ubicada la vivienda" strengthens my perception that this visa may not be
suitable for those foreigners who want to simply buy an old apartment in
a pre-1959 building in Old Havana: They will still have to buy it under
someone else's name, if they themselves are not permanent residents in
Cuba. Article 1 of Resolución 47/14 defines complejo inmobiliario as
"aquellos construidos por entidades cubanas autorizadas, con la
finalidad de la venta o arrendamiento de viviendas." ("those built by
authorized Cuban entities, with the goal of the sale or lease of dwellings")

But the thing I regret most is that neither of these two resolutions
shed any new light on the nature and extent of the rights of those
foreigners who buy real property in Cuba will get; what I wrote in a
previous column almost exactly a year ago still is, to the best of my
knowledge, all we know about that important topic.

Before there is a crystal clear answer to the question "what does
'owning' residential real property in Cuba by a foreigner entail?", it
will be hard to think of Cuba as a competitor for the US$550,000 each of
the many Chinese EB-5 aspirants must chip in to bet on a permanent and
unconditional green card. But even as things stand today, I would
hesitate to say who is the wiser investor. So who knows? Maybe some
people from China will still prefer to take the risk on Varadero than on
Brickell Avenue.

José Manuel Pallí is president of Miami-based World Wide Title. He can
be reached a

Source: "Analysis: Cuba's new real estate visa « Cuba Standard, your
best source for Cuban business news" -

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