By Douglass G. Norvell | [url=http://www.CubaNews.com]http://www.CubaNews.com[/url]

It’s been described as “underground” or “clandestine,” in the foreign press, but few people know that Havana’s Paseo del Prado serves as the hub of a national real-estate market complete with a cadre of real-estate brokers, information databases, free radio advertising and established ethical and unethical practices.

All of this will greatly interest foreign investors once they’re allowed to build and sell badly needed affordable housing in Cuba.

Since the 1959 revolution, all land technically belongs to the state, but individuals can own their homes, and a much greater percentage of Cubans own their homes than do Americans. In fact, so few Cubans rent that rental statistics aren’t even reported, compared to the United States, where one-third of the population lives in rented property.

RULES OF THE GAME

Consistent with home ownership, Cubans are allowed to transfer their property rights through trades, or permutas, and in some cases outright sales through a set of flexible legal mechanisms. Cuba’s bureaucracy is largely beyond the reach of civil law and powerful enough so that officials can shape rules to fit situations. As a result, a loose sort of laissez-faire management emerges, where processes can be hurried, or slowed, according to the situation.
Outright sales of homes are permissible in Cuba. Before the government changed its mind, there was also an emerging condominium market in Havana. Inmobilaria, the European real-estate giant, completely sold out one luxury project in Miramar and began another before strident Marxists in the government decided that enough was enough, and lobbied successfully to have the project discontinued.

But while the project was in progress, foreigners could simply walk into Inmobilaria’s office, plunk down a payment and begin the buying process. In other cases, especially where a homeowner stayed in Cuba rather than flee the revolution in the early 1960s, homeowners can simply sell their houses to whomever is approved by the government.

VIVIENDA HAS FINAL SAY IN HOUSING TRANSACTIONS

Various pieces of legislation and administrative directives govern real-estate transactions, beginning with the agrarian and urban reforms in the decade following the revolution.
Basically, housing transactions are supervised by the Instituto Nacional de Vivienda (Vivienda), which has a representative in each of Cuba’s 169 municipalities who sits in the office of Poder Popular (People’s Power). The Banco Popular de Ahorro (People’s Savings Bank), finances houses, and the certificate denoting payment completion serves as a title for homes. Finally, the Ministry of Justice has jurisdiction over home sales conducted illegally.
If a Cuban owns a home acquired after the revolution, it cannot be sold before first offering the property to the government, which can then set the price in pesos and acquire the property. While the policy for properties acquired after the revolution may seem brutal, there is a justification for it.
Most Cubans live in apartment homes acquired after 1959, at dramatic subsidies under the Urban Reform Laws of the mid-1960s. When approved by the Ministry of Justice, Cubans can purchase apartments on a 20-year payout, with a payment of 1/40th of their monthly salary. Since many Cubans earn an average salary of around 240 pesos a month, their house payments would be six pesos each, or the equivalent of 25 U.S. cents.
In Havana, apartments sold on the open market will bring upwards of $10,000, so if ordinary Cubans were allowed to sell, they would in fact, be reaping a nice profit from the urban reform laws, but then they’d have no place to live, other than with relatives.
Given this lack of a traditional real-estate market, one finds unoccupied apartments in many parts of Havana, while the owners wait for an opportunity to trade.
Trading apartments is legal in Cuba and permits citizens to change houses for personal reasons.  To implement a permuta, a Cuban goes to the Vivienda representative in the Poder Popular, who then sends out an architect to inspect and appraise the property based on size and age. That office then issues a voucher approving the sale. Then, if the trader does not already have a swap lined up, he must go into the market and find one.
Traders find each other via three methods: by word of mouth, by advertising on radio stations, or by contacting real-estate brokers who gather along the Paseo del Prado.
The Prado real-estate market occupies about half an acre at the boulevard’s southern end, not far from the Hotel Inglaterra. Gathered here are 50 or so real-estate brokers known as corredores, sitting on concrete benches with notebooks in their laps many talking with couples looking over their shoulders.
Most of these corredores are older men, and each of their notebooks contains hundreds of listings reaching across the country. These listings are organized by province and municipality, and includes names, addresses and phone numbers for each property. Data about the properties themselves include the number of rooms, its size in square meters, information regarding kitchens, bathrooms, exterior patios and entrances, and the availability of gas, phone and other utilities.
A typical corredor will list from 25 to 40 new permutas a month. That gives these men a basic monthly income of 250-400 pesos. Other than phone and transportation to the market, they have very little overhead. Few, if any, carry business cards since that would call unwanted attention to their activities.
Although helping other Cubans swap houses isn’t illegal, speculation is, under Reso-lution #261 issued by the Instituto de Vivienda in 2001. With permutas, the government permits up to four-way swaps, that is, a simultaneous transaction between as many as four parties, none of whom deal directly with each other. A gets B’s house, B gets C’s house, C gets D’s house and A gets D’s house.
Titles for properties consist of the certificate of loan payment from the People’s Savings Bank. Homeowners can also ask the Committee for the Defense of the Revolution (CDR) to certify through neighbors that the owner is the true owner, in a process called vecinos dan fe (neighbors give faith). Houses owned with a faith title can be sold to the government but not traded.

LEGAL DEALS AND ILLEGAL ONES

Illegal transactions include the arrendendor permuta where A makes a loan to B, and B occupies the house in perpetuity. Permutas desiguales (unequal trades) where a trader puts up money in addition to his home, are also common and sometime prosecuted.
In one case in Pinar del Ro four years ago, an illegal permuta case was prosecuted. A homeowner had traded a one-bedroom house and $10,000 for a four-bedroom house.
The Direccion Municipal refused to allow the trade and referred the case to the Ministry of Justice. A five-member tribunal three lawyers and two non-professionals heard the case and ultimately the defendants lost their houses and had to pay court costs.