You Can Buy Cuban Property Claims

Cuban property claims

In 1959, Fidel Castro led a Revolution to overthrow the government and capitalist economy of Cuba.  He seized assets and property such as farms, real estate, machinery, factories, and intellectual property; he never paid for any of it.  If you owned a farm, the Cuban government took it and you were left with literally zero cents on the dollar.  International law says you can’t take someone else’s property without paying for it.  Now that the U.S. and Cuba seem to be going down the path of normalizing relations, there is suddenly hope that the Cuban government will actually try to settle Cuban property claims either in the form of a cash settlement, a stream of payments over time, or in the case of real estate, returning the property to the previous owners.

Bloomberg explored the complex world of Cuban property claims. The biggest claimants are big companies like Starwood Hotels and Coca-Cola.  It points out they might be given something besides money in order to settle their claims, like tax-free development zones or distribution rights.  Those probably aren’t the type of entities that would sell Cuban property claims.  Even having a seat at the table to communicate directly with the Cuban government or its lawyers might be beneficial to them.  However, there are a lot of small claimants that lost family farms, residential properties or small businesses to Castro and the Revolution.  Many of these claims are owned by people that are 80 years old or older, or people that are 1 to 2 generations removed from living in Cuba.  These type of claimants may be willing to sell their claims in exchange for a cash payment up front.  Like buying distressed debt, buying a Cuban property claim might be a situation where you can buy something at a large discount to its face value and either sell or receive a settlement check at a smaller discount to face.

According to the U.S. Department of Justice, almost 6000 claims have been certified for a total value of almost $2 billion.  Another interesting historical fact is that Castro actually decreed in 1959 that he would issue government bonds to pay for all the property he seized.  That never happened.  No bonds were issued and no one was ever paid anything.  In order to find claimants that might be willing to sell their Cuban property claims, you might contact the non-profit organization called Joint Committee on Cuban Claims.  Fifty plus years of communist rule have decimated the economy of Cuba and the country and its government does not have money to pay claims.  However, it does have some things going for it such as beautiful beaches and proximity to the U.S.  Cuba is in a position where the rotting cars and buildings from the Revolution era needed to be replaced, and there only realistic way out would be normalized relations and trade with the U.S. and the introduction of the animal spirits of capitalism.  It is certainly possible that Cuba might settle claims and over time they might be able to actually pay more than pennies for them.

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