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New law creates real estate market in Cuba

By Mariano Castillo, CNN
updated 1:53 PM EDT, Thu November 3, 2011
STORY HIGHLIGHTS
  • A new law in Cuba allowing some real estate sales goes into effect next week
  • The legislation is seen as a major reform
  • Owners are limited to one residential home and one vacation property

(CNN) -- In a move that could reshape the Cuban economy, the government on Thursday announced a new law that allows for the sale of real estate.

The National Assembly in August approved a plan to permit the sale of real estate, and the legislation itself officially was put on the books Wednesday. It goes into effect November 10, the state-run newspaper Granma reported.

The new law allows for the sale, exchange, donation and gifting of real estate even in cases of divorce, death, or the owner leaving the country permanently.

As stated, the goal of the law is to "eliminate prohibitions and make limitations (to property ownership) flexible."

The effect of creating a housing market in the stagnant Cuban economy is uncertain.

For one, the law places some limitations -- including a prohibition of the ownership of more than one residential home and one vacation home.

Also, only Cuban citizens living in the country or foreigners with permanent residences in Cuba may participate in the transactions.

Buyers will be required to swear under oath that they don't own other property.

Under the law, in cases where the owner permanently leaves the country, the state confiscates the home and turns it over for free to any legitimate co-owners or family.

Cuba has a population of 11 million people and a housing shortage. It's not unusual to find three or four generations crammed into a small apartment or divorced couples under the same roof.

Before the law, a black market for real estate existed, where houses were swapped.

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