The ‘Cuban Law’ was launched in the 19th century so that the children of Spaniards who emigrated to the colonies had time to return when their parents died and thus be able to claim their part of the inheritance. Since then many things have changed: neither Spanish colonies, nor distances so long for the emigrated heir to return to the country … But one thing remained unchanged until now: the obstacles that this article, the 28th of the Mortgage Law, put to the transmission and sale of inherited properties.
This article establishes a period of two years in which the sale of a home of the deceased without forced heirs has no effect in the Property Registry. When the cause of the inheritance died without children (forced heirs), the property passed to the indirect heirs. However, they did not have full rights to the property during that 24-month period, at the expense of the appearance of a son of the deceased. When this happens, the inheritance changes hands in favor of the son.
Or it happened, because the cases in which article 28 is activated have been very infrequent for years. The way inheritances are regulated today and changes in society make it almost impossible for such cases to happen. “It is very difficult to pass. And the only assumptions for it to happen are that a child appears or that the inheritance is wrongly adjudicated, with a will that is not governed by law, “says Víctor Ortiz, partner and co-founder of Heritae.
I want to pay off part of my mortgage, do I reduce the installments or the term?
The Government has taken action on the matter and since September 3, when the article is eliminated, real estate operations of assets originating in inheritances will be streamlined. Thus, the heir of a home will be the direct owner, regardless of the degree of kinship that he maintains with the deceased.
“It is a law that harms many more people than it benefits. And today the necessary measures have been taken so that this situation does not exist and cases of this type are more infrequent,” says Ortiz. Santiago Fierro, partner at Cremades & Calvo-Sotelo, specifies that one of them is the Registry of Last Wills: “The solidity that it has achieved during the last 75 years makes cases of unknown notarial wills absolutely exceptional.”
Likewise, the experts consulted point to Finect that the arrival of telematic communication between notaries is another factor that has made situations that activate the ‘Cuban Law’ very unlikely in recent years. The only assumptions for cases to occur are the appearance of an unexpected child or an erroneous award of inheritance, with a will that is not governed by law.
The only form of will that is not notarized is the holographic will, handwritten by the deceased. This is where article 28 can make an appearance, about to disappear from the legal system. But few people use this type of will. In addition, to this must be added that the deceased does not have recognized forced heirs (ascendants, direct descendants or spouse), a very unusual double coincidence, the experts explain.
Obstacles in financing
The repeal of this centennial precept eliminates the obstacles in the successions between siblings, nephews and other relatives, sometimes forced to renounce their hereditary rights. Fierro explains that sometimes, in order to be able to face the expenses and taxes that are levied on any inheritance mortis causa, the heirs or heirs had no other option than to dispose of the inherited property to keep the remainder once the taxes had been paid. “And there were even situations that led the heir to renounce his possible rights due to the impossibility of personally meeting the expenses,” says the attorney for Cremades & Calvo-Sotelo.
The two-year term set by law generated insecurity in the transmission of inherited homes affected by article 28. “Given this insecurity, although exceptional and low risk, many operations were stopped,” adds Fierro. For his part, Ortiz points out that dragging this uncertainty for two years has effects on the sale of these homes: the buyer prefers to buy an apartment that does not have article 28, to avoid the appearance of a forced heir who in that period of time will ruin with the acquisition of the property. “It is more difficult to sell and also the collateral inheritances (brothers, uncles, nephews) are not so subsidized and you have to pay more taxes”, highlights the co-founder of Heritae.
In addition to delaying the transfer of real estate, Article 28 has negative financial consequences. Banks consider it risky to grant a mortgage on a home in this situation. The uncertainty that heirs may appear on the scene claiming the property or its distribution would affect both buyers and financial institutions. And in extreme cases, the buyer can face the mortgage and be left without that home.
To obtain financing from banks, home buyers under Cuban law had to leave the loan amount as collateral until the 2-year term expired, or sign a surety bond, exemplifies Fierro. “Once a client of ours has sold a house with article 28, we included a clause and we gave the buyer the guarantee that if an heir appeared and article 28 was executed, we would return the money of the sale and the expenses of taxes “. In these cases, the injured parties are the heirs who sell the property. “They even lost money, around 10%,” says Ortiz in reference to some inheritances that he has managed under these circumstances.
