Real Estate Problems in Nicaragua - Confiscations, Sandinista Squatters, and Original Owner Rage

In February, 2006, I wrote the following story.  I published it online.  In the story, I gave some information to potential purchasers of property in Nicaragua to help them effectively research property rights in the country.  The story is 100% true.  At the time, I was the owner of a farm in Nicaragua, and I had my farm listed for sale.  My farm had a fairly clean title history.  No significant part of it had ever been confiscated by the Sandinistas or any other government, although they had once attempted to confiscate one small part for a road (but not successfully) and had also forcefully bought the rights to place two large electrical towers (a transaction that appeared on the actual title but not in the property registry records).  El Horcal - a nearby farm - had been fully confiscated by the Sandinistas in the 1980s, its large trees clearcut, its infrastructure left unmaintained.  The farm went from an estate with hundreds of workers and several industries (in the 70s) to a beanfield with about fifty squatters growing beans in the 80s/90s/2000s.  In 2006, the original owner returned to Nicaragua with a fierce vengeance to retake his land that had been confiscated by the Sandinistas in the early 80s.  This story occurs at the time when that owner arrived back and began his attempts to take back his farm, but I did not actually learn that it was the original owner who was behind the events I witnessed until a week after most of this story occurs.

In case you have not heard about it, the Nicaraguan press has recently reported about some land cases in San Juan Del Sur. According to what I have read, some properties confiscated by the Sandinistas may be turned over to their former owners (or some alternative compromise may compensate those former owners). Unfortunate for some of the people who think they are currently owners of those properties.

Perhaps with some information and a story you can learn a few things about how to avoid this trouble should you invest in Nicaragua.

In the 80s, many properties of all kinds were confiscated by the Sandinistas: farms, houses, business properties, beaches, etc. The properties were confiscated for supposed reasons ranging from formerly being owned by Somoza or his Guardia, to not being productively employed (as if it were possible to productively employ agricultural land when the same Sandinistas were coming in on a regular basis and stealing your cattle and other products), to being useful for the public good, etc. The initial step in this confiscation was generally being published in The Gazette (you can get copies of backissues at the library of the national bank, near km 7 in Managua). The next step was issuance of a new title, registered in the registro de propriedades. Some of these properties were given to corporations belonging to groups of Sandinistas called cooperatives incorporated for the specific purpose of receiving confiscated property. Other properties were given to individuals. Some of the owners received compensation (government bonds), some did not. Some properties were listed as “about to be confiscated” in The Gazette, but the actual confiscation hasn’t happened yet (nothing appears in the registry of property).

The best thing in buying property is to avoid all property that has any history of being confiscated (you can do some of the title history yourself in the registry of properties, if you can read Spanish). Then cross your fingers that the property you buy was never “almost confiscated” with an announcement in The Gazette, cuz some politician might try and finish the job. (One local friend of mine bought a property in this condition in the 80s and later on had to “donate” a part of it as a deal that would stop the Chomorro government from finishing the job… He now explains that he’ll give a $1000 donation to the Sandinista re-election fund as an insurance policy against further confiscation, among other things.)

Some Nicaraguan properties that are for sale for cheap are, or were, owned by cooperatives. They’re cheap because the cooperative didn’t have to buy the property, because the former owner may try to reclaim it, and because often only some of the cooperative “members”/owners are pulling off a sale in which the other owners don’t get anything (or did this in the past). (If a cooperative has 5 owners, 3 of them can sell the property. And since property transactions in Nicaragua are cash transactions, where the titles typically list fake transaction values, the non-selling owners will not have much ground to reclaim. But on the other hand, they might not let another owner take possession without a gunfight.)

In any case, if you are perverse enough to choose to buy a cooperative or former cooperative, be careful to make sure the former owners have accepted compensation. You probably can’t find this out easily, but by paying bribes and sending certain people with contacts to the ministry of housing and credit, the office of terrains, and another office whose name I’ve forgotten, you might be able to get some information. If you’re lucky there, you’ll end up with a constancia (certification) - or 3 - that the former owners were compensated and accepted the payment; hopefully it won’t be a fake document, but you’ll have almost no way to know. And even if it is real, possibly a different supposed real owner may later claim not to have been compensated, that your real document is a fake. (If you haven’t figured it out yet, it is possibly better to buy higher-priced property with reasonably clean title than to try cleaning up dirty-diaper-titles at home! The saying in Nicaragua is “Lo barrato sale mas caro” - The cheap thing ends up more expensive.)

So here is a story, somewhat related to that information. Several of the farms near the one I owned in Diriamba were cooperatives. One, called El Horcal, as best I could tell, had one legal owner from the Somoza days, another set of owners (a cooperative) from the Sandinista days, and yet another set of squatters who were actually living on the property. (What a mess.)

The legal owner from the Somoza days in the past year has made steps towards retaking his property. I don’t know what legal steps he took in this case, I’m just telling a story, not being claiming to tell the whole story - but he undoubtedly took legal steps in addition to the physical ones I will relate. The first I heard was around New Year’s when he had paid the police to kick all the squatters off the property. They all left but were back the next day when the police went home.

One morning a few months ago, one of my local contacts called me up, “Peter, a bunch of hoodlums have taken over El Horcal. They all moved in last night.”

Later that day I stopped by his house. I said, “What an idiot I was not to sell the farm to that most recent offer. Now I’ve got another whole set of problems to deal with!”

“Don’t worry,” he said. “Number one, your farm never had any major title problems, and you’ve fixed almost all the minor problems it did have. It’s totally clean. No scum Nicaraguan would ever try to squat on a property like that, they only go for the properties with bizarre title histories, cooperatives and past cooperatives. In fact, this whole invasion could even be a good sign for your property. Because maybe those guys who took over last night are actually representing the true owner. If he can get his property back, then that will actually increase the value of your farm. No, you’ve got nothing to worry about.”

I got to my farm that day. My caretaker was shaking. “They’re all over the place,” he said. “There’s trucks of them coming in and going.”

“Coming into where?” I asked.

“Into the next farm,” he said. “Last night a tribe of them took over El Horcal and the next two farms too. They took the caretakers of all of them and tied them up. They stole all the beans and ate the chickens and milked the cows.”

“Who are they?” I asked.

“They’re thieves!!” said my caretaker. “Please come check on me every morning and every evening. There are thieves everywhere!”

This request was ridiculous. It was his job to be at the farm so I *didn’t* have to be. Going to the farm twice a day would take all my day and cost me more than I was paying him.

I saw his girlfriend hiding near the kitchen, and guessed that probably she was more responsible for getting him worked up than what was going at the neighbor’s place. I’d heard that at his previous job, he had to leave because of some bizarre problems with another girlfriend.

I headed back to town, and the next day I stopped by one of my workers house. “I’d like you to go to the farm on the motorcycle and bring some food out to the caretaker so he knows he’s not alone.”

“Fine, and I’ll check out who those crazies are, and what the story is,” he said. Later on I met up with him, and he explained to me, “It’s fine, nothing to worry about with the crazies. They’re indeed some folks that the genuine owner sent in to toss out the squatters. Then the squatters all headed over to one of Aleman’s farms [an ex-cooperative that “inmate” Aleman bought], but he didn’t let them in either, he told the crazies to chase the squatters as far as they could with machetes, and they did… Apparently, the crazies made an honest mistake in taking over those other two farms, and have now given them back. But I think taking over those two other farms could have also been a tactic of some kind that I don’t yet understand. Possibly even to scare you into selling. No worries about the crazies, Peter. What you do need to worry about is the girlfriend of that caretaker of yours.” [that she was trying to get him to quit the job]

…

May 2006 Footnote: I’ve heard that now (three months later) even the neighboring farms, that as far as I know were never cooperatives, are now having to defend their properties legally and physically; that, indeed, the night invasion of the full three farms was not just a mistake.