This paper explores the hypothesis of a positive relationship between economic and political development that has been found in some developed countries. I argue that this relationship is debatable when talking about countries with significant levels of poverty and in which democratic institutions have not been sufficiently established. I use household level data to study the effect that land ownership and formal housing has on the enrollment in civil society groups. Also, by
focusing on housing formality status, I extend to urban households the argument of the disengagement of rural individuals from the political life of their community once they become landowners. The focus of the analysis is the case of post-Sandinista Nicaragua in the midst of a long period of land and counter land reform processes and accompanying titling programs. The main result of the paper is the finding of a negative effect of formal housing on participation in civil society: households receiving formal property rights of their dwellings are less likely to join civil society groups. This relationship implies important dilemmas for democratic governments trying to solve the major economic problems of the population and it also evidences the low level of development of the democratic institutions in poor countries in the sense that once a household has satisfied its basic needs, it has incentives to disengage from civil society groups.