De Soto describes the exact opposite situation. Latin America inherited Napoleonic property law, which only recognized property ownership when formally registered, which required quite alot of red tape. It was impossible to transfer ownership without registration. Moreover, any defect in prior registration meant the lawful owner might be the heirs of someone generations ago. Most property "owned" by the peasantry usually had defective and incurable title, having changed hands in informal private agreements, which meant banks wouldn't accept it to secure a loan. This meant only the aristocracy could leverage the financial system, because they were accustomed to following all the formalities. What piece of real property someone thought they owned, even if occupied for generations, was often in the eyes of the law owned by some aristocratic family or the state.

He contrasted that system with the American common law system, where title could be legally transfered entirely privately. Disputes are handled by courts which look to the timing and substance of transfers. Moreover, adverse possession meant that after a number of years (well within one person's lifespan) nobody could come along and claim title because of a defective transfer (even if in principle they had a better claim originally), securing title in whomever held it, even if it had been transferred without even following the much looser requirements under the common law. A bank would issue a loan so long as you could prove you held an unchallenged title for a sufficient number of years. ("Title" was whatever piece of paper handed you by the previous possessors; no government stamp or recordation required.)

Registration systems in the US are a recent occurrence, and they overlay the traditional common law rules.

A gross generalization, but Napoleonic civil law systems emphasize formal transactions centrally administered by the state, while the common law emphasizes looking to the substance of private transactions, and usually only when a dispute arises (otherwise you just presume they're valid). Broadly speaking, De Soto argued the latter tended to favor the common man, because it was much less rigid.

De Soto also pointed out that US Federal Land Grants also did a decent job at distributing land among the people, unlike Latin America where mostly only the aristocracy held land under a good title.

"Cannot work well" and "cannot get started" are two different things. The whole of Latin America apart from Cuba is capitalist, for better or worse, regardless of how bad those countries keep their books.