It is finally happening. We’ve written previously on how smart contracts, blockchains, and NFTs may culminate into a new-age method of property ownership. It is now time to put the theory to the test. A virtual currency/smart contract/blockchain/NFT startup is planning on being the first to use these new virtual blockchain technologies to sell a piece of real property. Kind of.
As a quick refresher, virtual currency is a medium of exchange; you use it to purchase some good or service. Blockchains are theoretically immutable and decentralized ledgers that record all transactions. NFTs are tokens that are recorded on the blockchain, a node that signifies ownership, which is just the result of a transaction. A smart contract is (often) an automated contract that is also on the blockchain, written in computer code.
So how does all of this theoretically fit together? First, a home is listed on a virtual listing site. Then someone bids on the home. A bid is accepted. A smart contract is drawn up. The smart contract says something to the effect of, if Seller receives $200,000 in Bitcoin from Buyer, then Deed to Home is given to Buyer and a NFT is recorded to show ownership. Buyer pays; it is recorded on the blockchain. Half the smart contract is fulfilled, and now, automatically, the other half will be fulfilled; blockchain releases the Deed and records the NFT associated. If this sounds simple, it is because it is a vast generalization. The specifics can be technical.
In this case, the property is located in Tampa, Florida. Propy is the startup that is auctioning the land. Propy chose Florida due to their quick adoption of blockchain tech. But the buyer won’t receive a deed like a typical real estate transaction. Instead, they will receive an LLC or some other legal business entity that owns the land. Buyer will also get the NFT (with transfer of ownership paperwork) that shows ownership of that LLC/entity. This isn’t Propy’s first rodeo, they’ve sold an apartment in Ukraine. This will, however, be their first US foray. They aim to be the platform for these types of deals.
So, what is the benefit? According to Propy, it is time and efficiency. Many of the steps still require real-world validation—contracts need signatures, offers may need review, paperwork still is a part of the process. But if all the necessary legal variables (registers of deeds in the US) embrace blockchain, perhaps buying a home will become as simple as a push of a button on your smartphone.
Does this impact family law? Yes. Property is being acquired. Money is being spent. There are marital interests involved. In this case, some kind of business entity is being acquired for potential marital funds. These are items that will come up in a property division case. Family law specialists are aware this could be our potential near-future.