Real Estate tokenization is an innovation that leverages digital assets to represent rights over properties, through the use of tokens and blockchain technology. This initiative emerged as a way to reduce bureaucracy and democratize access to investments and Real Estate negotiations, while also enhances foreign investment in the country by simplifying international transactions.
Tokens transform physical property into a digital asset, capable of representing either a fraction (in the multi-property regime) or the entirety of the property, or alternatively, providing a right to a percentage of its proceeds and earnings.
Each token is conducted by a digital contract, referred to as a “smart contract”, which outlines information such as the enrollment and the specific trading conditions, capable of automatically perform the contractual terms within the agreed deadlines.
The contract will be autonomously operated between the parties, obviating the need for third-party validation, in contrast to the traditional Brazilian Real Estate Registry Offices – known for their bureaucracy.
Thus, this operation may provide numerous benefits concerning Real Estate transactions, including:
- Enhanced liquidity and payment flexibility (including cryptocurrency use)
- Absence of interest rates
- Heightened security, transparency, fraud protection
- Unrestricted disposal of the good, without co-owner consent (in the case of multi-property regime)
- Reduction of costs and intermediaries
As those promising innovations unfolds, monitoring is essential for anticipating potential legal developments and responsibilities concerning the recognition of digital assets as property representation within Brazilian law.