Lawyers for Real Estate Tokenization
Experienced Team in Real Estate Tokenization
Do you need advice on the real estate tokenization process, what it is, and how it can benefit your business? Then you need the advice of a legal team experienced in tokenization within the real estate industry.
Real estate tokenization is revolutionizing the way individuals engage in purchases, investment, and ownerships of real estate. From creating greater access to capital growth to expanding the investor pool, tokenization is both a secure and efficient means of dealing with real estate transactions of all sizes.
Before engaging in real estate tokenization for your business, you should secure a legal opinion about the process as well as blockchain technology.
Tokenization is a novel innovation, requiring careful attention to detail. Finding a legal team experienced to handle such issues can be challenging.
Fortunately, at Oberheiden, P.C., our team is here to help. We follow developments involving the tokenization process in various industry sectors.
We have a comprehensive understanding of tokenizing real estate—including how it can benefit your business and the different forms it can take.
Do not wait to get the legal advice you need about this growing area of business and financial innovation.
Put Oberheiden, P.C. on your side today to resolve these issues.
What is Real Estate Tokenization?
Tokenization of real estate is basically digital shares of real estate property on blockchain technology. It is the process of transferring a fractional share of real estate into a token on the blockchain.
The “blockchain” is the decentralized, distributed ledger stored across a large network of computers. Transactions on the blockchain cannot be altered, changed, or deleted because the blockchain is immutable.
Using blockchain technology for maintaining and storing tokenized real estate assets increases security of online transactions.
It is now possible for real estate assets to be represented digitally—which increases investment opportunities for more investors and creates a greater and more liquid secondary market where investors can resell their investment easily.
Along with the tokenization of the actual real estate property, debt interests to property and ownership shares of property can also be tokenized. These assets are then stored using blockchain technology.
As an example, consider buying a house. Traditionally, individuals buy the entire home—which typically involves getting financing for a portion of the purchase price. The individual could pay a 30% down payment and finance the remaining 70% through a mortgage.
With tokenization, greater opportunities exist. For instance, if the individual pays 30% right away, that individual would own 30% of the property. The remaining 70% can be tokenized to investors.
In other words, investors could purchase fractional, tradable shares of the remaining 70%. This acts as the individual’s mortgage on the property.
Tokenization eliminates the need to rely on and use third-party intermediaries. Greater access to capital is obtained from tokenizing the remaining 70% to investors. Thus, practically anyone can participate in the real estate industry.
Benefits of Real Estate Tokenization
The real estate industry is a source of significant assets and value. At present, access to the real estate industry is severely limited, although most investors believe real estate is a good investment.
Many real estate transactions are offered only to institutional investors or can only be completed by institutional investors because of the high costs of engaging in real estate transactions.
Tokenization of the real estate industry opens to door for retail investors and provides greater access to capital and participation in the industry. For instance, company equity and ownership interests of a new financial development can be tokenized and then purchased by investors.
Real estate tokenization offers many advantages, the most important of which are listed below:
The Process of Real Estate Tokenization
So how exactly is real estate tokenized? First, the individual or entity seeking to tokenize an asset must decide what kind of real estate asset they want to tokenize. This can an ownership share, debt interest, or the property itself.
Once the asset to be tokenized is identified, the issuing individual or entity must assess the legal and regulatory environment pertaining to the project.
This includes terms of the issuance, whether any registration or disclosure obligations may be required, who the targeted shareholders will be, and the terms of the tokenization agreement.
A security token offering (“STO”) would likely be used as the offering form. The STO would mention that the identified real estate is being split into fractioned pieces that will be stored on the blockchain.
The issuer must then choose the best blockchain network for their tokenized asset—including details about the resulting token to be created with this project.
The following steps involve creating the token and then developing a plan for its issuance to investors. How the investors will pay, how much interest they may acquire in the token, and details on liquidity and secondary market trading opportunities are important considerations at this stage.
The final step is to issue the tokenized real estate assets. Whoever owns a token also owns a fractional piece of the underlying real estate asset.
How An Attorney Can Help with Real Estate Tokenization
As mentioned, tokenization is only in the beginning stages. Attorneys and other consultants trained in blockchain technology and tokenization will be essential to guiding individuals and clients through this evolving process.
Below are ways that the attorneys and consultants at Oberheiden, P.C. can help you:
If you have a question about the above issues or another issue involving tokenization, give us a call today.
Have A Question on Real Estate Tokenization?
Real estate tokenization is the process of using distributed ledger technology—the blockchain—for creating a new marketplace for more investors involving digitalized real estate assets.
Shares of a property, debt, or ownership of a real estate asset are tokenized and transferred to the blockchain where everything is stored and secured—providing immutable proof of every transaction.
Tokenization facilitates greater investment possibilities and opportunities for further financial innovation in a way that is not hindered by centralized regulation and significant costs.
Despite these benefits, many questions remain. Before investing in a tokenized real estate opportunity or issuing a similar opportunity of your own, it is important to secure the advice of legal counsel.
The attorneys and consultants at Oberheiden, P.C. can advise you on the current legal and regulatory landscape involving tokenization in the real estate industry and how such opportunities can impact your investment and business.
Do not wait to get the advice you need with this evolving innovation.
Call or contact us today and ask for our tokenization and blockchain team.