Last week, digital real estate platform Roofstock boosted the sale of a $175,000 home in South Carolina through a non-fungible token, sparking debate over whether technology will facilitate or complicate the property-buying process. I got
The company’s Web3 subsidiary, Roofstock on Chain, listed the property on an NFT marketplace powered by the Origin Protocol (many mistakenly believed it was OpenSea).
Property buyer Adam Sripakov said, “Instead of waiting months for underwriting, appraisals, title searches and preparing deeds, you can buy fully titled and rentable properties in one click. I was able to do it,” he said. .
But as news spread about the incident, questions arose. 1 tweet It has generated a lot of attention as to who actually owns the assets and whether the token holders only own the tokens or the assets.
“The property itself is titled LLC and all we have done with NFT here is that NFT represents the sole ownership of that LLC,” Sanjay Raghavan, head of Roofstock’s Web3 initiative, said in an interview. says. on Market Watch. “People have been buying and selling real estate through LLCs forever, right? That’s nothing new. All we did was make it easier to sell that LLC from his A person to his B person. is.”
Raghavan added that the LLC’s operating contract contains language that the token owner is also the owner of the house, so it is legally established in the LLC’s operating contract.
But for others, this explanation only raises questions about security.
“What if someone steals an NFT from the blockchain?” South Carolina real estate attorney Sean Scapellato asked. “I don’t know how you treat people knocking on your door saying they bought your NFT and the house is now theirs.”
According to Raghavan, hacking is less of an issue if the NFT owner is not anonymous. In the US, anonymously he cannot own an LLC. This makes it harder to hack the NFT and take over ownership of the house. The homeowner is aware and this is documented in documents linked to the token, he said.
This is in contrast to NFT art, which is often kept online by anonymous users. Hacking and transferring ownership is easy when the original owner is unknown.
The NFT is also the only thing stored on the blockchain itself, but the metadata associated with it is linked to other places in the data room, such as servers and clouds, and that metadata can be shared with other Can be updated with all relevant property information.
For realtors, the technology is all-new and likely to raise more questions than it answers. Director David Conroy said in an email to MarketWatch:
“What steps have been taken to ensure regulatory compliance, property records, and tax implications regarding selling properties in this manner compared to traditional sales?” Conroy He added that the NAR is monitoring the development of these technologies.
Raghavan said only those who have a verified purchaser flag on their account can transfer tokens. This flag is like Twitter’s blue check mark, letting the system know that the buyer’s identity has been verified by the company. “Without it, if you try to transfer this token or buy it on the NFT Marketplace, your transaction will fail.”
The team worked with legal and tax experts to ensure the property was legally compliant, Raghavan said. But the deal may be difficult to replicate in other jurisdictions, he added, because laws and regulations vary by location in the United States and abroad.
Legal expert Scapellato said that even if the purchase of cryptocurrencies is allowed, the rights to be transferred are not always specified like a certificate, and it is unclear whether NFTs have the same utility as certificates. He stressed that it was unknown.
“State property laws vary across the country, and there are hundreds of years of jurisprudence based on the delivery of deeds with specific guarantees and rights in line with that state’s laws. NFTs must have the same utility.” I don’t think so.
For the Roofstock team, the South Carolina deal serves as a case study for what could be done elsewhere in the future with proper research. “We ran an analysis of some 50 states [to find out if] An LLC can move from A to B without triggering a tax event or anything like that,” Raghavan said. “Within the United States, when we go to the next state, we will comply with that state’s laws regarding how we conduct these NFT sales.”
For the Roofstock and Origin Protocol teams, the sale of a home was also an example of what can be done using NFTs as the underlying technology for transferring physical assets.
Origin Protocol’s Matthew Liu says the technology will define the evolution of the Internet. In the future, we won’t call NFTs “HTML web pages,” he said in his interview with MarketWatch. But the underlying technology of HTML gave birth to blogging, e-commerce, and social networking industries, just as NFTs will change industries in the future, he said.
“Five years from now, 10 years from now, the world will be dramatically different,” says Liu. “There will be a new version of the Internet, and NFTs will be something of a fundamental building block of digital ownership. And then it kind of falls apart, and it’s like a second cycle where people build it, and there’s real utility and use cases, and then it gets really, really powerful.”