Blockchain technology is revolutionizing many sectors of our modern economy. It was originally created as a peer-to-peer digital payment system, but has now been found to have many benefits in various business sectors. This has raised many legal questions as governments try to adapt and understand the blockchain and smart contract ecosystem.
The finance sector is the most affected by blockchain technology, as blockchain projects tend to directly compete with traditional financial products. Many see this technology as an opportunity for improving the performance of financial processes and lowering operational costs. We believe this applies to real estate finances as well. Blockchain technology, combined with smart contracts, will have an important impact on the future of real estate transactions.
Today, a single real estate transaction is a compound process that involves several intermediaries and public services, all tied together with various legal procedures. These procedures define and describe the rights and obligations of each role in the process.
The first intermediary that is introduced to a typical real estate translation today is a real estate agent. This is a professional who helps in finding, selling, or leasing a property and aids in the process of creating and signing various contracts pertinent to the transaction. The involvement of other intermediaries and their respective roles depends on the legal system where the real property in question is being bought, sold, or leased.
When acquiring a property through a loan, the number of necessary professionals involved increases (bank managers, real estate appraisers).
Finally, in order to complete any transaction, it must be registered by the state authority responsible for registering property ownership transfers.
If the involvement of these professionals is not compulsory in the country, that is, a transaction can be legally conducted without their participation, blockchain technology may be adopted. What's more, blockchain is considered to be a mechanism that can enhance the speed and facilitate transnational operations and may even be a way to enforce the registration of rental agreements while connecting them to the tax authorities, registries, courts and other administrations.
The question remains whether current blockchain technologies are sufficiently prepared to perform the functions of notaries, land registries, real estate agents and brokers in ensuring a secure real estate transaction.
We believe the answer is yes.