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How blockchain could change commercial real estate

On Behalf of | Feb 12, 2019 | Commercial Real Estate

Investors and others who are involved in Texas commercial real estate may have heard about the disruptive potential of blockchain. For instance, blockchain may bring about the advent of the smart contract. Smart contracts tend to allow for greater transparency between parties in a deal, which can increase trust between those parties. It may also result in the deed to a property being transferred immediately after the contract’s conditions are met.

Furthermore, blockchain may help to prevent fraud in the commercial real estate sector. This can save hundreds of millions of dollars in costs related to fraud. Using a blockchain enables investors and others to verify who owns a property and where funds for a purchase or other investment have come from. It also allows interested parties to look through every transaction related to a property to verify that it occurred correctly.

Another way blockchain could disrupt commercial real estate is by allowing for property tokenizing. This can allow individuals to purchase a portion of a property instead of having to purchase the whole thing. It can also individuals to gain access to the private equity market and other markets that those with modest means were generally restricted from in the past. For property owners, blockchain can make it easier to manage cash flow and other financial data.

Having a record of transactions and other important information about a property may prevent real estate disputes from occurring. If they do occur, it may be possible to end them in a timely manner. Legal counsel may help a party in such a dispute gather evidence that bolsters their position in settlement talks or in court. For example, having the deed to a commercial building or rental property might put to rest any questions about who owns it.


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