The Legal Guide to Real Estate on Blockchain: The Structuring
This series outlines the legal aspects of tokenizing real estate on a blockchain, and is created by Volodymyr Havrylyuk-Yensen, Legal Counsel at DigiShares | Digital Securities & STO, and Emil Holtemann, Marketing Manager at RealEstate.Exchange.
Disclaimer: This material is intended for general information purposes only and does not constitute legal advice.
Structure your tokenization according to your goals
The design of the legal structure will depend on the specific goals of the offering and legal constrains of the chosen jurisdiction. If real estate assets are located in another jurisdiction from the tokenization vehicle, then such assets must be securitised in a separate local special purpose vehicle (SPV) which is wholly owned by the tokenization vehicle. This is necessary due to complexities of direct ownership of foreign real estate and for liability purposes.
The following is a (simplified) illustration of the typical structure:
The structure of the tokens itself depends on the business model of the issuer, but most commonly real estate is tokenized either through digital equity shares or bonds issued by the SPV.
The legal process for linking the tokens with shares or bonds varies from jurisdiction to jurisdiction, however, it typically involves an amendment of the articles of association (bylaws) of the company, issuance of board resolution, and preparation of investor agreements.
Technology integration should also be conducted in parallel with the legal process by onboarding a tokenization platform, DigiShares offers a highly customizable and battle-tested whitelabel tokenization software, you can watch an 8 minute demo below.
Learn more about tokenization of real estate:
You can learn everything about RealEstate.Exchange through LinkTree — here you can also subscribe to the newsletter.
If you feel ready to talk about the steps of asset tokenization, reach out to me personally on LinkedIn: Emil Holtemann.
I will guide you through the steps, and set you up with the right people for your tokenization journey.
