Tag Archive for: real estate

blockchain is changing real estate

Blockchain Technology is Changing the Real Estate Industry

The real estate industry is one of the oldest and most economically significant industries in the United States. Real estate companies have contributed to the building and maintenance of a robust residential and commercial physical infrastructure in the country. The industry also plays a major role in the global economy even though it faces the challenges of slow transaction times and bureaucracy.

Fortunately, things are beginning to change in real estate because of blockchain technology. Here are six ways in which the real estate industry contours are getting transformed due to blockchain technology:

  1. New Ways to Trade

Traditionally, real estate technology has been majorly concerned with connecting buyers with sellers through listings. Blockchain has revolutionized the industry by introducing new ways to trade. Online marketplaces and trading platforms are now enabled for supporting real estate transactions in a more comprehensive fashion.

Blockchain technology has been developed by ATLANT which allows sellers to tokenize assets. It facilitates rental and real estate property transactions. Real property is tokenized as assets that are then traded in a manner similar to exchange stocks. Transactions can be easily completed online.

ATLANT handles the sale and purchase of real property as a stock sale. Assets can be liquidated using the platform through a token sale. Tokens that are collected can then be exchanged for fiat currency with buyers owning a percentage stake in the property.

  1. Intermediaries are Not Required Anymore

Banks, lawyers, and brokers have been part of the real estate industry for a long time. Blockchain may soon be able to usher in a period that doesn’t require any intermediaries. The role and participation of intermediaries are soon to change with the advent of blockchain technology as per a report by Deloitte.

New platforms will eventually be able to assume functions, such as legal documentation, payments, and listings. Buyers and sellers will be able to get more out of their money by cutting out the intermediaries. They will save on the fees and commissions charged by the intermediaries. This will also help in making the process much quicker as there will be no more back and forth between middlemen.

  1. No Longer an Illiquid Asset

For the longest time, real estate has been considered an illiquid asset. This is because it takes time for concluding a sale. This is not a limiting factor where crypto tokens and currencies are concerned. In theory, cryptocurrencies can be readily traded through exchanges for fiat currencies.

Real estate can be readily traded when in the form of tokens. Sellers don’t need to wait for buyers that will purchase the entire property to get some value. They can divide the property into tokens and assign a value to each of them.

  1. Allows Fractional Ownership

Blockchain can lower the barriers to real estate investing by allowing fractional ownership. Investments generally require significant upfront money for acquiring property. Investors earlier had to pool their money for purchasing bigger ticket properties.

Blockchain technology lends access to a trading app for purchasing and selling fractions of tokens as the seller sees fit. In relation to this, fractional ownership avoids the hassles of managing, leasing, and maintaining the property. Upkeep on its own can be expensive. It may be a troublesome effort to deal with tenants. Related activities, such as lending are also affected.

  1. Decentralization in Real Estate

Blockchain is a decentralized technology that commands security and trust. Information on blockchain is accessible by all peers on a particular network. This makes data immutable and transparent. Lack of transparency and greed can quickly create catastrophic consequences as was seen in the great housing bubble crash of 2008.

The decentralized exchange has increased trust built into the system. Buyers and sellers can have more confidence in carrying out transactions since information is verifiable by peers. Blockchain technology reduces fraud attempts. Smart contracts can provide enforceability beyond technology.

  1. Lowered Costs 

Decentralized networks afford special transparency that can trim down costs associated with property transactions. In addition to savings made by cutting out middlemen commissions and professional fees, blockchain technology mitigates costs related to inspection, loan, registration, and taxes.

These costs differ depending on the jurisdiction of a particular territory. They can be eliminated and reduced from the overall equation in the same manner as intermediaries. Blockchain platforms can help in automating the processes and making them an integral part of the system. Global real estate is currently dominated by large and wealthy corporations even though it is worth hundreds of trillions of dollars.

Blockchain technology is expected to make the industry more secure, transparent, and equitable. Lowered costs by getting rid of middlemen and tokenization have made it possible for small investors to enter the industry. It’s expected that real estate transactions may truly become peer-to-peer eventually. Blockchain-powered platforms will do most of the work.

Hire a Competent Real Estate Attorney for Best Advice

The technological advancements in the real estate industry can make things tricky for an individual investor. The capable and diligent attorneys at the BHM Law Group can help you understand your legal position in all matters related to real estate. Schedule a free and confidential consultation with us today. Call (205) 994-0902 or write to us online.

co-ownership of real estate

The Risks of Co-Ownership Agreements in Real Estate

Getting into a co-ownership agreement with your spouse, business partner, or friend might seem like a good idea, as it can reduce your mortgage burden and maintenance costs significantly.

But what happens if you want to sell the property and the co-owner disagrees with you? Or if the co-owner wants to rent out the property and you feel that it might not be a good idea? If and when it happens, you might regret your decision to get into a co-ownership agreement.

In this article, we take a look at three pitfalls associated with co-ownership agreements that you need to be aware of.

Limited Control over the Property

The biggest downside of a co-ownership agreement is that you and the other party own the property equally, which means neither of you has full control over it.

What it means is that if you want to rent out or sell the property, you can do so only after getting the other owner’s consent. The same rule applies to the other owner as well.

This might not be a problem as long as you and the other owner trust each other and are on the same page on how the property should be maintained. However, if and when you disagree with each other on something, it can turn into a stalemate – with neither of you being able to convince the other party on what needs to be done.

Let us assume that you own a vacation home with your brother. You want to rent it out, as you have recently lost your job and need the rental income to make ends meet until you find another job. Your brother, on the other hand, is reluctant to rent it out and wants to keep it for their personal use.

In the aforementioned scenario, your brother’s reluctance to rent out the property can lead to serious disagreements and affect your relationship with him. Even if they reluctantly agree to do so, they might hold it against you, which in turn can affect your relationship with him.

The Co-Owner Can Do What They Want with Their Share of the Property

This is one of the major pitfalls associated with a co-ownership agreement. The co-owner has the right to mortgage or even sell their ownership interest in the property as and when they want to.

Let us assume that your brother – who is the co-owner of your vacation home – has accumulated a lot of high-interest debt and desperately wants to pay it off. Since he does not have any savings or investments, he wants to sell his ownership interest in the property to pay off his debts.

In the aforementioned scenario, you only have two options. You can either buy him out and become the sole owner of the property or allow him to sell his ownership interest and enter into a co-ownership agreement with a complete stranger.

The Risk of Liens

If the co-owner of your property fails to repay a loan, fails to pay taxes, or gets sued by a third party, a lien could be placed on their ownership interest in the property.

The Risk of Incapacitation and Death

If the co-owner becomes incapacitated as a result of a serious injury or a medical condition, you still cannot make any decision about the property by yourself. Unless the co-owner has an estate plan which specifies who can act on their behalf in the event of their incapacitation, you might have no option but to file a petition with the court for the appointment of a guardian or executor.

It should be noted that the court-appointed guardian is required to act in the best interests of the party they are representing. So, there is no guarantee that they might agree with the decisions you make regarding the property.

Similarly, if the co-owner were to pass away, the co-owner’s heir or beneficiary might inherit it and you will be forced to share it with them – unless you have a joint tenancy with right of survivorship agreement, in which case you will be able to inherit the co-owner’s share.

Planning to Enter into a Co-ownership Agreement? Our Alabama Real Estate Attorneys Can Help You!

A co-ownership agreement can be beneficial in some ways, but it also has its own share of risks. With that said, it’s vital to consult with a prolific real estate attorney before you enter into a co-ownership agreement with someone.

The real estate lawyers at BHM Law Group have decades of experience and have provided personalized legal services to thousands of clients over the years. If you want to enter into a co-ownership agreement with someone or if you are already in a co-ownership agreement with someone and facing issues, we can provide you with the legal advice and guidance you need and protect your interests.

To talk to one of our experienced Birmingham, Alabama real estate lawyers, call us today at 205-994-0902 or contact us online and schedule a free consultation.