The tokenization of real estate properties is one of the changes that will impact the legal world of real estate guarantees in Brazil.
We highlight 5 key points about real estate tokenization in Brazil to watch out:
(i) Democratization of Access to Real Estate Investments: The (infinite) fractionation of real estate assets into low-cost digital assets distributes investment opportunities more broadly, reducing the concentration of resources in institutional investors with high economic power;
(ii) Financing Vehicle for Civil Construction: In addition to the increase in demand from smaller investors, other securities are created and present themselves as viable opportunities for civil construction players to access liquidity, such as the trading of lease receivables tokens;
(iii) Alternative for Homeownership: While renting all the fractions of a tokenized real estate, the interested party can acquire representative slices of its property, without necessarily depending on traditional real estate financing;
(iv) Reduction of Transaction Costs in Complex Operations: Current operations run on permissioned DLTs (distributed ledger technology), held by an independent third party. Transparency is guaranteed to participants of the deal regarding the performance of obligations, documents and other information;
(v) Use of Current Legal Instruments: All current success stories make use of known and common contractual instruments. Real estate financing operations with tokens as collateral, for example, use a CCB to create the financed credit and follow current legislation and regulation procedures regarding the management, locking and settlement of payments and dividends;
On the other hand, the investor or financier interested in tokenizing part of their operations needs to be careful, understanding that the same protections applicable to current businesses must be observed for these new businesses.
