
Using Cryptocurrency Smart Contracts to Sell Shares of My House - thisisit
https://www.yours.org/content/what-if-i-want-to-sell-shares-of-my-house--c604ac53b4d4/
======
will_brown
It’s very obvious what the author wants to accomplish, but I would ask how
smart contracts make this “super doable”?

>I could sell shares of my house such that they confer only ownership of the
economic value of the house at time of exit (sale, my death, etc.) or the
shares could be re-sold to someone else if the housing market here gets
hotter, etc. but I maintain ownership of the right to occupy the house.

So assuming you create the asset backed tokens via smart contract...when you
sell the house and pocket 100% of the proceeds (nothing personal, just hoping
for the best and planning for the worst), how am I to enforce my asset backed
token in court? What’s the jurisdiction? Where the house is or where I am (the
injured is)? It would be very inconvenient for me to have to bring suit in
your jurisdiction not mine. What if I sell the token and you don’t pay out the
buyer am I joint and severally liable to the buyer?

Assuming there is standing and personal jurisdiction, how does the court know
what type of ownership the token creates or created if any at all? You claim
it’s an economic interest, but how is the court to decide the ownership/rights
over say: fee simple, fee simple defesable, with condition subsequent, joint
tenancy, tenancy in common?

Also, maybe the token is not enforceable because it violates the statute of
frauds (real estate contracts must be in writing... is a smart
contract/code/token a writing that’s satisfies the statute of frauds?), or
does the smart contract violate the law of perpetuity?

It’s definately “super doable” to create a token on Ethereum via smart
contract (I’ve made multiple tokens myself), but I think it’s anything but
clear a asset back token can be created to represent ownership in real estate
claiming it’s a simple economic interest without addressing a quagmire of
legal issues and enforceability. Even then it’s all theory until it gets
tested in the courts and precedent is set.

~~~
wsinks
Hey Will Brown, I'm curious about the implementation of creating a token on
Ethereum. Have you written anything about that?

And I completely agree about the courts needing to decide. A bizarre idea -
should we generate a lawsuit as performance art? To establish precedence?
That's a scary world if it's possible.

~~~
will_brown
I haven’t written anything myself, but I can point you to
[https://beta.proofdashboard.com](https://beta.proofdashboard.com) it’s the
platform I used to experiment, first creating tokens for free on their
blockchain and then on the Ethereum blockchain when I felt comfortable with
Ethereum wallets/smart contracts/exchanges.

Funny enough I believe the initial iteration of Proofsuite was specifically to
subdivide real estate with asset backed tokens, but they launched with a great
number of tools to create your own tokens. I would also recommend their
YouTube videos/tutorials.

As to generating a lawsuit for performance art...the short answer is: do not
do that. If there is a real and actual controversy that is one thing, but -
and I can’t stress this enough - consult a lawyer. Playing fast and loose with
the courts can result in dismissal of cases with prejudice and even court
ordered sanctions. There is probably room for anyone who has purchased an
asset backed token to file a declaratory judgement, basically where the court
determines the legal rights of the parties without an actual order or award of
damages - still you would want to consult an attorney in your jurisdiction
first.

------
TheReveller
Why doesn't he create a company with 100 shares that owns the house, transfer
the house into the companies ownership, then just sell shares in the company?

I don't understand:

\- How someone would value the 'tokens' he is selling on his house unless they
came and looked at the house.

\- How the 'owners' of his tokens could preserve their investment. He might
just decide to trash the place since he sold most of it for 'liquidity'.

\- Why he wouldn't then just sell the house and take all the money for
himself. He'd have sold it twice! How's some crypto geek in Russia who bought
his house token going to make a claim on that money?

~~~
bradleyjg
Yes, there's absolutely no reason to use tokens here. It doesn't solve any the
problems with the idea, of which there are several.

If you want to invest in the residential real estate sector the best way to do
that is invest in a REIT that owns a portfolio of houses and rents them out.
Not buy some shady smart contract token that may or may not entitle you to
anything at all legally speaking and has god-only-knows what tax consequences.

Also: _I 'm not really interested in having capital tied up in real-estate,
but a lot of people are. And it makes sense as a middle ground investment -
more conservative than stocks or crypto, but more aggressive than bonds or
CD's._

This is laughable. Compare the Case-Shiller index of home prices:
[https://en.wikipedia.org/wiki/Case–Shiller_index#/media/File...](https://en.wikipedia.org/wiki/Case–Shiller_index#/media/File:Case%E2%80%93Shiller_Index.svg)

to real s&p 500 prices: [https://2us9vjrl2kf1np7bx397xl07-wpengine.netdna-
ssl.com/wp-...](https://2us9vjrl2kf1np7bx397xl07-wpengine.netdna-ssl.com/wp-
content/uploads/2015/06/sp-500-inflation-adjusted-returns-
since-1871-2015-long-term-chart.jpg)

And consider that real estate is typically owned with quite a bit of leverage
while stocks typically aren't.

~~~
alex_young
Don't your charts prove his point? The S&P chart is logarithmic.

------
dragonwriter
Smart contracts don't actually make that “super doable”, because the
underlying events and property are off-chain with no way for a smart contract
to either react to or direct them. It's also doable without smart contracts:
form a corporation where you are the sole initial shareholder, sell the
property to the corporation while reserving yourself a life estate, and then
privately sell as much of the stock as you wish. It's heavily _regulated_ ,
since you are dealing with both real estate and securities laws, but it's
doable, ad smart contracts don't avoid the complexity because ultimately you
still need to deal with all the meatspace legal issues.

OTOH, the really big problem with the idea is separating decision-making about
the property (which drastically impacts future value) from financial interest
in future value. Your aren't investing in the property market, you are
investing in the person managing the property, and people who aren't suckers
aren't going to want to do that at arm's length without due diligence on the
individual and some oversight of their management of the property. (And the
ones that are suckers are going to get fleeced quickly and then not be
available to invest.)

------
bb88
Dear Isaac,

Super interesting idea, and I have some cash I might be able to spend towards
it. But can you ensure the following will be enforced by your smart contract?

1\. Tenant agrees to upkeep property, including mowing of lawns, plumbing,
electrical, structural.

2\. Tenant agrees not to sell, sublet, or abandon the house.

3\. Tenant agrees not to do anything illegal that might cause the forfeiture
of the house by law.

4\. Tenant will give me a key to the property and house, so I can check in on
it from time to time.

I probably have some other requirements for the tenant. But I'm super
interested in how this might be accomplished via a smart contract.

Looking forward to conducting this via this newfangled smart contract
mechanism.

Yours Truly,

R

------
strgrd
When the level of discourse surrounding "blockchain technologies" boils down
to the following, it makes you wonder how long it is until you wake up to find
the bubble has popped:

"Someone who wants to own a % of a real estate asset in this city could just
buy a % share of mine.

Smart contracts via crypto make this super doable."

------
keyboardmonkey
where is the authority of ownership?... as in, if someone else or group of
people own tokens, where's the authority that will back them up if they want
to force residency on the property?... if you take your tokens to the police,
will they help you evict someone?... no. until there's common authority
somewhere, tokens are useless for ownership of physical property.

------
Dolores12
There are so many risks associated with owning the shares of single house in a
specific place, now including the risk of badly written smart contract where a
hacker can get all of your shares, or all shares could be locked up.

~~~
pythonaut_16
It might be interesting to see this concept used for a distributed housing
collective. A group of homeowners across the country pool the value of their
houses to buffer against economic downturns in any particular market.

------
free_everybody
I'm no real estate expert, but I can confidently say this is a very poor idea.
Or more specifically, this will turn out poorly for anyone except the person
who collects all the cryptocurrency and runs away.

~~~
dullgiulio
What else to expect from a person who thinks he has invented the concept of a
financial institution buying a property to rent it. Except he made the terms
convenient for himself. Lunatics.

------
dbatten
What happens when you refuse to do any repairs/upkeep and the house goes to
pot over 10 years? What happens when you don't maintain insurance coverage and
you burn it down? Etc.

~~~
s73ver_
Hell, what happens if the "smart contract" is poorly coded, and someone
exploits it?

------
femto113
Putting aside the fact that REITs are already a thing, there's a fundamental
misconception here:

    
    
       I'm not really interested in having capital tied
       up in real-estate, but a lot of people are.
    

Nobody wants their capital "tied up", they want it performing. The reason real
estate is such a popular (and often successful ) investment is because of 3
factors:

\- income (via rent)

\- leverage (via a mortgage)

\- appreciation (via time and luck)

Leverage is made possible because the income from a property can cover some or
all of the cost of the interest on the loan, meaning that all that's tied up
is the downpayment, so the appreciation enjoys a multiplier effect (say 5x if
you put 20% down). Offering a contract that only allows the investor to
participate in the appreciation without any leverage or income just doesn't
make sense (for the investor).

------
thecolorblue
This is an interesting idea. I believe this already happens with real estate
but I can't find what it is called.

Another problem I could see coming up, if you do not get the full benefit of
making improvements to your house, you will have less incentive to make
improvements to your home. You would also have to figure out how to grant
permission to make any improvements as investors would want to make sure any
changes to the house would increase the value. If you needed a new water
heater, who would pay for it? Could you convince the investors to buy into a
high efficiency heater, even if it did not add any value to the house over a
regular heater?

~~~
votepaunchy
> This is an interesting idea. I believe this already happens with real estate
> but I can't find what it is called.

Are you thinking of a land lease?

~~~
thecolorblue
I was thinking of REITs
([https://www.investopedia.com/terms/r/reit.asp](https://www.investopedia.com/terms/r/reit.asp))
but in actuality, they work a little differently.

------
paradygm
> I'm not really interested in having capital tied up in real-estate....I want
> to live in my house and not be kicked out by a third party owner, but I
> don't want my assets tied up in it....I want to sell shares of my house.

This article would be more compelling if he explored (or at least mentioned)
the existing mechanisms for leveraging his home's value (e.g. cash out
refinance and HELOCs) and why they don't meet his needs. Instead, he wants to
sell fractional ownership and control of his home?

------
njarboe
I would like to get some (10%-20%) equity out of my house. Not with a loan
against it but selling equity. I looked around some and this company[1]
facilitates exactly this scenario. Unfortunately when I called them a few
months ago they said they take 25% of the upside value and pay you only 10% of
the house value. The majority owners still have to pay for/do all the
maintenance. This seems like too much of a giveaway and is for people who need
cash, but for some reason can't git a home equity loan.

It seems that the blockcoin space has decided that it can be used as a
workaround for many financial rules, similar to how Uber/Lyft could work
because calling a limo was legal and technology finally made calling a limo
like hailing a cab.

I am not deep into the ICOs and blockchain tech but am quite interested in
working in this space. I live and own a home in the Bay Area to possibly use
as a test bed and have programming experience. I'd enjoy chatting over coffee
with someone with similar interests. Username at gmail for contact.

[1][https://point.com/](https://point.com/)

------
tfha
The hard part is getting the government to acknowldege the blockchain tokens
as actual ownership.

And then they'd also have to agree to honor all stolen tokens. Cryptocurrency
really doesn't work unless you let the blockchain be the final arbiter of
ownership, which means it would theoretically be possible to steal someone's
home.

~~~
noddy1
Exactly.

If he tokenizes his house and then a russian hacks his laptop and steals all
his tokens, what happens then? Will he move out and send his keys to moscow?

Ownership ledgers are significant because they have a legal basis and state
enforcement to back them up.

------
sandworm101
I don't think anyone here realizes what this would do to a property. This sort
of encumberment, splitting ownership between possibly hundreds of people, is a
huge headache. Try getting a proper mortgage when you have dozens of owners.
See what happens when one of those owners goes into bankruptcy proceedings and
that piece of your property gets tied up. And as an investor, get ready for a
city/state to come after you should the primary owner walk away and stop
paying taxes. And let us not forget the laws in many countries that require
interests in land to be registered.

The only way to do this practically would be to put ownership of the property
into a corporation and sell shares in that corp. But that gets you out of the
personal property market, no more owner-occupier status for mortgages or
insurance.

------
proaralyst
I think the greatest barrier here is in verifying the real world house price
at exit on the blockchain. I, as an investor, would have to trust someone to
verify this for me. At which point it may as well not be on the blockchain.

~~~
toomuchtodo
The problem I see is that ownership on the blockchain isn't going to be
honored by the legal system (similar to deeds, liens, land title, etc),
whereas a corporate entity with shares sold would be.

~~~
optimuspaul
I'm sure you could use legal instruments to make the legal system honor the
blockchain, but at that point what value is the blockchain providing? More
importantly this is venturing into the realm of securities and futures, which
is highly regulated.

~~~
toomuchtodo
Exactly. Until distributed ledgers or blockchains are considered as part of
"the law of the land", they have no standing in ownership matters.

~~~
omarchowdhury
[https://newmedialaw.proskauer.com/2017/08/02/delaware-
author...](https://newmedialaw.proskauer.com/2017/08/02/delaware-authorizes-
stocks-on-blockchain/)

~~~
toomuchtodo
I stand corrected when scoped to Delaware corporate entity law.

"Not just any blockchain-based ledger, however, will suffice. For one,
electronic corporate records must be capable of being converted into legible
paper form within a reasonable time. Second, like all other Delaware stock
ledgers, a blockchain ledger must be able to (i) be used to prepare a list of
stockholders entitled to vote, (ii) record information required by the DGCL to
be maintained in the ledger and (iii) record transfers of stock pursuant to
Article 8 of the Delaware Uniform Commercial Code."

So a blockchain or distributed ledger technology _can_ be used, but it could
just as easily be done using a relational database or paper records.

------
ph0rque
Would this allow me to short my house if I thought it was priced too high?

------
jasonlaramburu
Basically all the comments are about how this can’t be done, which aren’t
super helpful. What if they created a smart contract that held a signed pdf of
the title deed (turning over the property to the token-holders) in the event
of default? The OP could then pay a fixed amount each month into the contract
to compensate the token holders. If the OP fails to meet his monthly
obligations (or whatever they are), the executed title gets sent to the token
holders. As long as he pays them, they can’t access it. Thoughts?

~~~
root_axis
> _Basically all the comments are about how this can’t be done, which aren’t
> super helpful_

Because it very obviously cannot be done.

> _in the event of default_

How does the contract know a default occurred? The answer is that some entity
or individual has to be trusted to input that information into the contract,
at which point the smart contract aspect becomes totally useless (and in fact,
demonstrably worse than a centralized solution).

~~~
jasonlaramburu
I disagree that it very obviously cannot be done. It may carry more risk for
the token holders than an REIT but I see no technical reason why it couldn’t
be done.

As long as the payment is made in ether (or tokens) directly to the contract
wallet address the contract will immediately ‘know’ whether or not a payment
has occurred. You can easily write a smart contract to require a payment of X
ether every Y days. You could even make the contract payment requirements
dynamic based on the home’s value over time (ie it could scrape data about
other sales in the area from Zillow etc). If the owner misses a payment,
perhaps that triggers an email warning, with appropriate escalation thereafter
(reminders, phone calls etc). If the owner misses a prenegotiated number of
payments, then the contract considers it a default and automatically releases
the documentation.

I think the harder problem is if the owner defaults, and a % of the home’s
ownership transfers to the token-holders, what then? Presumably they would be
minority owners, so they could not force a sale.

~~~
root_axis
> _You could even make the contract payment requirements dynamic based on the
> home’s value over time (ie it could scrape data about other sales in the
> area from Zillow etc_

What computer runs the scraper? How do I know I can trust the response of this
computer? What if the scraper gets banned or breaks?

> _If the owner misses a prenegotiated number of payments, then the contract
> considers it a default and automatically releases the documentation._

How do the token holders know the documentation they will receive upon default
will be legit?

How is the relationship between tokens and ownership stake enforced?

What does it mean for multiple token holders to each receive a copy of the
executed deed?

~~~
jasonlaramburu
_> What computer runs the scraper? How do I know I can trust the response of
this computer? What if the scraper gets banned or breaks?_

Housing price data is publicly-available and pretty easy to verify at no cost.
Anyone considering investing in real estate presumably has access to this info
already.

 _> How do the token holders know the documentation they will receive upon
default will be legit?_

That's a risk with any type of transaction, but easy to verify with a good
lawyer. With boilerplate docs the cost of verification goes down with each
incremental transaction, i.e. once your lawyer signs off on the docs for your
first deal, you can feel reasonably confident making a 2nd deal on the same
paper.

 _> How is the relationship between tokens and ownership stake enforced?_

Token holders would only receive an ownership stake if the buyer defaults. Up
until that point they are just creditors. Basically this is a mortgage, but it
bypasses a long foreclosure process which is better for the lenders/investors.

 _> What does it mean for multiple token holders to each receive a copy of the
executed deed?_

There already is precedent for homes to have multiple owners. Depending upon
the desired number of lenders/investors, a shell company may need to be
created, but again that is relatively straightforward.

~~~
root_axis
> _Housing price data is publicly-available and pretty easy to verify at no
> cost. Anyone considering investing in real estate presumably has access to
> this info already._

That doesn't answer the question of how I know I can trust the computer that
feeds housing price data into the contract. What if it cuts the prices by 10%
before feeding them into the contract?

> _That 's a risk with any type of transaction, but easy to verify with a good
> lawyer_

You have no way to ensure that what the lawyer verifies is what the contract
will release upon default.

> _Token holders would only receive an ownership stake if the buyer defaults_

That doesn't answer the question of how the ownership stake is enforced. If
the default occurs, the token holders will have to go to court to figure it
all out which eliminates the usefulness of the contract.

> _There already is precedent for homes to have multiple owners. Depending
> upon the desired number of lenders /investors, a shell company may need to
> be created, but again that is relatively straightforward._

If my ownership stake is codified through the existing legal system what use
is the smart contract? It doesn't matter what the smart contract does if I've
already established myself as a partial owner via a shell corporation.

~~~
jasonlaramburu
I think a lot of your questions are more related to how eth smart contracts
work. Apologies if I'm misunderstanding. It's easy to verify that the deployed
code of an eth smart contract matches the open source code using the Bytecode
of the deployed contract. Etherscan offers contract verification, as do many
other sources.

 _> That doesn't answer the question of how I know I can trust the computer
that feeds housing price data into the contract. What if it cuts the prices by
10% before feeding them into the contract?_

You can read the state of a contract for free, so you would be able to see
whatever the 'price' was at any given moment. It would obviously be on you to
do your DD and confirm that the price is accurate.

 _> You have no way to ensure that what the lawyer verifies is what the
contract will release upon default._

Yes you do, see first comment above.

 _> If the default occurs, the token holders will have to go to court to
figure it all out._

Not all defaults will necessarily lead to litigation. The parties would only
need to go to court if the owner did not abide by the terms of the contract.
In any traditional foreclosure lots of money and time is spent on legal
proceedings.

 _> If my ownership stake is codified through the existing legal system what
use is the smart contract?_

You would only need to use the existing legal system in the event of default
or breach, which would hopefully be rare. The contract eliminates middlemen.
The token also gives investors/lenders significantly more liquidity, which is
desirable.

~~~
root_axis
> _It would obviously be on you to do your DD and confirm that the price is
> accurate._

Due diligence is irrelevant. The point is that a smart contract cannot run a
scraper, it must outsource that work to another computer living outside the
blockchain; _that_ computer is a blackbox thats behavior could change at any
time.

> _It 's easy to verify that the deployed code of an eth smart contract
> matches the open source code using the Bytecode of the deployed contract_

The code is not the issue. If all documents are available from the beginning
then the smart contract is not doing anything useful. A smart contract cannot
execute a deed automatically so it serves no purpose that could not otherwise
be achieved using centralized software systems.

> _Not all defaults will necessarily lead to litigation. The parties would
> only need to go to court if the owner did not abide by the terms of the
> contract_

The entire purpose of a contract is that people very often fail to meet the
terms of the agreement. If you're relying on the legal system to adjudicate
smart contract disputes then the smart contract is literally no different from
a traditional legal contract except that it is written in unnecessarily
inefficient blockchain code instead of legalese.

> _The token also gives investors /lenders significantly more liquidity_

The tokens provide no liquidity because the legal system does not recognize
them as real, you might as well print out PGP signed IOUs on index cards for
all those tokens are worth.

~~~
jasonlaramburu
_> a smart contract cannot run a scraper_

Sure it can. It would be expensive and slow, but certainly possible.

Yes, an off-chain scraper could change its behavior. I don’t know why it would
be in the interest of the company offering this service to do that, but sure.
As I said before, you could view the output of this scraper anytime from
within the contract itself (either through the company’s front end, or a 3rd
party blockchain browser). If it looked lower than the publicly-available
average, you would know there was a problem.

 _> a smart contract cannot execute a deed automatically_

Sure it can

 _> serves no purpose that could not otherwise be achieved using centralized
software systems_

You argue against yourself here. Your issue with the off-chain scraper is one
of trust- ‘how do I know it won’t change its behavior?’ I ask you the same
question: how do I know a centralized server will not change my contract, or
delete it?

With a distributed smart contract, you can be sure that if you audit the
deployed code, it cannot be changed without your knowledge.

 _> no different from a traditional legal contract_

The contract is really more of a trustless escrow system. It holds the legal
contract for all parties securely, and ensures that no single bad-actor can
change it.

 _> The tokens provide no liquidity_

You don’t know that. If enough projects got funded this way-big if- lenders
could buy, sell trade their positions.

~~~
root_axis
> _Sure it can. It would be expensive and slow, but certainly possible._

Forgive my imprecision, when I said "a smart contract cannot run a scraper" I
meant to suggest that it is prohibitively slow, expensive and impractical to
do so, like if I said "a macbook cannot render the motion picture Frozen".

> _Sure it can_

You are conspicuously lacking an explanation of how a smart contract can
execute a deed. Still, even if it could, the point is that _decentralization_
is totally useless in this venture. We could envision the exact same scenario
you described with centralized software operated by a neutral party and a
written contract that spells out identical terms.

> _You argue against yourself here. Your issue with the off-chain scraper is
> one of trust- ‘how do I know it won’t change its behavior?’ I ask you the
> same question: how do I know a centralized server will not change my
> contract, or delete it?_

You're misunderstanding. I'm not arguing against myself, what I'm trying to
explain is that the smart contract doesn't solve the problem of trust because
the only thing that matters (who the court says is right) works exactly the
same whether you're dealing with a smart contract or a real one.

> _With a distributed smart contract, you can be sure that if you audit the
> deployed code, it cannot be changed without your knowledge._

This is not a benefit, this is just another problem that has to be solved, all
you've done is replace a lawyer with a software analyst (who retains a lawyer
for when they OK a smart contract that gets hacked), except it's also slow and
expensive for the sake of decentralization.

> _The contract is really more of a trustless escrow system. It holds the
> legal contract for all parties securely, and ensures that no single bad-
> actor can change it._

Centralized escrow systems already do this job fine. There is no lack of
reliable escrow services.

> _You don’t know that. If enough projects got funded this way-big if- lenders
> could buy, sell trade their positions._

It doesn't matter who is funding them, they have no liquidity because the
government does not recognize tokens as units of ownership in property.

~~~
jasonlaramburu
All your recent comments (on this thread and others) are anti-blockchain.
However you provide no tangible argument other than ‘centralized servers
already do this fine.’ Ever seen the clip of Ballmer talking about the
original iPhone? He says it will fail because it’s slow, expensive and you can
already send email using a blackberry. That POV has not aged well.

You’re right, centralized servers can execute the computations just fine. A
reason people are excited about ethereum is that they have serious misgivings
that the operators of central servers are truly ‘neutral’ parties. With
distributed systems built in blockchain, you can always audit the code before
you enter a contract. I do not know of any widely-used centralized service
that allows this.

Yes, a smart contract can execute a physical document. One way (of many) would
be hellosign/docusign but running on ethereum main net. Of course this is only
necessary if you want to produce a signature that looks handwritten (not
essential for the doc to be legally-binding in the USA).

~~~
root_axis
> _All your recent comments (on this thread and others) are anti-blockchain_

This has nothing to do with the merit of the argument.

> _you provide no tangible argument other than ‘centralized servers already do
> this fine._

This is a strong argument because the cost of blockchain decentralization is
extremely expensive so it has to provide a very compelling value to be
worthwhile.

> _Ever seen the clip of Ballmer talking about the original iPhone? He says it
> will fail because it’s slow, expensive and you can already send email using
> a blackberry. That POV has not aged well._

That's not a "POV", it's a criticism that can be applied to any expensive
alternative, whether or not the criticism is accurate depends on the specific
circumstances, so trotting out an example of when someone incorrectly
evaluated the value proposition of the expensive alternative does not prove
anything.

Additionally, this entire reply is a complete red herring because this
discussion is not about the potential future successes of blockchain
technology, it's about the usefulness of this specific example (selling
blockchain tokens as shares of ownership in a property). The bottom line is
that nothing is _gained_ by using a smart-contract, but they are slow and
expensive so using them is worse than a trusted centralized system.

~~~
jasonlaramburu
Your entire argument depends on something that does not really exist, a
‘trusted centralized system.’ Maybe you can trust a system you or your
colleagues design and maintain, but any 3rd party centralized system can be
manipulated.

In its current state, a smart contract sacrifices speed and cost but
eliminates the need for trust. You may not value that as much as others, but
it certainly doesn’t make blockchain ‘worse.’

And yes, I think the fact that all your comments disparage blockchain shows
you may have simply already made up your mind.

WRT the OP, the question was ‘is this possible?’ I have shown that is
technically possible to finance a home purchase via crypto tokens, assuming
one can find interested investors. Whether the solution is of value to you
personally is totally irrelevant.

~~~
root_axis
> _Your entire argument depends on something that does not really exist, a
> ‘trusted centralized system.’_

Of course there is, what do you call the NASDAQ or the NYSE? Those are trusted
centralized systems that work just fine every day and process more
transactions than any blockchain can hope to acheieve.

> _a smart contract sacrifices speed and cost but eliminates the need for
> trust_

No it doesn't in any meaningful way. I need to trust that my tokens will be
recognized as a legal share of ownership in the property, all the smart-
contract can do is give me confidence that the tokens are not counterfeit or
double-spent, but this is obviously a non-issue with our current centralized
system. Nobody is concerned about counterfeit Apple stock. There is no benefit
to using a smart-contract because _it does not solve a problem_ (in this
case). Are there situations where a smart-contract could be useful? Probably,
but attempting to tokenize the equity of your home is not one of them and
you've completed failed to demonstrate otherwise.

~~~
jasonlaramburu
The tokens would allow you to access a share of the payback on the loan, or
the executed deed in the event of default confirming your interest. You are
correct, tokens are not securities. As I understand OP’s question is whether
or not this is technically possible (not whether this is an actual problem
worth solving). It is technically possible. You have only shown why it might
be risky or undesirable.

------
gjem97
I don't think the core problem here is solved by the application of a
distributed ledger. The problem that you will need to solve is this:
residential real estate loses value fast if not maintained, and furthermore
can vary a lot based on things like the presence of appliances,
heating/cooling systems and other improvements. Investors that hold a small
percentage and have no ability to enforce upkeep can find themselves losing
money on this even in a rising real-estate market.

------
matthewsinclair
What are you going to do about stamp duty? And from a tax perspective, who is
the beneficial owner? Are there any VAT/GST implications? I'd love to know the
answers to these kind of questions, because this concept of "atomising" a
larger asset is a really interesting use case for decentralised apps.

------
SecretTrees
Hello ladies and gentlemen! Sorry for the interference, but as far as I am
looking for a similar situation, I got something bigger to offer! My name is
Ilvers and here i come.

First of all Honestly! We are young parents, to our nine months old daughter.

Secondly We own a unique 22ha plot next to the longest lake (9km) in Latvia,
the EU.

The situation is as follows. In our 22ha we rent to about 100 retired people
who have built garden houses and cultivate various agro-crops, which we also
do not mind! We also do not conclude contracts because we are reliable people
and trust! But! Every year the land tax price rises and we can not even
collect 8 EUR IN SEASON from the retired people!

We have come to the conclusion with my wife! We must use the land
appropriately, otherwise, we will degrade it! Then, as far as I am a crypt
enthusiast, then I began to explore what are the possibilities for financing
the land and in general try to make some business on it! We have found a
solution !!! We decided to create a Crypto Holidays Camping site for the whole
community!

Researching the current situation associated with assets and the general
attraction of real estate for funding is a very big problem due to SEC US and
Australian laws.

Third. Then look, Write this down, because you will never read this again and
you will not see it until you won't come down by your self! All this project
is based on our cleanest conscience and our own wish and trust!

ME: I'm 32 years old and I have done nothing, life is starting to scare me. So
I'm not here for a scam or call it whatever you like! For 18 years of my life,
I have been working in 8 hard workplaces since my 14 years of age I helped my
mother maintain my two wonderful sisters. I know what is a hard job! You won't
be the one who will judge me on my self-esteem! By my Linkedin profile, you're
definitely gonna choke. Who am I to show you what can I do. I never planned to
be a millionaire! I just want to take care of my wife and dear daughter.

Here's what I have outlined and offering to you. Forget the SEC and all the
regulations that you know! JUST STOP IT !!!

We offer half of our property = 11ha Divide him into 10,000,000 shares, if you
even want physically presenting a registered LLC / LTD when the company's
capital is a real estate that is distributed. We Create token, ICO, shares or
whatever you want! I will call it Secret Trees Garden trust So, each of these
parts STG Trusts is sold at 0.50, - EUR cents for you, founders. the total
amount is 5 000 000 EUR!

Forth. We offer all 22ha! also, the remaining part of our own which will not
be divided, but separated from the detailed plan! We invest these funds in the
capital by placing x30 from dubldom.ru! 2.65 designed cottages for rent,
tourism, rest, holiday houses! The idea is to add all sorts of extras for
profit as well Hot Tubs, Saunas, Active Sports, Water Sports, All that can
bring us Profit! Create Crypto Holidays Camp! Our property is located in the
city's territory and our municipality supports us in creating tourism.

Payouts. Twice a year paying dividends. from total NETO from all profit
makings. We pay 70% of the earnings to each token holder of the STG Trust.
30%, we continue to invest in the capital, to raise the 11ha by buying
neighbor's property's and add it to the founders.

Thinking about Token, ICO Value and its Usage? I do not care how much this
coin will be worth after! Although 0.01 euro cents! STG Trust will be just as
valuable to me! Why?! So when I paid back the same amount that I bought! She
will be just as worthwhile as possible to get into contact with us, as well as
locals - 40,000 will be of the same value as 0.50 Cents sold locally. Consider
it as a member of the club who makes more cash by owning more of them! I
understand you cant realize this project and know what it will take!

I plan to work on this project for rest of my life and I don't think of
letting it down! Try to Understand the property after 30 years been profitable
x2 profit and if, however, you decide to sell, please! 11h +, which was split
into some of the current moment of the token that everyone owns by hes % to
divide it into dividends! We can even sell for each individual parts! We can
make even trust due to date, 30years? I suggest you work with me to be in the
team to create such a project. I repeat I do not have a doctorate or a lawyer,
a programmer's diploma! here you can find all the data, planings and my
contacts.

leave your skepticism for shitBMW clubs!

It's hard to believe but to do is harder! Trust is it.

~~~
SecretTrees
[https://secrettreesgarden.wordpress.com/](https://secrettreesgarden.wordpress.com/)

------
natalyarostova
You would have to pay proportional rent to the token holders, as they are
entitled to it for owning a % of your house, otherwise they are letting you
stay there rent free.

~~~
UncleEntity
Dude's plan is to live there rent free until he eventually sells it and then
the 'owners' get a return on investment -- kind of like buying shares in a
corporation that doesn't pay dividends I suppose.

Solves the 'getting priced out of the market' bit brilliantly assuming he can
find enough suckers to fall for this grand scheme.

\--edit--

It's actually a double-plus brilliant plan.

If he manages to pull this off he sells the house for full price then buys
back the tokens at a fraction of the value once the investors realize what a
bad investment it is to let someone live for free in their house.

------
efoto
The concept you described is what LAToken guys are working on.

[https://latoken.com](https://latoken.com)

------
nisse72
Why would I choose to invest in something like this as opposed to (say) units
in an property fund, ETF or similar?

------
fokinsean
Sounds interesting, but what're are the rules about living in the house? Does
he have to retain >50% ?

------
jameskegel
Why is every sentence a new paragraph?

~~~
ghostbrainalpha
Because they are basically bullet points, or a conversation he is having with
himself with a bunch of questions.

If you put those sentences together into a paragraph as if they are are
continuation of a single idea or topic it would sound insane.

