Real estate tokens are often seen as a high power market. Credit: Pixabay
The General Court of Justice (CGJ) of the State of Rio Grande do Sul regulated the exchange of properties with a cryptoactive counterpart. Therefore, even with non-fungible token (NFT). And from that to be registered in a registry office. The decision comes after the sale of NFTs of real estate in the state by Imovelweb and Netspace and the refusal of notary offices to register the transactions.
Tokens can be cryptocurrencies like bitcoin, stable currencies like tether or, in the case of NFTs, they are blockchain records of something that is unique. Thus, a blockchain code is created with property data, rights and duties of those who buy and sell or exchange. Thus, what is called a smart contract is formed.
Judge Vanderlei Teresinha Tremeia Kubiak says in the document that it will be possible to draw up public deeds for the exchange of real estate for token as long as certain prerequisites are met. One of them is for the parties to declare that they “recognise the economic content of the tokens/cryptoactives object of the exchange, specifying their value in the title”.
Furthermore, it should be clear that cryptoactives do not represent rights to the barter property. It is also necessary that the declared value of the tokens has “reasonable economic equivalence in relation to the valuation of the exchanged property”. This is because it is necessary to avoid disguised donations, according to the judge.
And that blockchain registration does not imply that the token refers to ownership rights over the property in question, that is, whoever buys the NFT does not buy the property. It does buy some kind of right, such as receiving rent.
Notaries questioned use of token in real estate records
According to provision 38/2021, the regulation started from a consultation on the matter. The authors were the Association of Notaries and Registrars of Rio Grande do Sul (Anoerg-RS) and the Forum of Presidents of the extrajudicial entities of Rio Grande do Sul.
And it follows days after Lenita Ruschel, 82, became the first person in Brazil to have digital ownership of a property. In fact, part of a property, which tokens facilitate, making assets more accessible to investors who do not have the resources to buy the whole. This happened in Porto Alegre (RS), as reported by the G1.
In this case, Lenita acquired an NFT that entitles her to receive 20% rent on an apartment. His goal was to buy a rental property. Therefore, you will receive 20% of the rent. This is an initiative of Imovelweb with Netspaces, which until then had done the tokenization of 30 properties.
Netspace had 24 deeds blocked in registries in the state
However, the dispatch states that Netspaces informed the Internal Affairs Office “that it has 24 public deeds ‘blocked’ in Notaries of Notes.” And that due to “the processing of this file”, he requested information on the subject.
Among the questions that the notary’s offices made to the Court about the use of tokens in property swaps, there is, for example, whether this type of operation is exempt from taxes, since “there is no taxable event foreseen for the eventual transmission of this digital right”.
There was also the question “as the property will remain registered in the name of the company that operates this access to the blockchain, and no longer in the name of those who accessed this parallel system, how will a lawsuit reach this asset, which has now ended up in the cloud? Would it be a new way of hiding assets so as not to answer for obligations, in an attempt to withdraw their assets from the trade?”
Another question is whether a lawsuit against the company that offers the property through tokens, and which has the property registered in its name, will affect the owners of the cryptoactives. They also asked whether this type of operation causes systemic risk to the legal security of contracts, as well as whether business in the cloud is related to the asset or to the registration of properties.