Table II. Challenges and opportunities... | Emerald Publishing

Table II.

Challenges and opportunities of the blockchain for real estate transactions

	Renting a property	Purchase a property	Purchase with mortgage loan
Blockchain benefits	Blockchain can ensure the legality of the contract and its registration, thus preventing the black market and tenant’s unprotection. Blockchain and smart contracts can also be connected to authorities to ensure the payment of taxes, registration of citizens, etc.	Blockchain and smart contracts might make these transactions faster, taking into account the needs of new millennial generation. Moreover, the publicity of blockchain might protect the right of the owner, prevent double sales and connect this database with other administrations or services, allowing transnational operations	Apart from the benefits explained for the rental and purchase contracts, blockchain might connect all the phases of granting a mortgage, thus reducing time and even costs: from the solvency assessment, through the property evaluation and to the registration
Blockchain challenges	Taking into account that to register or to hire a notary for rental contracts is not a common practice, the blockchain does not involve major challenges. However, to benefit from this technology, this blockchain should include the official ID of the parties, and smart contracts should include the agreed legal clauses to control their legality	As pointed out above, it is a common practice to hire a notary and to register it into the land registry (even compulsory in some countries: DE, NL). Blockchain by itself does not check the ID of the parties (public blockchains are anonymous), their capacity to conclude contract and, in general, this database cannot be amended. Therefore, when designing a blockchain for real estate, this should be linked to an official ID The capacity of the parties should be controlled (by means of affective computing or even thanks to the intervention of oracles) One or some selected official blockchain protocols should be available to protect third-parties’ rights (e.g. to allow them to know the actual owner or possible liens) Authorities should be able to amend it when necessary (e.g. courts or in case of inheritance) The costs of concluding new smart contracts should be somehow controlled; otherwise, they could increase (depending on the number of transactions) and thus prevent people with less resources to be protected. A permissioned blockchain controlled by an authority could overcome this challenge	Mortgaging a property through blockchain has the same challenges as the purchase. As pointed out above, in most countries, it is necessary to register the mortgage. The role of land registries depends on the country so that blockchain should at least ensure these functions. This blockchain should also allow the creation of rights in rem, thanks to “tokenisation” or sidechains, and legislation should be amended to allow the creation of mortgages through this technology. In addition, taking into account that mortgage loans may involve a consumer relationship, this technology should be designed to ensure consumers’ rights (e.g. the ones from Directive 2014/17/EU)

	Renting a property	Purchase a property	Purchase with mortgage loan
Blockchain benefits	Blockchain can ensure the legality of the contract and its registration, thus preventing the black market and tenant’s unprotection. Blockchain and smart contracts can also be connected to authorities to ensure the payment of taxes, registration of citizens, etc.	Blockchain and smart contracts might make these transactions faster, taking into account the needs of new millennial generation. Moreover, the publicity of blockchain might protect the right of the owner, prevent double sales and connect this database with other administrations or services, allowing transnational operations	Apart from the benefits explained for the rental and purchase contracts, blockchain might connect all the phases of granting a mortgage, thus reducing time and even costs: from the solvency assessment, through the property evaluation and to the registration
Blockchain challenges	Taking into account that to register or to hire a notary for rental contracts is not a common practice, the blockchain does not involve major challenges. However, to benefit from this technology, this blockchain should include the official ID of the parties, and smart contracts should include the agreed legal clauses to control their legality	As pointed out above, it is a common practice to hire a notary and to register it into the land registry (even compulsory in some countries: DE, NL). Blockchain by itself does not check the ID of the parties (public blockchains are anonymous), their capacity to conclude contract and, in general, this database cannot be amended. Therefore, when designing a blockchain for real estate, this should be linked to an official IDThe capacity of the parties should be controlled (by means of affective computing or even thanks to the intervention of oracles)One or some selected official blockchain protocols should be available to protect third-parties’ rights (e.g. to allow them to know the actual owner or possible liens)Authorities should be able to amend it when necessary (e.g. courts or in case of inheritance)The costs of concluding new smart contracts should be somehow controlled; otherwise, they could increase (depending on the number of transactions) and thus prevent people with less resources to be protected. A permissioned blockchain controlled by an authority could overcome this challenge	Mortgaging a property through blockchain has the same challenges as the purchase. As pointed out above, in most countries, it is necessary to register the mortgage. The role of land registries depends on the country so that blockchain should at least ensure these functions. This blockchain should also allow the creation of rights in rem, thanks to “tokenisation” or sidechains, and legislation should be amended to allow the creation of mortgages through this technology. In addition, taking into account that mortgage loans may involve a consumer relationship, this technology should be designed to ensure consumers’ rights (e.g. the ones from Directive 2014/17/EU)

Source: Own elaboration