Remember our pledge to publish overviews of how to use smart contracts in different spheres? Here we come with yet another piece on that — today, about real estate.
Smart contracts can be used when buying or renting a property. In apartment leases, the landlord creates a separate contract each time, which allows to specify individual rental conditions. Contracts can be written in number of ways. We want to describe you how it works on Smartz platform. The renter can cancel the booking; however, the owner can set an N-hour period before the actual arrival time. After this period, it will be possible to cancel the booking only upon paying a penalty. Before renting the premises, the customer must confirm that all the claimed characteristics and conditions are true to fact.
Due to the nature of real estate transactions, there are many ways to structure a deal. If a homeowner wants to sell the house, parties can agree to specific terms and enter into a contract. Blockchain allows the buyer and seller to name their terms based on certain pre-set conditions that are detailed in the smart contract.
There is no limit to the number of contingencies a smart contract may include. Real estate smart contract may be written so that any number of final sales prices, reductions in price, or increases, can be triggered based on specific events agreed to by the parties.
When the smart contract is written, tested and then validated on the public ledger, that sets the legal terms of the contract. When the property inspector makes his report, he can make that report a part of the blockchain, which then is validated by all other participants. If the contingency is met and the inspector’s report shows that the house’s foundation is cracked, that triggers a reduction in the agreed-upon sales price and the transaction is conducted according to the contingency price in the contract. There is no need to rewrite the contract to reflect the new sales price. Instead, some of these contractual details can be automated. Moreover, smart contracts can eliminate third parties and ease up the registration process.
Would you like to use a smart contract to buy or sell real estate? Let us know in comments below.