Blockchains, Smart Contracts and Real Estate

by Pillsbury - Gravel2Gavel Construction & Real Estate Law

The real estate industry is frequently identified as one of the most likely early adopters of blockchain technology and smart contracts. However, industry participants remain skeptical as to the timing and magnitude of the expected changes. That is understandable given the close association of blockchain technology with bitcoin controversies, other virtual currencies and some questionable crowdfunding ventures. Moreover, it is an emerging technology that includes confusing public, private and hybrid versions and involves imprecise terminology and standards. And smart contracts, which pre-date bitcoin, are still misunderstood and mistrusted.

What is not widely understood is that the potential applications of blockchain technology and automated smart contracts are extremely broad and will often not involve any virtual currency. Distributed blockchain databases with identical records that update simultaneously on multiple servers in multiple locations will provide a foundation for business transactions and public records that is more efficient, secure and transparent. Smart contracts will fulfill the role of trusted intermediaries, especially for routine tasks.

The irony becoming apparent in 2017 is that the mysterious inventor of bitcoin, who profoundly mistrusted governments after the financial crisis and eliminated their role as financial intermediaries, has created a technology platform with unique security features that is increasingly attractive to government agencies throughout the world. Cities such as Chicago, Dubai, Rotterdam and Toronto, states such as Arizona, Delaware, Hawaii and Illinois, and countries such as Australia, Estonia, Georgia, Ukraine, Singapore and Sweden are taking active steps to support and develop blockchain databases and smart contract applications. Enhancing public trust and creating a better climate for efficient business activity are the key drivers.

Of particular relevance to the real estate industry are laws allowing for corporate entities to be formed and operated on blockchain platforms, initiatives to make blockchain records admissible in court, laws recognizing the enforceability of smart contracts and smart UCC filings and the pilots in the United States and elsewhere developing trustworthy digital land and title records or offering more efficient and cost-effective land use, leasing, conveyancing, mortgaging and financing alternatives resistant to fraud.

Transactions on the internet today rely heavily on intermediaries to reduce counter-party risk, including title companies, public agencies, escrow agents, trustees, banks, attorneys and others. These intermediaries increase cost and slow down the processing and closing of the real estate transactions. Blockchain technology and smart contracts can eliminate or reduce the role of intermediaries and facilitate peer-to-peer transactions. For instance, Airbnb and HomeAway have been major disruptors of the hospitality industry in a short period of time, but Airbnb and HomeAway are, like the companies they aim to replace, also intermediaries that rely on labor intensive central databases. Over time, their businesses will change as self-executing smart contracts allow for vacation rental agreements directly between the homeowner and renter, with secure blockchain databases recording all of the relevant data and information.

Leading technology providers and advisors, including IBM, Microsoft, Accenture and Deloitte, have made significant commitments to these technologies and the pace of experimentation and adoption has picked up considerably this year. Cloud-based services have reduced the cost and risk of blockchain and smart contract pilots. Major consortiums, such as the Hyperledger Project, R3 and the Enterprise Ethereum Alliance, have attracted many new global members and substantial funding in the past few months. The Blockchain Research Institute announced an alignment last week with the Canadian government and several provincial and municipal administrations to give Canada “a globally competitive advantage in the development of this transformative technology,” according to the Minister of Innovation, Science and Economic Development.

Today, few of us give much thought to the centralized databases, each controlled by intermediaries and each vulnerable to tampering, that we depend on, except when they let us down or we are locked out or hacked. Blockchain databases will be the foundation upon which smart contract and other applications, including artificial intelligence, are based, and little thought will be given by users in the future as to how they are layered and configured. However, the benefits associated with more speed, lower cost and better security will be very apparent. Over time, smart contracts will become increasingly sophisticated and function along with other innovations in ways that will revolutionize the global economy. As competitors and regulators adopt these new technologies, they will be very difficult for any business or industry to ignore.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pillsbury - Gravel2Gavel Construction & Real Estate Law | Attorney Advertising

Written by:

Pillsbury - Gravel2Gavel Construction & Real Estate Law

Pillsbury - Gravel2Gavel Construction & Real Estate Law on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.