Using a corporation to buy and own real estate has been happening for a long time. Our family owns a lake cabin and many years ago I was given a copy of a book called “Saving The Family Lake Cabin“, which essentially provides advice for how to set up a limited liability company (LLC) to make it easier to pass along the real estate to your heirs and prevent fights among them. Buying real estate with LLCs also has been the practice of wealthy people who don’t want their ownership in real estate to be public.
But just recently, there are some new ideas that make it possible if not likely that owning real estate through corporations will become the norm instead of the exception. First, there are new companies like Pacaso (founded by Austin Allison and Spencer Rascoff, formerly with Zillow), which use LLCs to sell 1/8 to 1/2 shares of properties in second-home markets. They stress that this is way better than a time share and that it’s really ownership in real estate, even though it’s through an LLC.
The second concept is selling real estate using a non-fungible token (NFT) on a blockchain, as done just yesterday by Propy in conjunction with seen.haus. The NFT part is kind of just window-dressing to the LLC, which is doing the real work of owning and transferring ownership in the real estate involved.
For me, setting aside all the buzz-words, the most interesting aspect of these approaches is that these transactions all occur without any change in the public real estate records. As far as the local county or other governmental entity tracking the real estate ownership is concerned, it’s the same LLC owning the property regardless of the change in share ownership of the LLC. Given this, it will be very interesting to see if states or other governmental entities try to address this or not. If they don’t, we could well see a day where you have to check a blockchain somewhere to figure out who owns a parcel of real estate.