Real estate tokenization

What is real estate tokenization?

Commertize is tokenization infrastructure for the owner of an asset, who becomes the issuer. For each project we would set out the holding structure we would use, typically a dedicated vehicle for the asset, with the token representing an interest in that vehicle, and the alternatives.

The token would be the record of who holds which interest, and the rules on who may hold it and when it may move would be written into the token itself.

How would it work, in outline?

1. The owner decides, with counsel, which of two routes fits: move an existing register, or issue new interests in a vehicle.
2. The loan documents are read before anything else, because they say whether the move or the issuance needs the lender's consent.
3. The issuer's own securities counsel prepares and signs off the offering documents and chooses the exemption.
4. The vehicle's interests would be recorded on the issuer's register, with the transfer rules written into the token.
5. Where an existing investor base is moving, its units and every right attached to them would carry over unchanged.

Who is it for, and who is it not for?

It is for the owner of an income-producing commercial property (net lease, industrial, multifamily) and for the operator of a syndication that already has investors. It is not a way to buy a fraction of a house, and it does not change what a property is worth.

What would an investor own?

The investor would hold a security recorded in their own name on the issuer's register, with transfers restricted by the security's terms and by securities law. The security would be an interest in the vehicle that owns the property, not a deed to part of the building.

Can an existing syndication move its register on-chain?

A vehicle that already owns a commercial property, such as a syndication with an existing investor base, would keep its investors, their units and every right attached to them. What would change is where the register of who owns what is kept. The move itself would raise no new money. Where a lender already holds a pledge over the vehicle's equity, or restricts transfers, nothing would move without the lender's written consent, and the structure may have to change to get it. Where an operating agreement requires the investors' consent to an amendment, that consent would be needed as well.

Why do the loan documents decide it?

Income-producing commercial property often carries a mortgage, and the loan documents usually say what happens on a transfer. Federal law defines a due-on-sale clause as one that lets a lender declare the loan due "if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender's prior written consent", and it permits a lender to enforce one (12 U.S.C. §1701j-3(a)(1), (b)(1)). The statute's exemptions apply only to residential property with fewer than five dwelling units, so they do not reach a commercial building. Whether issuing interests in the vehicle that owns the property counts as a transfer is decided by the loan documents. Where the documents treat it as one, the lender's written consent, or a refinancing, would come before anything is issued.

Which property types?

A single-tenant property is simple to structure and concentrated in risk: one tenant means all of the income can stop at once. Putting a concentrated risk into tokens does not spread it.

What about a Delaware statutory trust?

A Delaware statutory trust (DST) is a structure that lets investors roll 1031 exchange proceeds into real property. The IRS ruling that DST exchanges rest on, Rev. Rul. 2004-86, describes a trust whose interests "will be of a single class" and records that "DST interests are not publicly traded" (2004-33 I.R.B. 191). The trust in that ruling could not accept new contributions, renegotiate its loan or its lease, or lease to a new tenant except on the tenant's bankruptcy or insolvency. Tokens would not change what a DST may do. Whether a particular DST's interests can be recorded as tokens is a question for its own tax counsel.

What does Commertize do?

Commertize is a digital capital markets platform for real-world assets. The owner issues; Commertize provides the infrastructure on which the structure is documented, recorded and displayed. AI agents can read what Commertize publishes about the assets it lists through Commertize Agents.

How are fees set?

For a new tokenization, Commertize charges a flat fee per project, set by the complexity of the structure and not by the asset's value or the size of any raise: $15,000, $25,000 or $50,000. Moving an existing register on-chain is quoted in writing as a flat fee before work starts. All terms are subject to a signed engagement.

Real estate is the worked example, not the limit

Real estate is the worked example on this page; the same structure, a vehicle that holds the asset and a token that records interests in it, extends to energy infrastructure, oil and gas royalties, compute and the other classes on /tokenize.

Frequently asked questions

Commertize is not a law firm, and it does not provide legal, tax or investment advice.