Fabrica Trust
A nominee trust structure for onchain property ownership
The Fabrica Trust is a legal structure that enables real estate ownership through blockchain technology. Developed since 2017, it has been used in the transfer of millions of dollars worth of real estate across hundreds of properties in close to a dozen U.S. states.
How It Works
The trust operates as a nominee trust where:
- The token holder is the beneficiary with full ownership and control
- The trustee holds legal title but has limited duties (primarily signing documents when instructed)
- The beneficiary can also serve as trustee, eliminating third-party involvement
This structure creates a direct link between the NFT and the property—wherever ownership of the token goes, beneficial ownership follows, while recorded title stays within the trust.
Owner Rights
The token holder (beneficiary) receives comprehensive property rights:
| Right | Description |
|---|---|
| Possession | Right to occupy and use the property |
| Control | Right to manage and make decisions about the property |
| Exclusion | Right to exclude others from the property |
| Enjoyment | Right to use the property without interference |
| Disposition | Right to transfer, lease, encumber, or sell |
The beneficiary also receives all income from the property and bears all liabilities and taxes. For tax purposes, the beneficiary is treated as the property owner—the trust is not a separate taxable entity.
Transfers
When a token transfers to a new wallet, beneficial ownership automatically transfers to the new holder. The trust agreement distinguishes between:
- Direct transfers (to personal wallets): Full ownership transfers to the new holder
- Functional contracts (escrow, lending, bridges): Original beneficial ownership may be retained pending final disposition
This distinction ensures that using your property as collateral or listing it for sale doesn't inadvertently transfer ownership until the transaction completes.
Termination (Off-Ramping)
To dissolve the trust and receive traditional title:
- Beneficiary burns the Property Token (via
burnorburnBatchfunction) - Trustee executes a recorded deed transferring property out of the trust
- Property transfers to the former beneficiary in traditional form
See Off-Ramp for the complete redemption process.
Trust Naming Convention
Fabrica trusts follow a standardized naming convention: Fabrica XXXXX Trust, where XXXXX is the token ID encoded using Crockford Base32.
Benefits:
- Compact names: Short and manageable for legal documents
- Easy lookup: Direct mapping from trust name to token ID
- Reduced ambiguity: Excludes confusable characters (I, L, O, U)
- Uniqueness: Each token ID produces a unique trust name
Custom or vanity trust names are possible but the standard format is recommended.
Legal Framework
- Governed by California law with San Francisco courts for disputes
- Blockchain transactions have the same legal force as written signatures
- Compliant with UCC Article 12 treatment as a "controllable electronic record"
- The Property Token is structured to not constitute a security under federal law
Open Source
The Fabrica Trust instrument is open source under CC0-1.0 (public domain). You can review the agreement, track changes, and contribute improvements:
Repository: github.com/fabrica-land/fabrica-connectors
The trust agreement is located at connectors/us/us-trust-agreement.md.
While we are confident in our trust model, it has never been tested in court. Property owners should be aware they are using their property in a way not contemplated by most real estate professionals. We're building a new model of ownership, and there will be hurdles to overcome.
Updated 9 days ago