Legal Wrappers

The legal wrapper is the innovation that makes onchain real estate possible. It's not a workaround—it's a carefully constructed interface between two systems.

A variety of systems exist to track property ownership. Until property can be directly held through a digital representation, county and government systems of ownership rights must be managed. We align these systems by wrapping the property in a legal entity whose operating agreement or similar state-recognized documentation allows for the representation of the assets onchain.

Property → Trust → Token controls the Trust.

Trade the token. The trust changes hands. The trust holds title; the token controls the trust. This retrofits the existing legal system rather than replacing it.

Many different styles of owning assets onchain have been theorized and/or implemented, each prioritizing and enabling different powers. Trusts, LLCs, unincorporated and incorporated DAOs, and partnerships can all form the basis for representing real property titles in the form of NFTs.

In the process of selecting the legal wrapper, asset owners will consider different degrees of certainty, liability, ease of use, and risk offered by various options for digitizing the rights and duties of asset ownership.

At the current stage, Fabrica adopts a single legal wrapper that has been developed over 8 versions since 2017, battle-tested and released as open source under CC0-1.0: The Fabrica Trust. This structure is UCC Article 12 compliant, providing controllable electronic records.