Blockchain, a decentralized communication system which was implemented first to authenticate bitcoin transactions, often used synonymously with cryptocurrencies, has now emerged as the technology has drawn interest from startups, technology developers, supply firms, financial institutions, and academic community. However, commercial rentals and leases are still behind in this race of technology.
Rental lease agreements are still signed on physical paper copies and kept by property owners and their tenants, and the manual spreadsheet is maintained to monitor leasing agreements and transactions. Due to these traditional methods of transacting, landlords are covered with challenges. The adoption of blockchain technology in commercial property market recently is changing the way landlords and tenants negotiate.
There is a lot of documentation and people involved in the traditional commercial real estate leasing processes, from lawyers to guarantors, and agents to verify and safeguard every transaction leads to the paper trail. These hectic processes and paper trails can be reduced with the digital contracts as the signature collection can be done online instantaneously. Discrepancies can be quickly spotted by using artificial intelligence for immediate rectification by involved parties reducing the risk of bureaucratic bloat and inefficiencies. The manual process of leasing transactions involves more parties which opens up opportunities for fraud. Data records can be secured and fixed with blockchain’s cryptographic security system as it requires the use of a public and private key and hence protecting the records from any database breach.
Applying blockchain reduces the unnecessary administrative burden on the personnel responsible for maintaining excel spreadsheets and saves time. It also contributes to saving the environment by reducing the need for papers with online transaction methods. Real estate companies can save unnecessary expenses by eliminating high administrative fees and commissions, with the use of blockchain technology to create smart contracts which typically act as agents. By transacting online, both the parties can save the traveling time and expenses, enhancing the experience for the landlord and tenant.
Smart digital contracts platforms are a skeptic to the size of a leasing contract because of its convenience without the imposition of large intermediary fees. Therefore, saving the unnecessary intermediary expenses as cost and time required to transact are the same for one-month leases, as well as ten-year leases. Blockchain technology will continue to help the industry by enabling landlords to efficiently market their spaces in the future.
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