The Fabrica Trust is a legal structure designed to streamline and digitize property transactions on blockchain. It acts as a bridge between traditional property ownership and onchain representation. Each property sits in its own trust, and that trust holds record title to the property.
Here are some of the key characteristics of the Fabrica Trust:
Tokenization: Once the property is in the trust, a digital token (the Property Token) is minted, which represents ownership of the trust. This token is held directly by the user, signifying control and ownership of the trust, and consequently the property. Transferring the token transfers ownership of the trust.
Nominee Trust: Under the Trust Agreement, the role of trustee is simply as an agent of the beneficiary. The beneficiary is the owner of the property held in the nominee trust, is by default their own trustee, and is ultimately responsible for all property taxes.
Trust Purpose: The purpose of the trust is to allow the beneficiary to use blockchain to manage ownership of a property and facilitate any future transfer of beneficial ownership (at which time a change of ownership will be reported to the county).
The Trust Agreement is open source and governed by California law, while conveyancing follows the law of the state where the property sits. In 2022 the California State Board of Equalization determined that “a transfer of the Fabrica Token is a transfer of the underlying real property itself” (a California determination).
In essence, a Fabrica Trust transforms the traditional property ownership model into a digital, blockchain-compatible format, providing users with flexibility and control over their real estate assets. For the full legal detail, see the Fabrica Trust documentation.