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Fabrica Trust Agreement

A method to operate on real estate using smart contracts by holding title in a custom legal entity.

The Fabrica Trust is a legal entity structure designed by Fabrica to hold real property and represent its ownership onchain.

Tip

The latest version can be found here: Fabrica US Trust Agreement

Previous versions are available here: Changelog

The key principles employed in creation of the entity are:

• Protection of the token holder's interest in the property. The token holder has full rights to and control over the property;
• Onchain interoperability;
• Chain as final source of truth with respect to ownership;
• Minimize on-ramp and off-ramp friction and processes;
• Low setup and maintenance costs. Nominee trusts with no professional trustee have minimal costs and/or registration requirements;
• No 3rd party involvement in or control over the trust.

The Fabrica Trust is created under California law, but has been used in a variety of states. Efforts are underway to extend its use for digitizing title in additional jurisdictions.

Structure and Functionality

The Fabrica Trust operates as a nominee trust, where the token holder is always the beneficiary. The beneficiary is the owner of the property and ultimately responsible for all benefits and obligations of ownership. The trust is designed to hold a single piece of real property.

The trust's design allows the beneficiary to use blockchain technology for managing property ownership and executing transactions—-both conventional and novel—-directly onchain. Because the purpose of the trust is to facilitate the use of blockchain technology, the beneficiary may also serve as the trustee, leaving no doubt that the subject property is owned by the token holder.

Key Terms

• Mere Titleholder - The trustee serves solely as the titleholder, with responsibilities limited to managing the trust property at the direction of the beneficiary.

• Right to Economic Benefit - The beneficiary holds all economic and beneficial rights to the property, including all net income and receipts from any source whatsoever.

• Termination - The beneficiary can terminate the trust and redeem legal title to the property by burning the associated token and directing the trustee to transfer the property out of the trust.

• Ownership for Tax Purposes - The beneficiary is treated as the owner of the property for all federal, state and local tax purposes.

Docs

For more information on Fabrica's history and use of the Fabrica Trust Agreement, please visit https://docs.fabrica.land/docs/legal-wrappers.