Lease/Rental

Overview

The lease and rental agreement management system in our real estate tokenization platform facilitates the creation, execution, and management of on-chain lease contracts. It provides a structured framework for property owners to list properties and for tenants to enter into rental agreements, with all transactions and rights embedded within the blockchain.

Lease Contract Creation and Management

1. Contract Initiation:

   • Token holders who own 100% of a real estate asset can initiate a lease agreement directly.

   • For properties with multiple token holders, a multi-signature process is required, with all "Rental_Owner" role holders consenting to the lease terms.

2. Lease Agreement Structuring:

   • The lease contract on the blockchain allows owners to specify terms such as rent amount, payment intervals, security deposits, and verification requirements.

   • Contracts include clauses for regular maintenance, property inspection, and other conditions as per the owner's stipulations.

Rental Payment Flow

1. Rental Payment Pool:

   • A dedicated smart contract functions as a payment pool, collecting rents from tenants and distributing them to token holders.

   • The contract ensures that rent payments are divided evenly among all token holders bearing the "Rental_Owner" role.

2. Standing Order Setup:

   • Tenants set up a standing order in their preferred cryptocurrency, which is then verified and stored within an escrow contract.

   • The standing order is activated upon the completion of multi-signature verification from both the tenant and the property owner(s).

Rights and Roles

1. Role-Based Right Management:

   • Rights are initially distributed evenly across all tokens, with each token representing an equal share of rental rights.

   • The smart contract facilitates the assignment of roles such as "Rental_Owner" and enforces their associated rights.

2. Multi-Signature Authorization:

   • Multi-signature functionality is integrated to ensure that decisions regarding the property are made collectively by all owners when complete ownership is not held by a single token holder.

Escrow Contract for Rent Collection

1. Security Deposit Handling:

   • The escrow contract holds security deposits and ensures their return upon the satisfactory conclusion of the lease, minus any agreed-upon deductions.

   • It acts as a mediator, holding funds securely until the terms of the contract are fulfilled by both parties.

2. Activation of Rental Payments:

   • Once the escrow contract has verified the standing order and all parties have signed off, rental payments are processed, allowing the tenant legal occupancy of the property.

Integration with Paddle Identity

1. Tenant Verification:

   • Prospective tenants use their Paddle Identity digital identity to verify their credentials as part of the rental application.

   • This verification process adds a layer of security and trust to the rental transaction.

Technical and Mathematical Considerations

• The rental payment pool contract automatically calculates the distribution of rent based on the number of tokens each "Rental_Owner" holds.

• Let $RR$ represent the total rent collected, $NN$ the total number of tokens, and $TiTi​$ the number of tokens held by owner $ii$.

• The rent share $SiSi​$ for each owner $ii$ is calculated as $Si=TiN×RSi​=NTi​​×R$.

Conclusion

The on-chain lease agreement management system is designed to bring clarity, security, and ease to the process of renting real estate properties within our tokenization platform. By leveraging blockchain technology, smart contracts, and digital identity verification, the system creates a reliable and efficient environment for managing rental properties and distributing rental income. This advanced approach ensures that all parties' rights are protected and that the transactions are transparent and enforceable.