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Can a property be legally divided with tokens? We explain it to you without technicalities

Real estate tokenization, especially the possibility of dividing a property into digital parts represented by tokens, is revolutionizing the way of investing in real estate and luxury assets.

But is this really legal? What should you know before considering this option?

In this article, without technicalities, we explain to you what it means to divide a property with tokens, what legal aspects you must take into account in Spain and Europe, and what are the real limitations and opportunities.

What does it mean to split a property with tokens?

Splitting up a property with tokens consists of dividing the ownership or rights to a property into several digital parts (tokens), which can be bought, sold or exchanged by different users. Each token represents a “portion” of the property, facilitating shared investment and access to assets that were previously only available to large capital.

This concept is a digital evolution of “condominium” or traditional co-ownership, but with advantages such as greater liquidity, transparency and global access.

Is it legal to tokenize and divide property in Spain and Europe?

The short answer: yes, But with important conditions.

Real ownership vs. property rights

In most cases, tokens do not represent direct physical property registered in the Land Registry. Instead, they usually represent contractual rights or shares in a company that owns the property.

This means that:

  • The real owner of the property is still the officially registered natural or legal person.
  • Tokens represent financial or contractual participation, with usufruct, benefits or voting rights, but not always direct registry ownership.

This model is legal and common in Spain and Europe, provided that it complies with current regulations.

Essential regulatory compliance

For tokenization and fractionation to be legal, it is necessary to respect:

  • Commercial and corporate legislation: If the property is held within a company (for example, a limited company or real estate fund), the tokens represent shares or shares. These must comply with Spanish and European laws that regulate companies and financial markets.
  • Regulation of Securities and Financial Assets: Many tokens can be considered securities (security tokens). In this case, they must register and comply with CNMV regulations in Spain and European frameworks such as MiCA.
  • Clear and transparent contracts: The rights and obligations of token holders must be defined in accessible contracts and comply with investor protection.
  • Money Laundering and KYC Prevention: Controls must be applied to identify investors and prevent fraud or illegal activities.

Limitations and risks to consider

  • There is still no official register of real estate tokens to replace the Land Registry, so physical ownership remains in traditional hands.
  • Liquidity and secondary market: The sale of tokens may be limited by regulations or lack of suitable platforms.
  • Assessment and management: The property must be properly valued and managed to avoid conflicts between token holders.
  • Fiscal aspects: The taxation of profits or income derived from tokens must be analyzed on a case-by-case basis, and can be complex.

What real opportunities does fractional tokenization offer?

  • It facilitates investment in high value properties with affordable amounts.
  • It allows you to diversify investments without having to buy the entire property.
  • It increases the transparency and traceability of ownership and transactions.
  • It reduces administrative costs and time compared to traditional management.

Conclusion

Tokenizing and dividing property using tokens is a legal and viable option in Spain and Europe, provided that the applicable commercial, financial and tax regulations are respected.

Although it does not replace traditional property registration, it offers an innovative model for democratizing access to real estate and luxury assets.

If you are considering this model for your real estate or luxury project, It is essential to advise you with legal and technical experts who ensure regulatory compliance and safety for all participants.

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