• Thurstan H

Smart Contracts for tenancy agreements


Four hands grabbing each by the wrist in a circle
Digitising agreements between people with Smart Contracts

The real estate sector traditionally works through agencies that are responsible for contacting people who need a home or a local with the owners or landlords, holding negotiation that favours the interested parties. An ideal and comfortable space to live is always a need for many people making real estate a very dynamic business. Besides, some others want to obtain an economic benefit when renting their properties like houses, apartments, warehouses, or shop stores.


There are a series of problems that those involved in the renting process often labouriously negotiate. Non-compliance with payment in particular, but includes other aspects of the contract. It has always been time-consuming to enforce the conditions of contract's since this implies coercive measures through the application of laws that often favour one side of the negotiation. Although negotiations between tenants and landlords have existed in the world for a long time, they continue to evolve or adapt, to keep up to date. The adaptation includes the technological advances adopted in society.

In recent years there has been a growing interest in including the benefits of Blockchain technology in the real estate sector. Benefits including transparency, immutability and automation are capturing the attention of real estate agents. This article explores how the Blockchain technology works, in particular, Smart Contracts over the Ethereum network, and applying this novel technology to the automation of contracts between landlords and tenants.


Blockchain works like a digital ledger, where the transactions are stored using cryptographic techniques, making it very difficult to forge a transaction. Cryptography is an information security feature based on mathematics, particularly from Algebra and Number Theory. It takes advantage of some mathematical equations being hard to solve for modern computers. If an attacker wants to send a fraudulent transaction to the Blockchain, the probability of success is very low, close to zero, because of the algorithmic complexity of the attack. Blockchain uses the same cryptography that makes secure communication through a web browser with online banking services.


Blockchain is not only cryptographic security, it is a consensus method too

The consensus is the process of having an agreement by which transactions write to the ledger. In the case of Ethereum, there is a network of miners (networked computers) that handle the writing of transactions. When an application built on Ethereum send a transaction, one miner receives it, validate its correctness and store it in a block. Then a competition takes place between the nodes, and if the node that has our transaction in it wins, it adds this block to the chain.


Typically, transactions can include simple logic in the Blockchain with a digital wallet. But Ethereum has an added feature that allows more complex programs for managing authorisation of entities to make some actions, sending payments with a time lock, for example. A program like this is called Smart Contract. Smart Contracts are written in a programming language called Solidity and is not exclusive to Ethereum. Several Blockchains allow the execution of Smart Contracts.

The secure, immutable nature of Blockchain combined with agreements and actions of Smart Contracts make ideal conditions for a tenancy agreement

The benefit of avoiding economic and timing costs through automation alone is of significant benefit. Through distilling current tenancy agreements in Smart Contracts, landlords can begin the process of legitimising Blockchain for tenancy agreements.


In conclusion, Blockchain technology has a variety of features that are suitable for being used in the realestate sector. Automating tenancy agreements using Smart Contracts can improve security, authenticity, non-repudiation, transparency, and immutability. Conditions of renting contracts can be automatic, thanks to Smart Contract, they are accepting the conditions written in the ledger and authorising it to perform actions on their behalf, ideally removing much manual communication.


Want more information on how you can benefit from emerging building related technologies? Signup to our blog for regular updates relevant to you. Otherwise leave a comment below.


#blockchain #Ethereum #SmartContracts #Tenancy #agreements #contracts #landlord #realestate