Q&A by Terra Land
Tlanders!
We know how important the legal aspects of our project are.
Many members of our Polish community have found this out in interviews we have given. We don’t want our international community to have any less knowledge about Terra Land.
Every Tlander is equally important to us, so we’ve prepared a FAQ for you to answer your most frequent questions.
If you haven’t joined all our social media yet, we would like to invite you.
https://twitter.com/Terra_Land
Feel free to contact us through our official Telegram channel. There you will get the quickest response to your questions.
Here you will find a video version — https://youtu.be/I4qiAUS3Cu0
1. What is a TerraLand ?
The Terra Land project is a global transaction platform designed to sell whole properties or parts of them, based on blockchain technology. The first stage will be commercial-grade investment properties, i.e. those that provide a return to investors without further involvement.
2. What is the investment process like on Terra Land ?
When a collection is launched, Terra Land enters into a preliminary or reservation agreement with the property owner. If 100% of the amount needed to purchase the property is not raised, the funds paid are returned to the investors. If the required amount is raised, a special purpose vehicle is set up for each new property, which is then owned by the property owner. The collected funds are converted into FIAT and the purchase amount is sent to the owner. After completing all formalities, investors who participated in the collection receive tokens assigned to the property and sign an option agreement with the company under which at any time you can convert your tokens for free into real shares in the company that owns the property. This is important as the agreement firstly guarantees that your investment will not be lost even if the tokens are lost, secondly it is the company’s commitment to the investor even if the management changes, the platform ceases to operate etc, it is still a binding obligation. If the option is exercised, the tokens are burnt and the investor officially becomes a co-owner of the company.
3. How important decisions concerning the property are made ?
Both in our rules of procedure and in the contracts concluded with the company, it is stated that all decisions regarding the sale or encumbrance of the property will be made on the basis of a vote of the investors holding tokens. The majority vote is decisive, i.e., the number of votes of people whose total token holdings amount to at least 51% of the total.
4. Where do you get the properties available on the platform from ?
So far, we have established cooperation with real estate brokers who have been selected from among those who met our requirements. These included many years of experience, an impeccable reputation, positive recommendations from business partners, knowledge and support in the whole process from selecting the property to finalising all the legal and administrative aspects and ensuring cooperation with a reputable lease operator if necessary. This is how we established cooperation with several companies, thanks to which we already have access to properties from over 20 countries, on 4 continents.
5. How do you inspect the properties ?
Each time, prior to a purchase transaction, we commission a local reputable law firm to carry out a legal audit of the property in question, as well as an expert opinion on its technical condition and valuation
6. Which institutional investors have invested in your project ?
- SkyVision Capital
- DWeb3 Capital
- Raptor Capital
- UB Ventures
- Thi VC
- Grizzly Capital
– UG Ventures
7. How did you finance the construction of the platform ?
We benefited from the public funding. In 2020, we received a GRANT from the National Centre for Research and Development, which supports innovative projects as part of the European Union budget. The process was very complex and demanding. Our project was checked mainly for compliance with legislation. The whole process took about 9 months and it was successful.
8. What if Terra Land closes down for various reasons? What about real estate ?
The model we have developed also covers this possibility, as the real estate is separated from the main company into separate entities. The assets of these entities constitute the real estate, and according to the articles of association, the real estate cannot be sold or encumbered without the consent of the investors. Even if Terra Land, as a marketplace, were to cease operations, there remains an obligation of all the companies formed as a result of the purchase of the real estate to the investors, and the realization of this obligation is still possible.
9. What if a whale buys 51% of a property and has sole decision-making rights, or someone makes it their business to build a portfolio of properties they can manage for 51% of their value ?
In the standard offer on the platform, there will be an option for one user to invest up to 40% of the value of a property, in order to prevent one person from buying a controlling stake. Above this 40% there will only be one option, 100%. If it turns out that too many properties are sold as a whole, we will exclude a part of the offer which will have the possibility of buying it as a whole.
10. Do you finance the construction of a property ?
No, we don’t. In our model we do not allow investors to finance the construction or completion of a property. This would expose them to unnecessary risk. An exception is a property which will be handed over no later than one month after the end of the collection, provided that it already has financing for the completion of the construction.
11. Can I sell my shares ?
Yes, in the first quarter of 2022 we will introduce a secondary market for trading options in properties purchased on the platform. Each user will be able to put up both a put and a buy option at any price they choose.
12. What if I have a signed contract and I send a real estate token to another person ?
It is not possible. Real estate tokens cannot be transferred without the participation of the platform. The reason for this is that every user needs to be verified (KYC) to buy a property.
13. Who is the physical owner of the property bought on the platform ?
With the help of our platform, you buy an option on the shares of the SPV which owns the property. This option gives you the opportunity to participate in the profits of the property and after the introduction of the secondary market you can freely trade them through the platform between other users.
However, if you want to exercise the option, there is no problem at all, you express your wish through the platform, send the token to the smart contract where it is burnt and at the same time sign an option exercise agreement. It should be remembered, however, that at this moment the crypto is exchanged for a real share, which is associated with a tax obligation the tax obligation. Additionally, it is not possible to trade such a share on the platform.
14. How is the contract between the company and the investor signed or is a notary public required for this ?
No, the notary public is not required. In July 2021, Simple Joint Stock Companies were introduced in Poland. Their undoubted advantage is, among others, the possibility of transferring shares electronically without a notary. The whole process is fully automatic, after positive KYC verification on the platform, data to the contract will be automatically downloaded. The user will only have to confirm the contract as in the case of confirmation of reading of the terms and conditions.
15. What happens in case of death of the token owner? Are they inherited ?
In case of death of an option owner or shareholder, his rights are inherited according to the system in force in the country of which he is a citizen.
16. Will properties be bought only after a sufficient amount of funds is collected from investors or will they be bought earlier, e.g., on credit, and investors will then de facto pay back the loan ?
At the time we start the collection for a given property, we sign a preliminary agreement with the current property owner (usually it is a developer) for the purchase of the property. When the collection is successful, we sign a final purchase agreement in the form of a notary deed. We do not allow for the possibility of partial capital raising and crediting the remaining part.
17. What if the property is hit by cataclysm or robbery? Do you have any insurance for such situations ?
Well, each company that owns a property is guaranteed funds as a part of the income from the activity of renting out the property. It is 10% of income monthly. So, to answer the question: yes, the properties will be insured.
18. How will I be able to convert digital shares into real shares? I understand that it will be necessary to visit a notary in a given country ?
Each investor who wants to perform the preliminary contract and become the official company owner, will be able to do that at any moment by going through the appropriate procedures for taking up shares in accordance with the regulations of a given country.
After executing the option, the tokens must be returned by the investor to the company, and they will be burnt. Taking up shares requires the investment to be managed according to the rules applicable in the traditional real property market, also in the context of investment liquidity. After executing the option on the Terra Land, trading shares in this real property will no longer be possible.
19. How would you deal with different property lawsuit in different countries and protect buyers against false information from fake agents?
The purchase of real estate will now take place under Polish legislation. In July 2021, Simple Joint Stock Companies were introduced in Poland. Their undoubted advantage is, among others, the possibility to transfer shares electronically without the involvement of a notary. Before adding a property, our law offices check whether a PSA can acquire a property in a given State and what formal requirements we must meet. Only after confirming the legislative route, we add the property to the platform. It is worth mentioning that we are currently conducting an analysis of countries other than Poland, e.g., Estonia, Switzerland, or Singapore, in order to protect our investors against potential changes in legislation.
Regarding the partners we work with when searching for real estate, these are companies that have been operating on the market for several or several years and enjoy an unblemished reputation. At the same time, we are building our business development department in order to directly acquire properties in every corner of the world.
20. If I buy one of the properties in Terraland, do I actually own the property? And what are the conditions for owning the property ?
With the help of our platform, you acquire options on shares of a special purpose company that owns a property. This option gives you the possibility of participating in the profits of the property and after the introduction of the secondary market you can freely trade them through the platform between other users.
However, if you want to exercise the option, there is no problem at all, you express your wish through the platform, send the token to the smart contract where it is burnt and at the same time sign an option exercise agreement. It should be remembered, however, that at this moment the crypto is exchanged for a real share, which is associated with a tax obligation the tax obligation. Additionally, it is not possible to trade such a share on the platform.
21. Can you elaborate more about how you allow users to buy real property using blockchain using Terra Land tokens ?
The Terra Land token is not used to purchase real estate. You can purchase real estate using $UST. $TLAND will be the reflection of the entire platform and all of the usability that the platform has today and will have in the future. It will be a deflationary token so that the development of the platform will reduce its supply on the market. Additionally, it will play an important role in the loan product. Gradually we want to introduce the widest possible adoption of the $TLAND token with the platform.
22. Will I have access to the notarized contract of the purchased property?
Yes, you will. Once the notarized contract for the purchase of the property is signed, we will make all contracts available for permanent viewing. They will only be openable by those who have taken part in the relevant collection.
We hope that this article has clarified a number of issues for you that you have not yet understood.
If you still want to know, please ask :)
