Real estate tokenization in the United States

You may have seen ads for “fractions of American homes” sold as tokens, sometimes for less than 100 dollars. This article explains what these tokens usually are from a legal standpoint in the United States, who regulates each part of the transaction and what public documents show about real cases.

It is an informational article, with the editorial team’s reading of public rules and documents as of October 2026. It is not investment advice and does not replace the analysis of a lawyer licensed in the United States.

Two layers of rules: the property and the investment

A tokenized real estate offering in the United States goes through two different layers of rules.

The first is real property law, which is state law. It defines who owns the property and how ownership is transferred.

The second is securities law, which is federal and enforced by the Securities and Exchange Commission (SEC). It defines how an investment can be offered to the public.

The token sits in the middle. To understand what it is worth legally, you need to look at both layers.

Who owns the property: the county record

In the United States, deeds and other rights over real estate are recorded at local public offices, usually at county level, with names such as recorder of deeds or county clerk. Each state has a recording act, which, according to Cornell University’s Legal Information Institute, governs the recording of deeds and “determines priority” when more than one person claims the same property. These laws follow three main models, called race, notice and race-notice, and the state’s model decides who wins the dispute.

The practical point is: the record that counts for ownership is the county’s, not a blockchain record kept by a company.

Some counties have tested blockchain in their own records, without replacing the official system:

• Cook County (Illinois), 2017. According to a summary by the American Land Title Association (ALTA), the title industry association, the pilot’s report concluded that the benefits of migrating existing records to blockchain were “limited” relative to the cost, and that a new system could take “10 to 15 years” to produce significant benefit.
• Vermont. The same ALTA page describes a traditional deed recording that included a cryptographic hash and a QR code linked to a blockchain database, a complement to the paper system, not a replacement.
• Bergen County (New Jersey), 2025. The county announced a five-year agreement with the company Balcony to digitize about 370,000 deeds on the Avalanche network, according to ROI-NJ. The reduction of more than 90% in processing time cited in the report is an expectation, not a measured result. The editorial team did not find any later public evaluation of the project.

Note that these projects use blockchain to store or authenticate the public record. That is different from selling investment tokens linked to a property.

What the token usually represents

In most documented offerings, the property is bought by a company, usually an LLC (limited liability company) or a corporation. The deed is in that company’s name. The investor receives tokens representing its units or shares.

Two documents filed on EDGAR, the SEC’s public filing system, show this design:

• A 2022 Form D from “RealToken 616 E 131st St, Inc”, incorporated in Delaware, reports an equity offering of US$ 53,924, with a minimum investment of US$ 50.
• The preliminary offering circular of MartelInvest 1 LLC, from 2023, offered LLC “units” “represented by digital tokens”. The company stated that it owned one property in St. Louis (Missouri) and intended to buy, renovate and rent out others.

In the editorial team’s reading, the consequence is direct. Whoever buys the token does not appear on the deed. Their rights depend on the company’s corporate documents, on who manages it and on whether the property is in fact in its name. The same reasoning applies in Brazil, as the article Does a token represent legal ownership of a property? explains.

For the SEC, the format does not change the rule

The central question in the United States is whether the token is a security. If it is, the offering must be registered with the SEC or fit within an exemption.

The classic test comes from SEC v. W.J. Howey Co., decided by the Supreme Court in 1946. Interestingly, it arose from real estate. In a March 2026 interpretation, the SEC recalls that the Court treated as investment contracts, rather than simple land sales, the sale of plots of a citrus grove combined with contracts under which the seller managed the land and passed on part of the profit. The buyer depended on someone else’s managerial efforts to make money.

That interpretation, Release 33-11412, issued on March 17, 2026, is now the SEC’s reference on crypto-assets. It replaces the 2019 “Framework” that SEC staff used to analyze tokens. Two points matter here:

• The SEC defines a tokenized security as an instrument that is already a security and is formatted as a crypto-asset, with ownership recorded on a blockchain.
• The text says that “a security is a security” whether it is recorded on or off the blockchain. It also warns that some tokens do not give the same rights as the original security, only the right to receive distributions from a central party that runs the business.

In January 2026, the SEC’s staff divisions published a statement on tokenized securities. It distinguishes tokens issued by the issuer itself from tokens issued by third parties, and points out that the holder of a third-party token may face risks that the holder of the original asset would not, such as that third party’s bankruptcy. The page itself warns that the statement is from staff, “has no legal force or effect” and was not approved by the Commission.

This is the point most subject to change. The 2026 interpretation itself replaces several statements on crypto-assets that SEC staff published throughout 2025. Check the current situation before any decision.

Offering routes: Regulation D, A and Crowdfunding

Registering a full public offering with the SEC is expensive. That is why most tokenized real estate offerings use exemptions. The figures below are those reported by the SEC in October 2026.

Exemption	Limit	Who can invest	EDGAR filing
Regulation D, Rule 506(b)	no cap on amount	accredited investors and up to 35 non-accredited every 90 days; no general solicitation	Form D
Regulation D, Rule 506(c)	no cap on amount	accredited investors only, with verification; general solicitation allowed	Form D
Regulation A, Tier 1	US$ 20 million in 12 months	general public	Form 1-A
Regulation A, Tier 2	US$ 75 million in 12 months	general public, with an investment limit for non-accredited investors	Form 1-A
Regulation Crowdfunding	US$ 5 million in 12 months	general public, with per-investor limits, through a registered intermediary	Form C

Sources: SEC pages on exempt offerings, capital-raising pathways, Regulation A and Regulation Crowdfunding.

Some terms in the table:

• An accredited investor is, for an individual, someone with net worth above US$ 1 million excluding their primary residence, or income above US$ 200,000 (US$ 300,000 with a spouse) in each of the two previous years, among other criteria, according to the SEC.
• Form D is a notice filed within 15 days after the first sale. It is not SEC approval.
• Under Regulation A, the offering can only be sold after being qualified by the SEC. In Tier 2, the issuer is exempt from registering the offering with state regulators, but needs audited financial statements and periodic reports.

There is also a liquidity limit. Securities bought in private offerings, such as Regulation D ones, are restricted securities. According to the SEC, as a rule they can only be resold publicly after six months, if the issuer files periodic reports with the SEC, or after one year, if it does not. Under Regulation Crowdfunding, resale is generally barred for one year. In other words, the token may be technically transferable on the blockchain and still legally restricted.

What public documents show

Offerings on EDGAR

The RealToken 616 E 131st St Form D, from July 2022, indicates Rule 506(c). The offering was therefore restricted to accredited investors, with verification. On the filing date, the form recorded zero sold and no non-accredited investors. A full-text search of EDGAR, in October 2026, returned other similar forms from companies called “RealToken [address], Inc.”, based in Boca Raton, Florida. In the editorial team’s reading, the model is one company per property.

MartelInvest 1 LLC took a different route: Regulation A, Tier 1, with a cap of US$ 20 million. The offering circular provided for a minimum investment of US$ 50 and accepted dollars and crypto-assets such as USDC, USDT and Matic. The offering was never qualified. On March 20, 2024, the SEC declared the filing abandoned, because it had been under review for more than nine months without qualification.

The lesson is simple: a document filed with the SEC is not a seal of approval. It is worth checking on EDGAR which exemption was used, whether the offering was qualified and what happened afterwards.

The Detroit case

The most documented case of problems with tokenized real estate in the United States involves RealT, a Florida company that sells fractions of residential properties in Detroit as tokens.

In July 2025, the city of Detroit sued RealToken LLC, its subsidiaries and its partners. According to Michigan Public, the city called the action its largest lawsuit over property maintenance code violations. It cited 408 properties without the certificate of compliance required for rentals and at least US$ 500,000 in fines. The company attributed the problems to property managers who, it said, diverted maintenance funds.

An investigation by Outlier Media, republished by Michigan Public, reported that RealT sold tokens linked to 39 houses whose purchase had not been completed. The deeds were still in the seller’s name. The report also points to dividends paid weekly while postal data suggested the properties were vacant. The company attributed the deed failures to “title issues” and the delay in the purchase to the seller.

In April 2026, according to Outlier Media, the parties reached a court-approved agreement that put an outside administrator in charge of about 700 of the company’s properties. The administrator has the power to renovate, sell or demolish properties. The goal is to bring 210 properties into compliance by October 2027. The agreement is not public, and the information comes from the parties’ summaries.

The editorial team did not confirm in the EDGAR documents the corporate relationship between the company in the Form D cited above and the RealToken LLC sued in Detroit, although the name and state match.

In the editorial team’s assessment, the case shows that the blockchain records the transfer of the token, but does not guarantee that the company holds the deed, that the tenant pays the rent or that the roof is intact. Those risks remain in the physical and legal world. The article Why tokenizing an asset does not eliminate risk covers this in general terms.

Risks for those looking at this market from Brazil

• Total loss. The company that owns the property may go bankrupt, and the property may have debts, fines or overdue taxes that rank ahead of the investor.
• Title. Check whether the deed is actually in the issuing company’s name in the county record.
• Liquidity. Resale restrictions and a lack of buyers can prevent you from exiting.
• Intermediaries. With tokens issued by third parties, that third party’s bankruptcy is an additional risk, according to the SEC itself.
• Management. Rent, maintenance and compliance with local codes depend on whoever manages the properties, not on the blockchain.
• Jurisdiction. A dispute with the company or the manager will be resolved in the United States, under American state and federal law.
• Brazilian rules. Offering investments to residents of Brazil has its own rules. See who regulates what in real estate tokenization in Brazil.

Key takeaways

• In the United States, property ownership is still recorded at the county. The token usually represents a stake in a company that holds the deed.
• For the SEC, a token that works as an investment is a security, on or off the blockchain. The offering needs registration or an exemption, and each exemption has limits and resale restrictions.
• Public documents show offerings that were never qualified and a legal dispute in Detroit involving poorly maintained tokenized properties and deeds that were not in the company’s name.
• Before looking at any offering, check three things in public sources: the filing on EDGAR, the deed in the county record and the SEC’s current regulatory position.