Shared Ownership in Practice – Governance, Conflicts, and Who Lives in the House

Tokenization doesn’t magically remove the classic frictions of shared ownership; it amplifies them. If you have 500 tokens for a $500k house, owned by 50 or 200 people, you’ve created a mini‑economy. Who lives there? Who approves a $30,000 roof replacement? What if half the investors want to sell, and half want to hold?

This post tackles the most common practical questions.

Who Lives in a Tokenized House?

There are three common patterns:

Pure investment, third‑party tenant
- The SPV owns the property and leases it out to a normal tenant.
- Token holders receive rental income and appreciation but never occupy the property.
- This mirrors traditional single‑family rental, just with a different capital stack.
Hybrid: Some owners can occupy
- Certain token classes may confer a usage right (e.g., limited stays, timeshare‑like periods).
- This is common in vacation properties but complex for a primary residence where ongoing occupancy is required.
- Requires careful tax and legal analysis to avoid reclassifying tokens as something other than simple securities.
Owner‑resident with minority financial backers
- One household lives in the home as the primary resident.
- They might hold a minority or majority of tokens and pay a “rent” or “occupancy fee” to other token holders.
- Over time, they may buy more tokens, similar to a shared equity mortgage.

In practice, high‑quality, scalable models will likely default to pattern #1: the property is an income‑generating asset, not a co‑living experiment between dozens of strangers.

How Are Capital-Intensive Decisions Made?

Capital‑intensive and design decisions (e.g., renovations, structural repairs, major upgrades) can’t be decided ad hoc. Typical patterns:

Threshold‑based delegated authority
- The SPV manager can approve expenditures up to a certain percentage of property value or annual rent without a vote (e.g., 5–10%).
- Above that threshold, token‑holder approval is required.
Tiered decision types
- Routine repairs (leaky faucet, appliance replacement): manager decides, within a pre‑approved budget.
- Major capex (new roof, adding a bedroom, solar installation): requires a simple or supermajority vote.
- Strategic decisions (sell the property, refinance, change operator): may require higher thresholds and longer voting periods.
Governance tooling
- On-chain voting systems integrated with the token contract.
- Off‑chain voting with strong identity and cap‑table linkage (e.g., “1 token = 1 vote”).
- Delegated voting, where token holders can delegate their vote to an expert or committee to avoid decision paralysis.

Common Shared Ownership Issues (And How Tokenization Helps/Hurts)

Tokenization changes the mechanics but not human nature. Expect:

Free‑rider problem
- Some investors may resist funding big repairs, hoping others will.
- Solution: mandatory capital call rules, or automated retention of a reserve from rental income for capex.
Short‑term vs long‑term horizons
- Some want to maximize near‑term yield; others want long‑term value creation through renovations.
- Tokenization can help via:
  - Multiple share classes (e.g., income‑preferred vs growth‑oriented).
  - Clearly defined business plans and investment horizons baked into the SPV charter.
Exit and liquidity conflicts
- Some investors may want to sell their tokens early; others want the property held.
- Tokenization helps by enabling secondary markets, but:
  - Transfer restrictions (securities law) still apply.
  - Governance may need to define conditions for forced sale or periodic liquidity events (e.g., every 5 or 7 years).
Governance fatigue
- Most token holders don’t want to vote on every paint color.
- Solution: delegate almost all day‑to‑day decisions to a professional manager, reserve votes for major strategic choices, and allow vote delegation.

Who Really Runs the Property?

The realistic answer: a professional property operator, contracted by the SPV and accountable to token holders via clear KPIs and the threat of replacement. Tokenization doesn’t change that someone must:

Select and vet tenants.
Coordinate maintenance and repairs.
Manage budgets and reserves.
Report performance and financials to owners.

In the next post, we’ll look at the services and ecosystem that need to grow around tokenized real estate to ensure properties are not just well‑financed but also well‑run and increasingly high quality.