Mortgage Lending in the Metaverse: Structuring and Documentation, Default and Enforcement Issues

This program is cancelled

A live 90-minute premium CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Tuesday, December 13, 2022 (in 4 days)

1:00pm-2:30pm EST, 10:00am-11:30am PST


This CLE webinar will examine the conceptual framework around lending on virtual real estate in the metaverse and the issues lenders and investors need to consider, including the nature of the collateral, how to perfect a security interest, and the financing and enforcement risks associated with metaverse lending.

Description

With the increasing capital invested in real estate in the metaverse, "mortgages" have now appeared as a financing option. In a metaverse mortgage, the parties use NFTs as digital collateral, with one of a variety of lending and escrow solutions utilized. Metaverse lenders must grapple with enforcement and foreclosure issues unique to virtual real estate and virtual mortgages.

Virtual real property can only exist on a metaverse platform. A platform's operator can restrict an owner's access to or delete the platform, leaving owners and lenders with no property rights. Decentralized autonomous organizations further complicate this issue. The lender must understand the governance protocols in place for the platform in which it is lending and potential borrower governance protocols.

While called a "mortgage," the lending relationship parallels Article 9 of the UCC in that a creditor can promptly take possession of collateral after a debtor defaults. But questions remain: How can a virtual lender enforce and monetize its security interest in virtual collateral in the event of bankruptcy? How are virtual assets valued? What court would have jurisdiction over disputes regarding virtual real estate, and what law would govern foreclosure? How will these issues interplay with the "code is law" mentality of the crypto community?

Listen as our authoritative panel discusses the legal implications of metaverse mortgage lending.

READ MORE

Outline

  1. Metaverse real estate: the current investment market
  2. Financing metaverse real estate
    1. NFTs as collateral: valuation and other issues
    2. What constitutes possession of NFT by the lender
    3. Borrower development rights
  3. Risks associated with metaverse platforms: DAOs
  4. Default and enforcement risks

Benefits

The panel will review these and other questions:

  • How is metaverse real estate identified and transferred?
  • What rights does the borrower have in the virtual real estate once it is transferred to the lender as collateral?
  • How should the metaverse lending transaction be documented?
  • What issues might arise in enforcement after an event of default?

Faculty

Falcon, Kenneth
Kenneth J. Falcon

Managing Partner; Chair Real Estate Practice Group
Falcon Rappaport & Berkman

Mr. Falcon’s practice has largely revolved around his real estate clients, for whom he has overseen hundreds of...  |  Read More

Peltz, Moish
Moish E. Peltz

Partner; Chair Intellectual Property Practice Group
Falcon Rappaport & Berkman

Mr. Peltz focuses his practice on IP and business law with a focus on helping companies grow their businesses and...  |  Read More