What is an Eligibility Check?

An eligibility check is the on-chain verification performed at the smart contract layer that confirms a wallet meets all required conditions including:

verified identity

accreditation status

jurisdictional eligibility

holding period compliance

before a transfer of ownership interests is permitted.

What the Eligibility Check Verifies

The eligibility check evaluates multiple conditions simultaneously before permitting a transaction.

For the seller, the check confirms that the holding period has elapsed and that the seller's wallet is still in good standing (no sanctions flags, no revoked compliance status). For the buyer, the check confirms that the receiving wallet holds a valid soulbound ERC-721 compliance token encoding:

Verified identity

Accreditation

Jurisdictional eligibility

If any condition fails, the transaction is blocked at the smart contract level. There is no override mechanism. The eligibility check is binary: either all conditions are met and the transfer proceeds, or at least one condition fails and the transfer is rejected.

How the Eligibility Check Works On-Chain

The eligibility check is executed by the on-chain factory contract layer built on top of the ERC-3643 standard. When a transfer is initiated, the smart contract queries the compliance status of both wallets involved. The soulbound ERC-721 token bound to each wallet contains the encoded compliance data that the contract reads.

The check happens in real time at the moment of the transaction. There is no queue, no manual review step, and no delay between check and execution. Eligibility verification has become increasingly rigorous as regulatory scrutiny of investor composition intensifies.

Real estate funds must verify:

accredited investor status

qualified investor standards

ERISA compliance

beneficial ownership reporting requirements

protecting both funds and investors by ensuring regulatory compliance throughout fund life.

Documentation requirements include investor questionnaires establishing accredited status, legal documentation verifying identity and beneficial ownership, ongoing compliance tracking as circumstances change, and board resolutions for institutional investors.

If the check passes, the transfer executes in the same transaction. This automated enforcement is what makes compliance programmable rather than procedural.

Why Automated Eligibility Checks Matter

Manual compliance review does not scale. A platform handling hundreds of transfers across multiple SPVs cannot rely on human reviewers to:

verify accreditation

Jurisdiction

holding period for each transaction without introducing delays, errors, and bottlenecks.

Automated eligibility checks remove the human bottleneck and enforce the rules consistently across every transaction.

Automated checks also eliminate the risk of unauthorized transfers. In a manual system, an operator error or policy override could allow a non-compliant transfer. In an automated system, the smart contract enforces the rules regardless of who initiates the transaction.

Eligibility Check at Node Proptech

Every transfer of ownership interests on the Node platform passes through an on-chain eligibility check. The check verifies the compliance status of both parties using the soulbound ERC-721 tokens issued by SumSub's verification process.

Best practices include standardized documentation templates, centralized verification procedures, regular compliance training for verification personnel, and periodic audits confirming existing investor eligibility.

For funds with high turnover or secondary trading, verification becomes ongoing rather than point-in-time.

The eligibility check enforces the transfer restrictions defined by S&K and encoded into the on-chain factory contract layer.