Among the potential uses for blockchain technology, real estate titles — a bit of a land-legal one that many people only think of when plodding through paperwork to buy a home — may not seem high on the list.
Land titles don’t relate to digital goods or cryptocurrencies, but those records do have features that can lend themselves to digital ledger storage: they’re generated through the interactions of people and businesses who often have no previous relationship, they require long-term storage and trust, and they are often limited to paper files.
And because of the non-trivial amounts at stake in most land transactions, participants must pay third parties to verify the data.
“We still have this thing called property insurance where someone has to actually go to the local council, find a paper title on a file, and then, you know, pay a lawyer,” said Ather Williams III, a senior EVP. for digital innovation at Wells Fargo, in a panel on blockchain possibilities at the Collision tech conference in Toronto in June. “I think these are the kinds of places where blockchain can be really, really effective in driving efficiency.”
A nationwide jurisdiction in the southwest corner of Virginia is now trying to do something like this. Wise Counties Smart Land Records Project aims to: store land titles on a private blockchain-like systemwhere every change is immutably recorded.
“You can’t delete these smart records,” said David FitzGerald, founder and CEO of bloqable, the Arlington-based company collaborating with Wise County on this project. “They are there for posterity.”
The project stores these real estate titles in Amazon Web Services (AWS)’ Quantum Ledger Databasea hosting arrangement that FitzGerald said lacks the decentralization of a true blockchain, but satisfied its customers’ desire to maintain more control over its records than a publicly distributed blockchain would allow.
“This is a blockchain-style ledger that we think is as secure as we can get — and super economical because it’s on AWS,” he said of the plan. So far, more than 1,200 titles have been written in this ledger system.
Security is important because title fraud occurs. It is possible to create and insure a fake title a fraudster to sell property he does not own with a 100% profit margin†
The immutability of blockchain records, in which every change is recorded collectively by the nodes in that blockchain, makes this type of theft easier to spot, FitzGerald said. What if an error goes undetected before a title is written to this immutable ledger? The system allows Wise County to write a new record on top of the old one, which will be listed first, but will not delete or delete the old record.
The other part of this project involves automating the process of generating the “abstracts” summarizing the ownership of a property and (in Virginia) the transactions of the past 40 years. The project aims to develop machine learning systems to prepare at least some of these summaries, a task that today, FitzGerald said, requires about three hours of work by trained professionals.
Title practitioners could be wrong, but the elected official overseeing this project predicted that real estate buyers would win if it made property insurance cheaper or unnecessary.
“The ox that may be impaled are insurance companies,” said Jack Kennedy, clerk of the … Wise County and City of Norton Circuit Court† He added that the relative smallness of Wise County – the… census 2020 registered 36,130 residents and 16,644 residences – made it a viable site for this research and development effort. In a May interview, he estimated the county’s costs at about $200,000, some of which was paid for by a state-run technology trust fund for district officials.
A real estate agent in central Virginia raised no objection to the prospect of making title uncertainty obsolete.
“In theory, it makes a lot of sense to have a single way that we can tell without a doubt how a title was acquired, transferred and sold,” he said. Jim Duncan, partner at Nest Realty in Charlottesville. “I like the concept of the blockchain being that one source of title.”
Wendy Henry, lead for blockchain and digital assets at Deloitte Consulting, said in an email that: other efforts to store land titles on blockchain systems hadn’t come true. Cook County, Illinois, for example, did not continue a 2016 pilot project, which she said reflected the difficulty of data migration.
Henry suggested that the best use cases for blockchain-stored land titles would be in countries outside the US with less reliable administration and more government corruption. “Having an unchanging track record that is trusted is a huge advantage,” she wrote.
Douglas Heintzman, Chief Catalyst at Blockchain Research Institutea Toronto-based think tank agreed.
“The greatest impact on property registers is currently in regions where there has been a lot of corruption in government offices, and as a result there is little confidence in the veracity of titles,” he said in an email.
But as noted in a Report Organization for Economic Co-operation and Development 2019 as Heintzman pointed out in his email, blockchain efforts in the countries of Georgia, Ghana and Hondurus also had steeper hills to climb because of that lack of trust in government. The need for digital ledger verification may not be as high in southwestern Virginia, but the government is also asking less of its voters to move to what it hopes is a more resilient and cost-effective system.
Kennedy emphasized that efficient angle of government in an interview without Web3 evangelism.
“It’s a practical problem,” Kennedy said. “This has a practical everyday application that can only get better.”