Blockchains, best known as the technology behind digital currencies such as Bitcoin and Ethereum, are beginning to be implemented in a variety of commercial applications. The technology is attracting not only financial institutions and stock exchanges, but fields as disparate as the music, diamond, healthcare, insurance, and shipping industries. The possible benefits of an organized, structured, secure, and efficient data management system that blockchain technology may be able to provide has also led governments and private companies to begin to explore using blockchains as a replacement for the current land title record systems used around the world.

What is Blockchain?

As discussed in a previous post by my colleagues, Jeff Moerdler and Greg Jaske, fundamentally, a blockchain is a digital database or ledger maintained by a decentralized network of computers. The ledger is made up of linked batches of transactions known as “blocks” and an identical copy of each block is stored on the computers that make up the blockchain network. Each block contains details of a transaction and is time stamped and associated with certain data that links it to the previous block in the chain. When a new transaction takes place, it is authenticated across the decentralized network before being recorded as a new block. This system creates a record that is resilient, transparent, and tamper resistant and having the data stored across multiple computers reduces the risk of losing information to disaster or sabotage.

Blockchains and Land Title Records

Throughout the United States, real property records are stored and maintained at the local government level. In California, the County Assessor in each of the fifty-eight counties maintains all real property records. While many of these counties accept electronic versions of land title records, such as grant deeds or deeds of trust, others still rely on original paper documents. This imperfect system of real property records is one reason that the title insurance industry takes in billions in revenue annually. Counties throughout the world rely on similar systems with land title records being stored as original paper documents in government buildings. Relying on paper records in one central location creates a system vulnerable to accidents and natural disasters. Such a system is also vulnerable to fraud or tampering by corrupt governmental regimes. In 2010, a large earthquake in Haiti destroyed or damaged numerous municipal buildings used to store Haiti’s land title records, creating confusion as to who held title to what. In Andhra Pradesh, India, corruption and fraud have led the government to explore blockchain technology as a possible solution to make land title records more transparent and less susceptible to fraudulent transfers.

Governmental Implementation of Blockchain Technology

In addition to Andhra Pradesh, several governments have also begun to implement blockchain technology for land title records. In April 2016, the country of Georgia initiated a project to record land title records using blockchain technology. Sweden, Dubai, and Brazil have also announced blockchain related pilot programs for land title records. In September 2017, an apartment in Ukraine was bought and sold using blockchain technology with payment made entirely in cryptocurrency. Here in the United States, Cook County, Illinois has completed a blockchain pilot program that studied how blockchain technology could be implemented into current law and practice in Illinois land records. Earlier this year the city of South Burlington, Vermont launched a pilot program using blockchain technology to record real estate conveyance documents. While in each of these instances the government has not yet fully replaced the traditional systems of recording documents with blockchain technology, they are initial steps and examples of how blockchains may be used in the future for land title records. As with blockchain technology’s disruption of traditional currencies, it may just be a matter of time for this technology to also disrupt land title records.