Among possible applications for blockchain technology, real-estate titles—a bit of land legalese that many people may only think about as they plod through paperwork to buy a house—might not seem high on the list.
Land titles don’t involve digital goods or cryptocurrencies, but those records do have features that can lend themselves to digital-ledger storage: They’re generated by the interactions of people and companies that often have no prior relationship, they require long-term storage and trust, and they often remain confined to paper records.
And because of the non-trivial sums at stake in most land transactions, participants have to pay third parties to vet the records.
“We still have a thing called title insurance, where someone actually has to go out, go to the local municipality, look for a paper title in 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 those are the kinds of places where blockchain can be really, really effective at driving efficiencies.”
One rural jurisdiction in Virginia’s southwest corner is now trying to do something like that. Wise County’s Smart Land Records Project aims to store land titles on a private blockchain-like system, with every change immutably logged.
“You can’t delete these smart records,” said David FitzGerald, founder and CEO of Bloqable, the Arlington-based firm working with Wise County on this project. “They’re there for posterity.”
The project stores these real-estate titles in Amazon Web Services (AWS)’ Quantum Ledger Database, a hosting arrangement that FitzGerald said lacks the decentralization of a true blockchain but met his clients’ wish to retain more control over its records than a publicly distributed blockchain would allow.
“This is a blockchain-like ledger that we think is as secure as we can get it—and super-economical because it’s on AWS,” he said of the plan. So far, more than 1,200 titles have been written into this ledger system.
Security matters because title fraud happens. Successfully creating a fake title and getting it insured allows a fraudster to sell property they don’t own at a 100% profit margin.
The immutability of blockchain records, in which every change is jointly recorded by the nodes in that blockchain, makes this sort of theft easier to spot, FitzGerald said. What if an error doesn’t get caught before a title gets written to this immutable ledger? The system allows Wise County to write a new record on top of the old one, which gets displayed first but does not expunge or erase the old record.
The other part of this project involves automating the process of generating the “abstracts” that sum up a property’s ownership and (in Virginia) its last 40 years’ worth of transactions. The project aims to develop machine-learning systems to prepare at least part of these abstracts, a task that today, FitzGerald said, requires about three hours of work by trained professionals.
Title practitioners may lose out, but the elected official overseeing this project predicted that property buyers would win out if this makes title insurance cheaper—or unnecessary.
“The ox that will potentially be gored is title-insurance companies,” said Jack Kennedy, clerk of the Wise County and City of Norton Circuit Court. He added that Wise County’s relative smallness—the 2020 census recorded 36,130 inhabitants and 16,644 housing units—made it a feasible spot for this research and development effort. In a May conversation, he estimated the county’s costs at about $200,000, some paid for by a state-run technology trust fund for county clerks.
One real estate agent based in central Virginia voiced no objection to the prospect of making title uncertainty obsolete.
“In theory, it makes a lot of sense to have one single manner by which we’re able to tell, without question, how a title has been acquired, transferred, and sold,” said Jim Duncan, a partner at Nest Realty in Charlottesville. “I like the concept of having the blockchain be that one single 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 had not panned out. 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 U.S. with less reliable record-keeping and more government corruption. “Having an immutable record that is trusted is an enormous benefit,” she wrote.
Douglas Heintzman, chief catalyst at Blockchain Research Institute, a Toronto think tank, concurred.
“The biggest impact for property-title registries currently is in geographies 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 2019 Organisation for Economic Cooperation and Development report that Heintzman pointed to 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 a digital ledger’s verification may not be so high in southwest Virginia, but the government is also asking less of its constituents in moving to what it hopes will be a more resilient and cost-effective system.
Kennedy emphasized that efficient-government angle in an interview devoid of Web3 evangelism.
“It’s a practical problem,” said Kennedy. “This has a practical everyday application that can only get better.”
