Real estate professionals will soon be in for a surprise as tech experts begin to apply blockchain technology to record land documents. Blockchain, the technology underpinning Bitcoin and other digital currencies, is a revolutionary system for transmitting and storing data. The technology is hailed by its proponents as being a game-changer in data security—it has covered the pages of the financial press, as investors and CEOs scramble to find unique applications for the nascent technology.
Sweden has already begun to test the application of blockchain in its real estate industry. A recent Wall Street Journal article details Sweden’s attempt at recording land transfers using the blockchain, which the country’s experts claim will make land transfers more efficient and protected. Forged real estate documents, one of the many title defects covered by title insurance, still pose a threat to real estate purchasers across the globe. Proponents of blockchain land recording technology argue that their methods will put an end to fraud.
Despite the enthusiasm emanating from Sweden, title experts in the U.S. remain skeptical about applying blockchain to land recording. According to Zachary Kammerdeiner and Ashley Sadler of Connecticut Attorneys Title Insurance Company (CATIC), “[b]lockchain technology holds infinite possibilities that could help make current processes in our industry and society more efficient; however, it will never be able to do what title insurance professionals do each day: provide peace of mind and protect property rights.”
Title professionals such as Kammerdeiner and Sadler argue that the blockchain will not be able to prevent title defects, because the information recorded using blockchain is only as good as the information inputted. Therefore, as safe and efficient as the blockchain may be, it will ultimately remain susceptible to the same problems that currently plague local recorders’ offices.
The hype around blockchain technology has finally made its way to the real estate industry. At least one major county in the U.S., Cook County in Illinois, has attempted to apply the technology to its land recording system. But regardless of blockchain’s successes in land recording, there is little doubt that any major changes will take a long time. Many of our current methods of land recordation date back centuries, and many states have yet to adapt their laws to the modern era. Additionally, because land recording takes place at the local level, there is perhaps only a small likelihood of achieving uniform acceptance of blockchain across the country. Of all the industries facing possible disruption from blockchain, a look at history may lead us to predict that real estate will trail the pack.