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Can Blockchain Technology Revolutionize the Land Registry System?

By Casey C. Sullivan, Esq. | Last updated on

If you wanted to transfer real property in England a thousand years ago, you would have to publicly present the buyer with a clod of dirt from the land, symbolizing the transfer of title, and record the exchange in the local shire-book or church-book. One thousand years later and the clod is gone, but the rest of the process is very much the same: transfers of real property are still recorded with the local county's recorder of deeds, the modern equivalent of the shire-book. It's an effective, but not a terribly efficient, system.

Blockchain technology, some propose, can bring that antiquated system into the contemporary age. Blockchain technology could create a widely distributed, indecently verifiable, and largely incorruptible record of property ownership that bypasses the centralized system of county offices and recorders of deeds, or so the thinking goes. It's as though everyone could have their own personal, inscrutable Domesday Book.

Taking Blockchain Technology Beyond Bitcoin

Blockchains are most closely associated with "cryptocurrencies" like Bitcoin, but they have exciting legal applications that are just beginning to be explored. We've talked about smart, self-executing, and self-verifying contracts based on blockchains before, but the technology isn't limited to cryptocurrency and contract applications.

There's plenty of complex explanations of blockchains, but we'll go with this simple one, from the Bitcoin Wiki: "A block chain is a transaction database shared by all nodes participating in a system ..." Each block contains a record of the previous block and that registry is distributed to anyone participating in the system. Since the registry is widely distributed and controlled by no single person, altering transaction histories is virtually impossible. And none of that recording or verification requires a centralized system or node.

Blockchain Takes Over Title Recording?

Enter land recording. If title transfers and exchanges are recorded and distributed via blockchain technology, land fraud becomes more difficult and authenticating title more easy and efficient. (Or so the theory goes.)

This can be particularly important in areas where ownership of real property can be questionable and title fraud is common.

One such country, Honduras, considered testing out blockchain's promises. Last May, Honduras entered into a partnership to create a blockchain-based land title registry with Factom, a blockchain company based out of Austin, Texas.

The move was an attempt to deal with widespread title fraud in the country, according to Factom's CEO and co-founder, Peter Kirby. "The country's database was basically hacked," Kirby told Reuters last May. "So bureaucrats could get in there and they could get themselves beachfront properties."

In a country where the majority of land is still not registered, the new registry is intended to help encouraging more landowners to record their title with the state, by removing the risk that recording will result in fraud.

It hasn't exactly been smooth sailing, so far. In December, Factom announced that the project had stalled because of political obstacles. (Others have laid the blame on Factom itself.)

It's too soon to tell if a blockchain-based registry will ever become a reality in Honduras and, if it does, whether it will work. But should the project succeed, its  blockchain-based land registries might become just one feature in our increasingly likely blockchain future.

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