Blockchain land registry systems transforming real estate
Why governments need blockchain land registry systems to prevent the disagreements and injustice in land registrations?
In this article, we would be discussing on the need for blockchain land registry systems in real estate.
Land registration is a tedious and time consuming administrative process. The thoughts of which very rarely, passes through the mind of people outside the real-estate sector. Many are even unaware of the regular procedures involved in the land registration process too. But even if its the case, this department plays a very important role in the real estate industry. Are you aware that each year there is a 5% hype in real estate deals compare to the previous one.
Every land transaction that happens is carried out by means of a relevant land registry document. The clauses mentioned in the land registry documents varies depending upon government regulations, agreements between both the parties and market conditions.
Roadblocks in traditional land registrations
From the beginning, land registrations procedures are carried out through the land registry documents (written in paper). As a result, loss of this document, falsification, changes in agreement clauses and un-lawful claims create disparities and disagreements between both the parties.
Moreover, this is common scenario particularly in the case of older land documents where there are instances were either the land registry document has been destroyed or lost. In such case, a re-survey of the property is needed for the owner to claim his land back. The time duration for which is quite long and it would even create further problems even in the future.
For instance, consider a scenario where your land or property was affected by a natural calamity and being a much older property the land registration documents are either lost or destroyed. So even if the government issues compensation payouts, you won’t be able to claim it. Since as per government procedure there aren't any documents left to prove your ownership of the land.
In such a scenario even if a politically and financial prominent businessman claims the property to be his own. You would have a tough time proving your ownership.
So, basically the present land registration procedures and following settlements could be considered as a faulty system.
To know how blockchain is transforming the real estate industry:
Use of blockchain in land registry systems
Blockchain is relatively a young technology and its potential use cases have escalated at a disruptive pace since the inception of the technology back in 2008. It was only a matter of time before it embraced land registry management under its purview.
This technology is being considered by many nations for extensive usage in the land registry management sector owing to the capabilities it brings to the table. Land title projects in many countries such as UAE, Georgia, Sweden, and Ukraine are already exploring this with enthusiasm.
Benefits of blockchain land registry systems
- Reliable Databases: Eliminates property fraud since every piece of land can be uniquely coded and linked to a smart key. Thereby limiting land registry frauds to a great extent. Furthermore, concepts such as Smart Contracts make it possible to automatically transfer ownership once the purchaser transfers funds to the owner’s bank account.
- Enhanced search process: With Blockchain, data is distributed across a peer-to-peer network to allow listings to be more freely accessible. Since network participants have more control over their data, this affects both transparency and trust. Such a system would include clearer property details such as Property address, Comparable rental rates, etc.
- Seamless property management: Managing ongoing lease agreements, property operations, and cash flows is a mammoth task. Smart Contracts do away with many of the associated challenges with what can be known as a ‘smart tenancy contract’.
- Fast and cheap financing: Since Blockchain reduces inefficiencies and increases transparency in the whole ecosystem, financing becomes a breeze. Digital identities of lands assist all sorts of processes such as loan applications, documentation, due diligence, and property servicing.
Potential Impacts of Blockchain land registry systems
The implementation of blockchain technology in the land registry system can change the conventional system and add an extra layer of protection to each document relating to the land registry. The impact of the implementation of such a system in the land registry is as follows.
- Ease to Government Departments: All departments can use a single window portal to view information, issue licenses, update or revoke a license, etc.
- Ease of involved entities: Users can interact with the government through the portal for uploading documents, license and other requisites for KYC.
- A decrease in fake certificates and illicit documentation: Anybody can verify the authenticity of the documents by scanning the QR code or by entering the unique ID of the document.
- Efficient governance: Since the solution cuts down the interface time between the user and the government, the efficiency of governance in different departments can be improved.
The technology perspective
A blockchain land registry system seeks to fix all the problems surrounding the current flawed land registry management system by attributing the property title to a token and the exchange of the token can be tracked every time it changes hands through a series of transaction outputs. When the property is sold or transferred, the transaction output belonging to the previous owner is “spent” and, at the same time, a transaction output belonging to the new owner is created. In this case, if someone needs to identify an owner of a property, they can simply go through the transaction history. The important takeaway is that this mechanism can provide an easy, secure way to register and transfer property.
It is certainly not a stretch to say that the blockchain land registry system is a perfect solution to keep the public records safe and secure. Even the costs involved with mortgage rights & other third parties could be included in the system. Thus, the smart contract ensures proper sign offs between the buyer and the seller in accordance with the government body. In general, we could forget about mundane conflicting paper works by digitizing land records.
For a better understanding of this topic, you can refer this article: