New York City’s Department of Finance is trying out blockchain. Can the technology make recording and keeping deeds a better process? The test run, handled by Medici Land Governance (MLG), will find out whether the method will work in a massive city, the company stated in August 2021. MLG is owned by Overstock.com — an early adopter of blockchain in the retail sphere. Its blockchain recording system is proven to be tamper-resistant and easily searched.
The Pain Points of Titles and Deeds
There is no consistent title examination process across the country, but a title search usually entails researching multiple data systems — and not necessarily finding everything. Errors, lapses and fraud are big issues for city and county registries wherever property changes hands.
Title companies exist to sift through the document history and confirm who really owns the asset and is in a position to convey it. Then, the companies insure the findings. Lenders require title examinations and title insurance to make sure they are actually lending to the person with valid, unclouded ownership rights. In addition to the insurance that protects the lending bank, many homebuyers also purchase owner’s title insurance.
All of this takes substantial time. And the title search alone can cost hundreds of dollars in New York City.
A blockchain system could offer major improvements to traditional searches. If a blockchain system turns out to be successful in New York City, it could turn out to be the country’s watershed use case.
The New Project Will Be Informed by Past Success
New York City residents e-record their real estate documents with the Division of Land Records through the Automated City Register Information System (ACRIS). That system will continue to serve as the main data source for real estate records as the blockchain test takes place.
In the test, blockchain will record 500,000 documents to start, with this part of the data only accessible to the NYC Department of Finance during a verification testing phase.
The whole project will be informed by a smaller success MLG had with deed records in Teton County, Wyoming (population: 23,464). Teton County is now hailed as the first U.S county to record deeds, mortgages, and other real estate instruments on the blockchain, assuring the clarity of chains of title.
Dr. Ali El Husseini, the MLG’s CEO, described that project as supplying a tamper-proof and transparent recording system “for title holders in any property transaction in Teton County.”
MLG also has a similar pilot project underway, which it kicked off in 2020, in Carbon County, Wyoming (population: 14,800).
New York City, of course, is another story entirely — with 8.3 million residents and some 40,000 annual deed recordings.
What’s Next for New York City Deed Records?
After the New York City project constructs a ledger from a half-million entries, the Division of Land Records will continue to build it out with new recordings. The hope is that a successful new system could reduce insurance costs for homeowners, and speed up the time to closing on sales. The blockchain could keep one, comprehensive repository of information that is easily examined and continually verified. Human error, lost instruments, and fragmented sources of information would all be minimized. Preventing deed fraud could potentially be within reach.
Moreover, once a blockchain system is in place, titles will have standard data that can be easily grasped not just at local levels, but at the level of global real estate transactions. And from a broader perspective, other facets of public services, too, could benefit from implementing new blockchain concepts in New York City and beyond.
BusinessWire: Medici Land Governance and New York City Department of Finance to Explore Use of Blockchain to Address Deed Fraud (Aug. 5, 2021).
Leo Jakobson for CoinMarketCap: New York City to Explore Blockchain Land Records (Aug. 6, 2021).
Jamie Crawley of CoinDesk for Nasdaq.com: New York City to Explore Blockchain for Preventing Deed Fraud in Land Sales (Aug. 5, 2021).
Kristi Waterworth for MillionAcres.com: NYC Considering Digital Deed Ledger: Blockchain and the Title Industry (Aug. 24, 2021).
Overstock.com Investor Relations: Medici Land Governance Makes Teton County, Wyoming the First County in the USA with Blockchain-Registered Land (PDF; Jun. 17, 2019).
Sebastian Sinclair for CoinDesk.com: Overstock Subsidiary to Put Wyoming County Land Registry on the Blockchain (updated Aug. 24, 2021).
Photo credit: Marc Kargel, via Unsplash.