Real estate transactions recorded in the Columbia County Circuit Clerk’s Office for the week ending May 17, 2019: Patricia Carter-Hayes to Patricia
How might blockchain technology be applicable to real estate transactions?
Blockchain technology is making great headway in real estate, both in terms of a payment solution, and as a way of achieving greater efficiency and transparency to the exchange itself. Many are banking on blockchain technology to one day transform the business of real estate by moving all aspects of transactions to a digital platform, making them faster, less costly, and more resilient against fraud.
Blockchains are best known for keeping track of who owns purely digital currencies like bitcoin, but government agencies and for-profit companies are increasingly exploring how the digital ledgers can be used to track ownership of something very tangible: Real Estate.
Many of us may not know what blockchain means fully, but at the very least, we need to understand the basics of what it is and how it might be used in the real estate industry.
What is Blockchain?
Blockchain is essentially software that was first developed as a way to securely store digital currency, such as Bitcoin. But its storage capabilities have evolved. With blockchain, no one entity is in control of information; instead, it’s accessible by multiple entities, offering greater ways to verify information and leave a digital trail to help combat fraud. Blockchain will create a better system for recording and providing access to information in real time. Blockchain enables greater universal access so everyone can work from the same information in a much faster, easier, secure, and fluid way.
It’ll help real estate professionals avoid having to enter data multiple times in multiple places. That also mitigates the potential for human error or data discrepancy. Blockchain is a protocol. All you need to know is that it’s safe, and it won’t put you out of a job. It’ll just be operating in the background. I think it’s unbelievable the power this technology has to change real estate transactions.
The Blockchain will transform real estate in four ways:
2. Fraud prevention
4. Smart contracts
Purchasing property using cryptocurrency and without intermediaries such as banks is already happening. In the near future, the blockchain would be used not only in terms of payment in cryptocurrency, but also for transferring conventional money and national digital currencies issued by central banks.
Land records in most Indian states date back to the colonial era, and most land holdings have uncertain ownership. Fraud is rampant and disputes over titles often end up in court. Putting India’s land records on blockchain – the technology behind the bitcoin currency – would greatly increase efficiency and reduce fraud.
The blockchain technology works by creating permanent, public “ledgers” of all transactions, potentially replacing a mass of overlapping records with one simple database. Once a real estate transactions is on blockchain, all the parties involved — banks, government, brokers, buyers and sellers can track the deal.
Blockchain will also enable faster home loan disbursals. Banks and insurance companies will have to spend much less time on the verification of records, leading to quicker decisions, lower transaction cost (processing fee) and higher availability of credit.
Countries across the world – from Sweden to Dubai, Georgia to Britain – are beginning to embrace or test the technology in their national property records.
Dubai too marched forward with a similar solution for its land registry, announcing the project during a Middle Eastern technology event. While some governments and organisations have become suspicious of cryptocurrencies, exchanges, and anything to do with blockchain, others seem to be embracing it. Dubai sets the standard for this, as it is rushing to digitise all of its administrative data so that it can run entirely on the technology by 2020.
Since demonetization, a lot of people and industries had suffered; however, there were certain businesses, which benefitted to a great extent. Out of all these, certain businesses that benefitted were e-wallets such as ‘Paytm’. Along with the gain in their popularity, the popularity of virtual currency such as Bitcoin, Ethereum and the like, is also gaining momentum.
Every property would have its unique electronic identity and every person who is desirous to purchase land/ or lend money against such security can very well see every little aspect of such property which would include the chain of ownership, a documented list of repairs and refurbishments etc. and the risks involved could be reduced and the claim of the seller/mortgager could be easily verified without the need of a third party thus making it a streamlined, safe and easy process.
Of course, there will be several people opposing it and most people will say that it is impossible to have such a thing in India due to the sheer numbers and corruption that India has.
However, there are several factors which support a possibility such as:
- The manner in which the current Government is implementing new systems and legislations such as demonetization, GST, RERA, etc.
- The amount of efforts being pumped into making India digital (such as AADHAR Cards, biometrics etc.).
- The availability of all property and company related documents online (like the online portal of the sub registrar of assurances and the ministry of corporate affairs.
- The compulsory registration and disclosure of all real estate projects under the RERA Act.
From the sales process, checking the last transacted price point, interacting with owners, to checking the legal title of the property, all these actions are done by different parties or intermediaries. And it takes several months and thousands or millions just to facilitate a sales and purchase transaction! Wouldn’t it be nice to save all that time and money with just a click of a button?
Therefore, there is definitely a possibility of this technology being introduced and implemented in India, hopefully leading to a corruption free and stress free India.
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