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Blockchain technology has the potential to revolutionize the real estate industry. This technology has a much larger role in building a transparent and secure ecosystem in CRE. From reducing instances of fraud to increasing security, blockchain solutions offer numerous advantages in commercial real estate (CRE). Now, industry players are also realizing various potentials of blockchain in CRE operations, including leasing, purchasing, selling, and more. One aspect of CRE that lacks authenticity and transparency is land title management. This blog gives an analysis of how blockchain improves and creates transparency across this field, for instance, in land title management.
Blockchain for Land Title Management
Land title management is among the most crucial aspects of commercial real estate. It covers title searches, title insurance, and more. Since a title serves as authentication for property ownership, it helps you know the legitimacy of an individual lending or selling the land. Proper title search under land title management requires selecting properties without any outstanding mortgages, liens, easements, unpaid taxes, and other items. These defects, if left unchecked, may cause major financial loss or even ownership loss to an owner. Sometimes it is difficult to detect flaws with the property title. So, owners opt for title insurance to get protection against any potential title defect. Then, the insurance company will compensate for any losses arising from the defect.
As already mentioned, land title management has issues that need to be addressed. Let us dig deeper to understand the industry challenges.
Industry Challenges
Despite the many benefits of land title management, it is one of the main areas where a majority of fraud and mistakes occur.
Owners may face problems when there are inaccuracies in property deeds and misspelling errors in legal documents. These title defects can hamper any future sale of the property. Property owners need to fix these clerical or other errors. Moreover, there is a cumbersome clearance process for fixing title defects due to bureaucratic and government institutions. Consequently, it can lead to disputes while selling property or in court. These problems arise due to manual documentation.
Another challenge in land title management is the high title insurance fees. It is a result of a monopoly across the CRE. A title insurance issuer establishes its rates, restricts consumer choice, and distributes bribes via a network of connected businesses. Other reasons for the high price include lien recording and chain of title issues.
Moreover, illegal deeds and forgery are additional challenges to land title management.
Blockchain Solution
Blockchain can bring a change in the land title management system of CRE. It can make the title records and checks simpler, faster, and more efficient. Additionally, it can reduce any risks of fraud by eliminating the human factor.
You can incorporate blockchain technology into land title management by creating a blockchain-based digital identity of properties. Then, the blockchain can save the titles of every property on the blocks, making it easier to monitor ownership rights. Also, this decentralized distributed ledger leaves no room for frauds concerned with titles, transfers, easements, liens, etc. It is due to its encrypted and tamper-proof nature. Consequently, blockchain technology led to transparency and high security that can help buyers and banks in the title assessment process. Additionally, it can address issues like lack of trust, corruption, insecure data, susceptibility to cyberattacks, and inefficient services.
Blockchain stores the most critical data which is inaccessible to scammers. So, even if they get signatures and other data, they will not be able to complete any transaction.
Also, Read | Most Significant Use Cases of Blockchain in Real Estate
A Real-World Example
Bitland is a real-life example of using blockchain in CRE. It is a nonprofit organization that aids individuals and organizations to secure their property rights by using blockchain technology. Moreover, it surveys the land and documents its deeds in the blockchain. The firm started with a pilot project in Kumasi, Ghana.
There are three phases of Bitland's operation. These phases are three key phases are land survey, title preparation and land registry, and land tokenization.
Process
Developers comply with the following process when incorporating blockchain into the land title management process.
Land Survey
This step requires GPS equipment and survey markers for land survey.
Title Development
Title development includes a VGlock number, GPS coordinates, and other information.
Blockchain Title
Blockchain records the time and date of all details of a property title, alongside maps and documents. This process makes a transparent, secure, and documented proof of ownership.
Title Tokenization
Lastly, developers convert property titles into tokens. This process of tokenization helps you easily track these tokens and use them as collateral.
Also, Read | How Blockchain Can Influence Real Estate Investing
Conclusion
In a nutshell, blockchain can increase security and lower the costs of title management by eliminating many issues. Moreover, this technology's inherent system of trust is making it popular within many real estate businesses. If you also want to enter this market, then Oodles Blockchain can assist you. Get in touch with our team to know more.
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