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 panache. Use cases and implementation of blockchain land registry system is increasing as more federal agencies are exploring the potential benefits they get with the transformation. Let’s take a close look at some of the major benefits:
Back in 2010 when Haiti was shaken by a devastating earthquake, the housing industry was in utter turmoil. When the dust settled, it became an impossible task to match the right owner with the respective property. Rampant corruption amongst government officials and reliance on manual databases further compounded the issue.
This is where Blockchain comes in. It can practically do away with property fraud since every piece of land can be uniquely coded and linked to a smart key. There by limiting land registry frauds to great extend. Furthermore, concepts such as Smart Contracts make it possible to automatically transfer ownership once the purchaser transfers funds to the owner’s bank account.
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, Capital values, Ownership history, Tenant details, Age of the property, Title clarity etc
A working example of such a concept is Propy (PRO) that has developed a global property store with a decentralized title registry system. In an industry that has traditionally been marked by complexities and time-consuming processes, such Blockchain processes are making it easy to purchase properties in any corner of the world at the blink of an eye!
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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’.
Here’s how it works:
→ Initiation: Both parties sign a smart agreement which contains every detail including rental value, payment frequency as well as tenant and owner info.
→ Maintenance: The Smart Contract periodically initiates lease payments from the account of the tenant to the landlord according to the terms of the contract.
→ Termination: Once the contract is over, the security deposit is paid back to the tenant after relevant adjustments for damage repair.
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.
The immediate result? Reduced loan documentation time and increased data integrity. Even the involved smart contracts are accessible to all the involved legal parties, such as the requisite government departments. Government officials can follow complete audit trails of transactions, such as ownership history, property cash flows, and mortgage payments.
So what are the outcomes of merging the land registry management system with the Blockchain technology that network participants around the world can realize?
Here’s a quick look:
All this and more pegs Blockchain as the most disruptive technology in the space that promises to improve both profitability and efficiency. Significant value for the ecosystem could be created almost overnight through the usage of a blockchain land registry system in public records.
The traditional land registry management basically includes preparing hard copies of registration documents and getting it attested by a government official or an authorized notary. This system faces adversity in its functionality in occurrences of natural calamity or a dispute between different parties over the ownership of land, where the rightful owner could not be identified. The impact of the situation turns worse when it deals with construction projects where the government and contractors have to wait for the ownership issues to resolve. Due to the inefficiency in the record keeping, verification and excess growth of bogus documentation, the land registry system is rife with corruption and inefficiencies.
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, request a user to upload proof documents and do KYC procedures.
→ 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 documents will be converted into smart contracts and saved inside a block in the blockchain network. The government will have a public access key to every land in the country, this way there will be no bogus documentation or fraudulent activities in the land registry system. From the perspective a buyer, the buyer can be assured of the provenance of the land and the location of the plot, thereby reducing the potential for any disputes and the costs and time involved for any given transaction.
A blockchain based documentation in the land registry system will help the authorities exclude unwanted expenses and eliminate the involvement of the third parties for registration. This system can entitle the transferor and the transferee their rights and duties as the smart contract will not execute on a flaw of any pre-requisites.
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 – which can include public registry details such as size, GPS coordinates, year registered, etc – 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 – starting from the initial transaction and finishing at the open, or “unspent,” transaction output (i.e. the owner of the open transaction output is the current owner of the property). Moreover, the current owner is able to verify ownership by “signing a message” with his or her private key associated with that address on the blockchain. The important takeaway is that this mechanism can provide an easy, secure way to register and transfer property.
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As a matter of fact, it is 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 off’s 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.