When most people hear the word “blockchain,” they think about cryptocurrencies like Bitcoin. But blockchain technology is about much more than alternative currency. In fact, it’s poised to make a huge impact on the real estate industry—especially when it comes to document recording.
But first, what is blockchain?
Generally speaking, a blockchain is a public ledger technology that consists of “blocks” of individual transactions, each one with a unique timestamp. These blocks are linked together – like a chain – in such a way that they cannot be revised. Like a ledger, blockchain enables a continuous number of data records that could be verified instantly, yet they are virtually tamper-proof.
One can begin to see where blockchain’s value lies in the world of document recording. Currently, recorded documents such as deeds and lien releases–housed in more than 3,000 county recorders’ offices nationwide–are created on paper and scanned and stored individually. A property deed recorded through blockchain technology will look like any other deed, only it will include a string of letters and a special code that allows anyone to locate it without being able to change it.
Suffice to say blockchain technology will save an enormous amount of time when recording documents. Many recordings are still performed manually, whereas blockchain changes can be made instantly in real time. Blockchain will also save money typically spent on creating, scanning and sending paper documents.
Transparency is another huge benefit behind blockchain technology. Blockchain technology enables audit trails that cannot be tampered with. Because every transaction is time stamped, someone could look at a single property and instantly see all the previously recorded documents associated with that property. Blockchain certificates can be verified by virtually anybody without the assistance of a third party.
Blockchain technology has other potential applications in real estate transactions. It could be used to document and transfer escrow funds, and it could speed up real estate closings tremendously while simultaneously reducing the risk of fraud. And it can help speed up the process of verifying a borrower’s assets and other financial information.
Truth be told, blockchain technology is still in its infancy, and there is very little happening with it in the real estate industry today. Previously recorded documents, many of which are on paper and stored in vaults, will have to be digitized. Regulatory oversight will need to be created for using blockchain technology as well.
But progress is being made. The Mortgage Industry Standards and Maintenance Organization, or MISMO, has launched a workgroup to develop blockchain standards for property transactions. A growing number of financial institutions are investing in blockchain technology. And the first deed was recently recorded using blockchain technology in Vermont.
In other words, blockchain technology is coming this way—and when it arrives, document recording will never be the same. Contact us to see how we can help.
About the Author
Shannon is a seasoned innovator and trusted leader in the Mortgage and Settlement Services industry. Prior to his tenure as Chief Operating Officer at reQuire, Shannon held senior executive positions at WFG National Title Company and LandAmerica Financial Group.