Blockchain is an interesting concept and the technology may eventually provide some serious benefits in the real estate sector. However, there have been inaccurate and sweeping generalizations about the process title professionals take to search the public record and issue a title insurance policy to protect property rights. Below are several examples of why title insurance will remain extremely beneficial to consumers and lenders even as more information becomes digitized and potentially migrate to blockchain.
- Our public recording system is an example of a public blockchain in real life; Albeit a non-digital and non-self-executing process.
- Documents that have been recorded in the public record- either electronically or by paper- are not erased. In fact, its the opposite. Over time, the chain of title gets longer and requires additional analysis to determine if any issues exist that could limit use of the property.
- Land titles are complicated. There’s much more to the process than making sure there’s no fraud involved. There are covenants, easements, mortgages, leases, legal descriptions, etc… that impact the title of a property.
- Forged documents are one of the most common title problems, but invalid deeds and incorrect property descriptions, are just some of the title issues that must be examined. Other title risks include mistakes, deed indexing errors, unpaid mechanics’ liens, judgment liens, income tax or property tax liens, undisclosed easements, claims by missing heirs, and claims by ex-spouses.
- There is no way that even the best title search or examination will detect a good forgery. The items identified above are so-called “non-record defects.” These types of defects you cannot search for- in a courthouse or via Google using blockchain- but are covered by an owner’s title insurance policy.
- Blockchain’s greatest potential is in helping to provide trust where government or industry has not been able to do so to date. Thankfully, in U.S. real estate, we have solved that problem through our public records and title insurance.
- The best summation comes from the state of Vermont, “At present, the costs and challenges associated with the use of the blockchain technology for Vermont’s public recordkeeping outweigh the idenifiable benefits.”
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