At some point in the future will blockchain eradicate the need for title insurance in New York State, as this revolutionary technology will theoretically maintain a 100% accurate chain of title for any property?
While I suppose that anything is possible, an explanation first of what a blockchain is would likely be helpful…
Blockchain: “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority…“ (Source)
From the standpoint of title insurance, anyone who has ever visited the real estate records archive in the various jurisdictions across New York State will likely tell you that an often non-computerized decentralized record-keeping system and a paper-based trail would make it extremely difficult to implement an historical blockchain.
But that said, would it possible to take the title analysis compiled on a property by property basis going forward to create a blockchain of ownership?
The caveat is that this would of course assume that any title analysis done and then put onto a blockchain was 100% correct and that no defects to the chain of title were missed (i.e. the title report is only as good as the title company creating the report).
Additionally any analysis would likely only be done as a real property was changing hands, meaning that a truly valuable blockchain would be decades in the making.
That is of course unless jurisdictions around New York State, many already cash-strapped, took a real property blockchain upon themselves to create. Unlikely!
Theoretically a property title blockchain would reduce actuarial risk, in-turn reducing the premiums needed to be charged by title insurance underwriters as claims would be rare. Records kept on the blockchain would also reduce the headcount needed by title companies as the work required would be lessened due to information being reliable and readily available.
Conclusion: While reliable real property records on blockchain would prove useful for any number of reasons, a viable commercial use of the technology for the real estate industry in New York appears to be years off.
If you have thoughts or opinions on the subject leave them in the comments section below or let me know by sending me an email.
Mike Haltman, President
Hallmark Abstract Service
(516) 741-4723, (646) 741-6101, firstname.lastname@example.org
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