The city’s Department of Finance is targeting deed fraud in a proof-of-concept test that seeks to make property documents ‘transparent and immutable’
New York City is exploring whether blockchain can improve the way it records and stores land ownership records.
The city’s Department of Finance partnered with Medici Land Governance to “to develop a proof of concept for the use of blockchain technology to detect and reduce deed fraud in New York City,” the company announced
on Aug. 5.
Recording the documents on a “transparent and immutable” digital ledger “has the potential to revamp how property documents are recorded in New York City and help prevent deed fraud," said DoF Commissioner Sherif Soliman said in a statement.
Avoiding deed fraud — and simply errors — is a problem far beyond New York City. Virtually every land sale requires a title search to ensure the seller really owns the property in question.
Title searches are part of the standard closing costs on home purchases, and generally run
$150 to $500 in New York City. Most banks will not finance
home or real estate purchases without a lender’s title insurance policy, and buyers are generally advised to get their own policy
New York City currently uses its Automated City Register Information System (ACRIS) as the official repository of these records, dating back to 1966.
Under the proof of concept, Medici will provide a parallel service that will simulate the recording of 500,000 records. The goal is to “demonstrate how to improve security, specifically by reducing the chance of intentional and possibly unnoticed fraud, reducing potential attack vectors, and increasing transparency,” Medici said.
The company’s Actum public records product is a blockchain-based public records archive that provides “secure, tamper-proof, immutable public records that are searchable, transparent, and trusted,” it said.
Blockchain’s use in storing and recording land ownership records has been going on for sometime, and not just in developed countries like the U.S.
The United Nations’ Office of Information and Communications Technology and UN-Habitat have collaborated on a similar blockchain-based product, goLandRegistry
, which is designed to provide “systematic, transparent, and secure online land registry management and data verification.”
That is being tested in South Asia. And, it is not the only such project the UN has run. Land registries are a key tool in allowing people to pull themselves out of poverty. Without clear ownership of property it cannot be used to back loans or other financing that allows it to be sold or developed.
The UN Development Programme ran an Ethereum-based land registry proof-of-concept in Panchkula, India in 2018. Discussing that program, the agency said
that many citizens in the developing world “simply don’t have confidence” in land registries. “Some are unsure if they legally own a piece of land, even if they have a legitimate sale deed. Others who want to buy a piece of land are not sure if the seller legally owns it.”
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