Will Blockchain Technology Really Ever Supplant The Humble Title Search?

I’m a fan of Neil deGrasse Tyson. I regularly listen to his “StarTalk” podcast. In this week’s episode, helped along with some comedic relief from Marcia Belsky, Neil talks to Dr. Sandra Johnson about the science behind cryptocurrency and blockchain technology.

It’s a good episode, and I certainly learned a thing or two. My ears perked up a little, however, when the conversation turned to some of the possible legal applications. When Johnson got to listing potential future uses of blockchain technology, one of the things she mentioned was that it could replace title searches.

Could this staple service of law firms and title companies everywhere really be usurped by a series of automated entries on a digital ledger? I’m a bit skeptical. To explain why, I’ll start with what is probably a clumsily articulated, but mercifully brief, explanation of what a blockchain is.

Blockchain technology is not the same thing as cryptocurrency. Rather, a blockchain is what allows for cryptocurrency systems to work by maintaining a secure, decentralized record of transactions. Unlike traditional databases, a blockchain gathers sets of information together in groups known as “blocks.” When a block is filled to capacity with data, it is closed and linked to the previously filled block — hence, as more and more blocks are strung together, you form a “blockchain.” The blockchain is shared across a computer network, and each block in the chain receives an exact timestamp as it is attached to the chain. Because the blockchain is decentralized, no single person or group can artificially modify the data contained therein. The nature of a blockchain makes the timeline of stored data essentially irreversible.

On the face of that, if I’m more or less understanding what I just wrote, it seems that blockchain technology might indeed be of at least some use in the context of title to real property. After all, one of the functions of a title search is to make sure the person selling the real estate actually owns it. If that information was contained in a tamper-proof blockchain, well, one less thing to worry about.

Still, there is a lot more to a title search than just determining who truly owns the parcel. Take the South Burlington, Vermont, pilot project as an example. This city of about 20,000 has been experimenting for some time with integrating blockchain technology into its system of recording property deeds. South Burlington received its first ever blockchain-recorded property deed in early 2018. There was still a traditional deed, though. It just also had a QR code and a big jumble of letters and numbers at the end, either of which could be used to find the deed’s location on the Ethereum blockchain.

As of early 2020, a blockchain land registry system had been implemented on a trial basis for South Burlington. The blockchain registry system ran parallel to the traditional recorder’s office system for six weeks. At this point in South Burlington, even though the blockchain trials haven’t seemed to cause any particular harm, they haven’t led to any huge practical benefits yet either. There’s still a lot of talk about how blockchain technology could “possibly” enhance the existing process, if it was used “consistently.” But every lawyer knows that consistency, despite being a perennial and loudly espoused aspiration of the legal system, is nonetheless fleeting in the legal system. That is particularly so whenever anything new comes along.

While it is easy to see how blockchain technology could more securely protect records of who actually owns a piece of real estate as compared to current systems, get a little deeper than that when it comes to title issues, and a lot of headscratchers present themselves. Sometimes there are errors in a deed which need to be corrected later — seems like that could be difficult to accomplish if the deed is encoded in an immutable data block. There may be judgments recorded against a property, loans or liens encumbering a property, a problematic survey, or even a three-dimensional feature in real life located on, under, or over the real estate which could have title implications. Is there some way I’m missing that would make it easier to get all of that onto a blockchain in the first place, and to then make sure it’s all easily findable on the blockchain instead of kind of being here and there at various points in the chain based on when the data was recorded?

In 1903, the Wright brothers took to the skies (briefly, and only for a few seconds). Less than eight years later, the newly invented airplane was first used in combat. A technology with true utility doesn’t need a lot of help to catch on. Yet, here we are, 13 years beyond the creation of bitcoin, the first cryptocurrency based on blockchain technology, and, at least outside the realm of highly speculative investment options, blockchain still pretty much remains a technology in search of a use.

We would already be using blockchain technology instead of traditional title searches if it was really a whole lot better. Perhaps someday, improved blockchain technology will cure all that ails us when it comes to title to real property. But that day is not today, nor is it anytime in the near future.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.