I was sitting in amazement in a title office a few days ago as the title agent explained to me they almost sold a property and paid a fraudster without the real owner ever realizing it. The fraudster had created a fake ID and had listed the abandoned property through a real estate agent. If it was not for a neighbor who called the real owner when they saw the for sale sign, the transaction would have likely gone through. How is fraud like this even possible in the 21st century?
Property records are a far more broken system than most people realize. And from first-hand experience in Pakistan, this is definitely not a problem specific to the US. We depend on an incredibly complex system of public and private records - not just on the property but on everyone who has ever had an interest in the property - which could include everyone from a distant cousin to the plumber.
Solution:
A national digital registry of all real properties with historical information on their owners, transactions, and liens.
- Use private keys to authorize the transfer of ownership, which can use a multi-signature approach that includes multiple owners and the local county office.
- Ability to post liens on a property record and have a distributed group of mediators who settle disputed liens.
- Clear records of asset purchases and sales that are auditable by tax authorities and maybe even a smart contract that automatically deducts capital gains taxes as transactions happen.
- Automated escrow of payment and title using smart contracts so transactions can be completed without any intermediaries involved.
- An immutable history of property ownership and liens so title insurance is either not necessary or becomes much cheaper as the records become more transparent and reliable.
- An automated probate system that transfers ownership to heirs once a smart contract can confirm the passing of the owner.
There is an entire industry built off the broken and dated property records system - the title insurance industry generated $26 billion in premiums in just 2021. Now that’s an inefficiency you could drive a bus through. We must innovate these rent-seeking middlemen away.