Because few countries have national property registries, resource theft and illegal land grabs remain serious problems in many nations around the world. Not only are property records fractured and often poorly kept. Litigating title fraud claims can be incredibly expensive and time-consuming for a plot’s rightful owner. This process can become even more protracted if the owner is fighting a major corporation or government entity in court. In countries without immutable land registries, corruption is all too common. Corruption aside, a significant share of deeds and titles are still recorded solely on paper. Without digitization, these paper records are vulnerable to natural disasters and other threats. Blockchain property registries could protect the rights of local landowners – especially those in nations without sufficient protections. A few federal governments have already taken steps towards national DLT land registries. In his 2019 paper “Digital Transformation: Blockchain and Land Titles” for OECD’s Global Anti-Corruption & Integrity Forum, Georg Eder points to Georgia. Eder writes that in 2018 alone, the Eurasian nation was able to register “over 1.5 million land titles on their blockchain-based system.” As of the 2020 Georgian census, the country was home to just over 3.7 million residents. In this post, we explain exactly how blockchain property registries protect against illegal land grabs, resource theft and post-disaster documentation loss. Follow below to learn all about blockchain land registries – including countries currently implementing them and barriers to widespread adoption.

Terms to Know

Before reading through our post about blockchain-based land registries, there are a few key terms each reader should know. The following definitions should provide enough background for readers outside the real estate industry to easily understand our post.

Blockchain Technology

Blockchain is a distributed ledger technology — or DLT — which was introduced by Satoshi Nakamoto in 2008 to support the cryptocurrency Bitcoin. Though Nakamoto’s original blockchain network was public, there are now private and promissory blockchain networks. In a recent post on the BHR blog, we explain that blockchain allows users to manage data securely and immutably. There is minimal risk of hacking or other data corruption.

The servers that record this information are referred to as “nodes.” It is through these nodes that blocks of data are submitted, validated and stored. The term “blockchain” refers to the way in which data is processed and stored by nodes. Each “block” of data must be verified by a node before it can be added to the “chain.” The manner by which blocks of data are verified depends on which consensus mechanism was chosen for that particular network. In 2022, the most common consensus mechanisms are Proof of Work and Proof of Stake. PoS is currently poised to overtake PoW due to its comparable energy efficiency.

While new blocks can be added after they are verified, old blocks cannot be altered or deleted. Every node that participates in adding new data to existing blockchain networks stores the complete history of that blockchain. Even if a hacker were to alter data stored by one node, the other nodes would be unaffected. Because nodes must achieve network consensus, the falsified block of data would be rejected. This characteristic of the distributed ledger technology is what makes it particularly well-suited to land registries. We argue that network consensus is what makes blockchain land registries especially important in countries where corruption and land grabs are all too common.

Title

A title represents legal ownership of an asset. It could represent land ownership, ownership of a car or even ownership of intellectual property. A land title can be held by one individual — called sole ownership — or by multiple owners — called joint tenancy or tenants in common.

When the owner or owners agree to sell their land, the title is transferred to the new owner. During land transactions and other real estate transactions, the deed is transferred at the same time the title is. In fact, the deed is the vehicle by which the title is transferred.

In the United States, most mortgage brokers require applicants to commission a title search before underwriting a loan for the property in question. If that search returns a “clear title,” the property is free from liens, unpaid property taxes and other legal issues.

Deed

As noted above, a deed is a legal document that transfers the title — which represents land ownership — from the seller to the buyer. While a title represents the owner’s right to their land, a deed provides actual proof of ownership. Some existing land registry systems use titles to record ownership, while others use deeds.

In an article for Investopedia, Daniel Liberto explains how deeds function in our present land registration system. Liberto writes that in the United States, a deed must be filed with the right local government department. If the property’s deed is not filed, the owner will struggle to “sell it, refinance it, or obtain a line of credit on it.” A deed that has not been registered is still valid, but is referred to as an “imperfect deed.” Imperfect deeds are more vulnerable to lengthy legal challenges.

In countries without an established land registry or robust identity management system, landowners might never sign or register a deed with their government. Without physical representation of their title, it can be difficult for landowners to lay claim, prevent land theft and prove ownership in court.

Land Registry System

This post focuses on the replacement of conventional land registry systems with blockchain-supported registries. From records destroyed by national disasters to illegal land grabs, proponents argue that blockchain technology could help solve many land tenure security challenges. But what is a land registry system?

According to Tim Hanstad in an article for AUILR, a land registry system is “any public system of records concerning legal rights to land.” Hanstad argues that “individual and secure land tenure rights are…crucial to poverty alleviation and economic growth.” Unfortunately, few countries have a national land registry. Even in the United States, each land registry department functions county to county — not at a federal level. Many nations lack any type of formal land registry — whether local or federal.

Because of this, a number of countries across the globe are currently considering blockchain-based land registries. Replacing existing land registry models with blockchain-based registries would ensure an unalterable chain of title for each registered property. If thoughtfully implemented and explained effectively to the populous, a blockchain-based land registry system could help streamline real estate transactions while protecting landowner rights.

Land Governance or Land Administration

The terms “land governance” and “land administration” refer to the procedures and policies by which land is managed. A land governance framework typically outlines how records are kept and how lands can be used — i.e. for industry or conservation. This legal framework also details the rights of local landowners and explains how and when the government might obtain privately-held land.

According to this resource from Un-Habitat, “the establishment of land governance…plays a key role in the realization of human rights.” It also plays a key role “in the achievement of key development objectives.” The right approach to land governance can contribute to “poverty reduction, food security, gender equality, economic development, sustainable infrastructure [and] balanced territorial development.” It can also limit confusion regarding property ownership after conflict and/or natural disasters.

Title Fraud

Title fraud occurs when an entity transfers your land title without the true owner’s permission — usually by forging a signature on the deed. The falsified document shows that you sold or gave the property to the fraudster. Once the new deed is filed, the fraudster’s ownership is entered into the public record. They then appear as the current owner to lenders and potential buyers.

By transferring ownership without alerting the true owner, a fraudster can wrest control of the property and leverage it as they wish. They might use your property as collateral when applying for loans or even sell the property to another buyer without your consent.

Erik J Martin writes in a post for MoneyRates.com that seniors and victims of identity theft are “particularly vulnerable” to title fraud. Property owners who fail to invest in data protection or “practice good cybersecurity measures are also at risk.” Those who live off-site — i.e. foreign investors and those with vacation homes — are especially likely to become title fraud victims. This is because they are not available to monitor the property in-person.

Land Grab

Title fraud is technically a type of land grab. However, the term “land grab” typically refers to a more concerted effort. Land grabs usually involve corrupt government officials and powerful corporations who work together to defraud landowners. Today, foreign companies are responsible for a significant share of the land grabs that take place in developing nations. In many cases, these land grabs are made possible by government officials.

This is especially common in countries without established land governance or land administration processes that protect everyday landowners. An Oxfam American resource entitled “The Truth About Land Grabs” explains. The resource defines land grabs as transactions “that happen without the free, prior and informed consent of communities.”

In many developing nations, corporations can cheaply obtain large swaths of land for agricultural and industrial use. Sadly, land grabs in those areas “often result in farmers being forced from their homes and families left hungry.” According to Oxfam, “more than 81 million acres of land worldwide…has been sold off to foreign investors” in the last decade alone.

Does Land Grabbing Still Happen Today?

In the US, we often think of land grabs and the corrupt behavior outlined above as something that only happens in developing nations. Specifically, we believe it only occurs in nations without formal land registry systems. It is true that in the twenty-first century, land grabbing is more common in such countries. This is because records are either nonexistent or easily falsified. In short, existing systems are fairly simple to subvert. In their paper “A Blockchain-based Land Title Management System for Bangladesh,” Kazi Masudul Alam and fellow researchers explain.

Alam et al. describe how land ownership is hotly contested across Bangladesh and how this affects landowners without deeds. They write that “various loopholes in the current procedures are exploited by the land sharks in collusion with the authorities.” Together, land sharks and government officials are able to manipulate the country’s traditional land registry process. They “falsify documents” so they can later claim ownership through the legal system or by engaging in “forceful land grabbing.”

Bad actors are able to falsify documents and take control of land that does not belong to them. This is because of Bangladesh’s “century-old model to manage land-related records.” Bangladesh’s existing land registration system is fractured and largely paper-based. According to Alam et al., landowners fighting to recover ownership make up “the highest number of civil disputes in [Bangladesh’s] judiciary system.”

Individuals Are Not the Only Victims of Land Grabbing

Land grabbing also occurs in communities across Africa and South America. Anywhere the rights of regular landowners are poorly protected by their governments, land grabbing is a possibility. In an article for BBC News, Dickens Olewe describes how rich landlords and large companies take land from local owners in Kenya. Olewe writes that “possessing a title deed in Kenya does not necessarily guarantee ownership.”

This is because “fraudsters in cahoots with land officials have been known to change land records,” as they do in Bangladesh. This affects everyone from individual landowners to nonprofit institutions. Several years ago, a group of student protestors in Kenya were tear-gassed. They were gassed while trying to protect their school from being destroyed by a high-end hotel chain. The school could not produce a formal deed detailing their ownership of the land. This made it next to impossible to prove they were the rightful land users.

What about the United States?

For Americans, land grabbing might not be quite as foreign or far in the past as we would all like to believe. Only a few decades ago, Black farmers in the Southern US had their land ripped away. It was stolen through a mixture of borderline legal and flat-out illegal activities. These activities were conducted by individuals that wanted the land, companies and government entities alike. Around the world, some American companies are still engaging in this type of behavior. These corporations are often aided by local companies, corrupt government officials and other bad actors. Landowners in nations with fertile farmland and access to other natural resources are at a greater risk of this type of land grabbing.

In his article “The Great Land Robbery” for The Atlantic, Vann R. Newkirk II points to a 2015 report from nonprofit GRAIN. GRAIN works to protect local land rights — especially those of small farmers and their communities. They have recently worked alongside community members in Senegal, Kenya and Pakistan. As a result of their 2015 investigation, GRAIN accused American pension fund TIAA of “skirting laws limiting foreign land acquisition.” This practice extended to TIAA’s “purchase of more than half a million acres in Brazil.” TIAA used a Brazilian company as its proxy when buying much of this land.

Newkirk writes that TIAA also seems to have “acquired land titles from Euclides de Carli.” According to GRAIN and The NYT, de Carli was a local businessman “described in Brazil as a big-time grileiro.” In Brazil, grileiros are “landlords and land grabbers who use a mix of legitimate means, fraud, and violence” to displace small farmers. At the time, representatives from TIAA claimed that they were in “complete compliance” with local and international law.

Land Use Rights

How a property owner can use his or her land typically depends on federal, state and local laws. In the United States, zoning laws restrict land use in urban, suburban and rural areas. These laws dictate how many structures can be built on a single plot of land. They determine whether one can run a business from within those structures. Such laws also dictate how land can be used for industry and identify which lands are set aside for conservation and/or research.

Challenges Posed By Existing Land Registry Systems

As noted above, some countries – especially developing nations – do not have any type of formal land registry system. According to this IJM resource, “1.5B of the world’s urban poor [lived] in informal settlements…without secure right to their property” in 2020.

Many of the local and national governments that do have established property registries still rely on paper documentation. Even in areas with access to the technology and man-power required to transition away from a paper-based system, digitization has been slow. 

Paper records are vulnerable to manipulation, but they are also vulnerable to natural disasters like fires, floods, hurricanes, earthquakes and more. Even completely innocent activities – like moving a county recorder’s office from one building to another – could result in loss of paper records. Another issue is the fragmented nature of most property registries. In the United States, deeds are filed with a municipal or county government. There is no centralized record of all land titles in the US.

While shifting from paper to digital documentation is an important step in securing this data, digital records are also vulnerable to loss and corruption. Title fraud and land grabs are of particular concern in areas rife with government corruption – even when ownership is digitally recorded. 

The Case for Blockchain Property Registries

To summarize the above, many existing land registry systems are inefficient, insecure, complex, fragmented and expensive to update. From brokers and notaries to investigators and attorneys, each real estate title transfer involves a number of third parties. This not only makes traditional real estate transactions time-consuming. It also presents dozens of opportunities for error.

Proponents of blockchain-supported land registries argue that the distributed ledger technology will protect this data by making it impossible to manipulate. Blockchain-based land registries also protect against loss due to disaster and innocent human error. If a dispute over land ownership does occur, a blockchain registry could significantly reduce the amount of time it would take to settle.

In their 2020 paper for the Journal of King Saud University – Computer and Information Sciences, Kazi Masudul Alam and colleagues elaborate. They argue that blockchain is a natural fit for property registries because of how land ownership is tracked and transferred. Alam et al. write that “the inherent nature of a land title is attached to its earlier history” and how that has evolved. It is this chain of title that “preserves the integrity of land ownership, which matches the fundamental building block of Blockchain.”

But What Exactly Makes Blockchain the Right Fit for Land Registries?

Blockchain’s core structure might resemble how land ownership is tracked and transferred. But what about this distributed ledger technology makes it the perfect fit for land registries? In a post for The World Bank forum, Sebastian Kriticos describes the features of blockchain as they pertain to property registries. 

First, Kriticos writes that data recorded on-chain “is stored using cryptography.” This means that every single asset represented “on a blockchain ledger gets securely encoded with a unique identifier that allows for protection and tracking.” 

Second, data recorded in a block must be validated. This means that every time a new data set – like a real estate transaction – “is added to blockchain, its authenticity is verified.” To verify new blocks of data, a set and its validator must have “a legitimate connection to other nodes within the network.” 

Third, blockchain technology “allows for a distributed storage of records,” rather than a centralized storage of records. This means that “information can be seen and added to the network by permissioned parties.” This is done immutably without the need “to rely on any intermediaries or a centralized authority.”

Removing the need for certain third parties and a single centralized authority is particularly appealing. This is because an immutable, distributed ledger of real estate transactions could improve public trust. It could improve public trust in national land registries by limiting the possibility of fraud and other types of corruption. As outlined briefly in the terms section of this post, land use registries could also benefit from blockchain technology.

Benefits of Blockchain-Based Land Use Registries

Many blockchain-based land registry systems currently focus solely on recording existing titles and new transactions. In one paper, University of Bern researchers Desiree Daniel and Chinwe Ifejika Speranza point to the importance of recording land use rights. They emphasize that land use rights should be recorded alongside chain of title. Not only could a blockchain-based land use registry protect conservation lands and other environmentally-sensitive areas. Daniel and Speranza argue that it could also “provide digital documentation to actors in the informal land rental market.”

In developing nations, providing evidence of land use rights as a small farmer or other worker can be next to impossible. Few workers are digitally literate, and many others lack access to bank accounts. In “Blockchain for the Social Good,” we note that many small farmers who work on rented land have no digital record of their work. All they have are paper receipts. Their continued access to that land is tenuous at best. The land registry system suggested by Daniel and Speranza could protect landowners, tenants and land users alike.

Land users in countries where government-issued land leases are common, but formal land registries are not could benefit enormously Daniel and Speranza’s model. In these countries, land leases are more common than land sales, but sales are not recorded in the same manner as leases. A system that combines land use records with land ownership records could help protect the rights of both users and owners.

Barriers to Widespread Adoption

Unfortunately, there are a number of barriers to widespread adoption of blockchain property registries. First, governments suffering from widespread corruption are in most immediate need of blockchain-based land registries that cannot be altered by bad actors. Convincing these governments to adopt blockchain-based land and land use registries that protect everyday property owners might be a hard sell. 

Second, many land registries still rely on paper documents and have yet to digitize those documents. Transitioning massive amounts of historical records to a blockchain-based system could be extremely time-consuming, energy intensive and expensive. All three could be barriers in developing nations without disposable resources they can easily allocate to a blockchain-based land registry. 

Third, establishing trust in a blockchain-based property registry where few people are tech literate could be challenging. Providing necessary education could – again – require resources a country does not have. 

Fourth, a blockchain-based land registry that truly solves all the issues listed above would need to be national – or even international – to be effective. In the US, this would require getting all county governments to accept a potentially costly and time-consuming switch from their current system. 

Fifth, public agencies must be willing to commit resources to maintaining and upgrading the system as necessary. This white paper put together by the Vermont State Archives and Records Administration Office of the Vermont Secretary of State explains. The white paper notes that “public agencies must be able to guarantee the long-term preservation and continued access to public records recorded within.” If agencies fail to do so, blockchain will not be effective in long-term public record-keeping.

In short, “technologies come and go…[but] public records, especially archival records, must endure.” After all, accurate land tenure records are vital to preserving the rights of all property owners and users. 

Countries Exploring or Implementing Blockchain Land Registries

Despite its challenges, there are many governments currently exploring and/or implementing blockchain-based land registries. The Republic of Georgia – mentioned in the introduction to this post – was one of the first to adopt a blockchain land registry. Its blockchain-based registry is probably the best-known. The 2020 blog post “Restoring Trust in Public Land Registries” from think tank New America elaborates. 

According to New America, Georgia’s “land titling system…allows the public to easily verify the ownership of a property deed.” They can do so “without fear of manipulation or theft from government administrators.” The original blockchain-based registry has expanded in recent months. In 2022, it can record everything from “the purchase and sale of land titles” to the “demolition of property, mortgages and rentals.” Today, property owners in Georgia can access the system from their phones, tablets or personal computers. The platform’s code is open-source, meaning it can be adapted by other governments that wish to create their own blockchain-based land registries. 

Other countries that have either adopted blockchain-based land registries or announced pilot programs are spread across Europe, Asia, Africa and the Americas. These include – but are not limited to – Estonia, Ukraine, India, the Netherlands, Sweden, the United Kingdom, the UAE, Honduras, Columbia and Brazil. Several state governments across the US – such as Vermont and Wyoming – have also announced their foray into blockchain-based property registries.

Only time will tell how many countries eventually adopt national blockchain-based land registries. For all we know, there could be a global blockchain property registry in our future!