It is easier for someone to forge a deed to your house than steal your Wi-Fi password. That’s according to John Mirkovic, the Chicago chapter co-chair of the International Blockchain Real Estate Association and deputy recorder of deeds in the Cook County Recorder office. But Mirkovic believes deeds can become secure if the real estate industry starts using a new technology called blockchains and digital ledgers. Blockchain technology came to prominence as a way to securely transfer bitcoin and the same technology can be used to simplify and secure property sales, he believes.
Blockchain uses a digital ledger, which is stored on a network of computers. If it were to be used to transfer a deed from one property owner to another, a request must be sent to the network of computers, which will verify that the transaction is valid. Once the transaction is verified and the deed is transferred, the information about that transaction creates a block of data. With each transaction, another block is added to the chain of transactions related to that deed. This blockchain acts as a digital ledger and, since it is spread across a network of computers, is virtually unhackable. This means that all the information about a property’s history can be found on its blockchain and can be trusted.
The Cook County Recorder of Deeds is attempting to bring blockchain to Illinois real estate. In addition to being a founding member of the Illinois Blockchain Initiative, the county released the findings from a pilot program in blockchain technology in mid May. While further testing needs to be done, Mirkovic was encouraged by the results of the program, saying: “They made some good findings, in particular they discovered that it is completely legal and permissible for people who want to convey real estate to use a method like this.”
If blockchain technologies were implemented, it could reduce title insurance premiums and generate $4 billion in cost savings in the United States by reducing error and manual effort, according to a Goldman Sachs study published in May 2016. Mirkovic says that in order for blockchain to be effective, people need to be educated about what their title insurance covers so they understand how blockchain will benefit them. For instance, many people don’t know that title insurance does not protect future filings on their home after they own it. Blockchain would secure property and simplify the entire transaction.
The data needed to bring blockchain to Illinois is spread across five different government agencies, so implementation has a long road ahead. Meanwhile, Mirkovic is fielding questions like, “Why can’t my property title be password protected?” His answer is invariably, “That’s what blockchain and distributed ledgers can allow.”