Title App’s innovative approach to using distributed ledgers and conducting property transactions within trusts is poised to revolutionize the real estate industry. By addressing the flaws of the current system and leveraging the power of blockchain technology, Title App offers enhanced security, efficiency, and autonomy for real estate professionals and mortgage lending executives.
The Flaws of the Current System
Traditional property title transfer processes suffer from issues like title theft, fraud, and a lack of trust in government institutions. Homeowners often question whether their county, state, or federal government can effectively safeguard their most valuable asset — their home. Additionally, the bureaucratic procedures and processes associated with property transactions lead to significant delays and costs, causing frustration for buyers and sellers.
The Trust-Based Approach and the Escrow Locker
Title App challenges the conventional property ownership system by offering an alternative to traditional government oversight of title. It's a private trust-based approach (and by this Title App means a legal trust, not trusting other people to do the right thing). This can be used in countries that have an existing title system and countries that don't resulting a big leap in improvement in title security, and savings in time and money.
Through the creation of a trust recorded at the local jurisdiction level, individual ownership is abstracted away. This trust acts as the “owner” of the property, facilitating all transactions, including lending and title insurance. This approach provides greater security, transparency, and flexibility by reducing reliance on government control.
The Escrow Locker, a key component of Title App’s system, ensures secure property transfers. When a property is sold, an Escrow Locker is established within the platform.
The seller places the Digital Title Certificate NFT representing the property into the locker. Multiple parties, including the buyer, seller, and trusted third-party participants, collaborate to validate and confirm the transfer, leveraging blockchain technology’s security and multi-signature capabilities.
The Escrow Locker is then used to transfer the funds for the property purchase between the parties and transfer the Digital Title Certificate between the old owner and the new own (or in legalese, the new and old trustees).
Reducing Reliance on Government and Ensuring Autonomy
Title App’s trust-based approach, combined with the abstraction of title away from government, empowers individuals and reduces reliance on centralized systems. By providing a secure and decentralized platform, direct government involvement in property transactions is diminished.
Josh Lawler, partner at Zuber Lawler, LLP, and co-author of the HOM DAO white paper, emphasizes the significance of this approach: “Abstraction of title on the blockchain away from government ensures greater integrity and autonomy in property transactions.”
Title Insurance at the Trust Level
Within this trust-based model, the concept of title insurance adapts to ensure protection. Title insurance policies can be issued to the trust, covering potential legal costs in case of title disputes or claims. This innovative approach secures the interests of all trust beneficiaries and provides an additional layer of protection for property transactions.
Those funding Title insurance pools may require a slightly higher premiums as this new protocol rolls out, but over time, the rates for insurance with this system will likely be far less than traditional title insurance due to the transparency and immutable features of the transfer process. With Title App its conceivable that the risk levels of property title could become so low as to eliminate the need for title insurance altogether.
Looking to the Future
Title App’s trust-based approach coupled with the Escrow Locker and the abstraction of title from government control, has the potential to transform the property transfer landscape. The advantages are clear: enhanced security, reduced fraud, streamlined processes, and increased confidence in property transactions.
This alternative title system, combine with distributed ledger technology, paves the way for a more efficient and secure future in real estate. In conclusion, Title App’s innovative approach revolutionizes property transactions by addressing the flaws of the current system. By leveraging blockchain technology, adopting a trust-based model, and securing title insurance at the trust level, Title App empowers real estate professionals and mortgage lending executives, and government officials with a secure, efficient, and autonomous platform for property transactions. As countries and communities embrace this forward-thinking technology, the future of property transfers is poised for significant positive change.
(Note: The content of this article is for illustrative purposes only and does not constitute financial or legal advice.) Sources: Smith, J. (2022). “Title Theft: A Growing Concern in Real Estate.” Real Estate News Today, 17 March 2022. Johnson, S. (2022). “Streamlining Property Transactions: The Power of Trust-Based Models.” Mortgage Professionals Monthly, 25 June 2022. Lawler, J. et al