Such extreme incidents are rare, but it speaks to a real issue in public administration — the volume of public records, specifically land titles, that exist only in paper form. With this medium so susceptible to theft or damage, and with digitization available, why haven’t cities moved their real estate record business fully online?
The consequences of title theft are dire, especially for average homeowners who aren’t as well-resourced as stadium owners. Once a title is stolen, the credit reporting service Experian says, “the fraudster can then secure as many loans as possible using your equity as collateral. The real homeowner often is completely unaware of the scam until the lender starts to send letters indicating they intend to foreclose on the home.” In 2020, deed theft scams netted $547 million.
Ultimately, an identity thief cannot take formal ownership of a property if the thief’s actions result from forgery. Still, the damage done before the fraud is identified can be substantial. Attorney William Maffucci states that “since the forger’s name will appear on the land records, the forger can sometimes deceive a third party into ‘buying’ the property or a lender to take a ‘mortgage’ of the nonexistent title. … Usually owners must file a lawsuit to clear title.” This forces land owners to protect their investment through title insurance, which typically costs $1,000 per property.
If paper titles lack security, the answer is to digitize them. It is bizarre that in the 21st century, when so much private-sector activity has moved online, an expensive asset like land — whose transfer is facilitated by governments — would not have digital titles. An essay by CoreLedger, a blockchain development firm, notes that even in developed countries that have moved to a largely digital system, older properties with missing or damaged titles face registration challenges. In the U.S., the process of reclaiming a lost title is also challenging. Moving to digital storage would improve security and access; reduce overhead costs of storage and maintenance; and reduce the need for insurance.
Digital information isn’t immortal either. Files can be corrupted or simply decay. But a blockchain land title system would supply title holders with accounts online, rather than simply in a database, which could be vulnerable. Transactions would be recorded on networks that could be used as ledgers for records and privately controlled. Companies working on this technology claim that the security would be sufficient to prevent unscrupulous individuals from gaining access to a title or creating their own. “In contrast to storage on a central server or a central archive, which — if lost — means the end to all claims, blockchain allows information to survive any disaster,” CoreLedger insists.
Blockchain title systems are increasingly being explored in the developing world. As Government Technology* observes, events like the 2010 Haitian earthquake can lead to damage of records, which impelled Haiti itself to explore a blockchain-based system. And in the nation of Georgia, 90 percent of the cost of operating the land title system has been saved and transparency and security increased thanks to improved record access for residents.
With the growth of digital storage options, there’s no reason U.S. jurisdictions should not look into blockchain as an alternative to traditional storage. The main obstacle is that getting the resources to increase digitization can be difficult. Research done jointly by Oxford University and McKinsey & Co. determined that “public-sector IT projects requiring business change were six times more likely to experience cost overruns and 20 percent more likely to run over schedule than such projects in the private sector.”
But it is worth the attempt for land titles. By reducing the long-term cost of insuring and securitizing these documents, governments can reduce the much larger cost of developing real estate. Housing itself would be cheaper for the consumer. The technology is there — cities should take advantage of it.
This article featured additional reporting from Market Urbanism Report content staffer Ethan Finlan.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
*Government Technology is a sister site to Governing. Both are divisions of e.Republic.
