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Vermont City Hosts Blockchain Real Estate Test Program
Practical Law Legal Update w-012-9970 (Approx. 5 pages)
Vermont City Hosts Blockchain Real Estate Test Program
by Practical Law Real Estate
| Published on 09 Feb 2018 • Vermont |
South Burlington, Vermont is hosting a pilot program to test the application of blockchain technology to the recording of real estate instruments. The program should provide important feedback about the benefits of blockchain for recorder offices in areas with lower volumes of real estate transactions.
Blockchain technology has great potential for the real estate industry, particularly for recording and managing land records. The South Burlington City Clerk's Office hopes the use of blockchain will significantly decrease the time it takes to record paperwork related to the transfer of interests in real property and other documents, including:
Other possible benefits include:
- Conducting real estate closings entirely online.
- Transferring deeds electronically.
- Decreasing the potential risk for fraud.
Blockchain is a proven technological method for storing transactional records that is immune to alteration, destruction, and loss because it uses:
- Asymmetric cryptography, which creates public and private keys to encrypt and decrypt data.
- File hashing, which converts a string of characters into a shorter key or value representing the original string.
- Data integrity certification systems.
Vermont's Recent History with Blockchain
Vermont has been progressive on blockchain-enabling legislation in the past few years. For example:
- In 2015, Vermont passed a law requiring an investigation into the potential applications of blockchain technology for the verification and security of government records.
- In 2016, Vermont enacted legislation allowing blockchain records to be used to authenticate evidence for admissibility in court (H.868).
- In 2017, Vermont approved a law amending money transmission rules to allow for virtual currencies (H.182).
In a pending bill, Vermont may look into creating an e-residency program similar to what Estonia created, which would be attractive to virtual business.
Practical Implications
South Burlington is a city of just under 20,000 people, which makes this blockchain experiment significant for county recorder offices across the US because it will provide information about:
- The effort and time that a clerk spends entering documents into the blockchain.
- The costs associated with training clerks on the blockchain system.
- The volume of transactions that are necessary to justify the costs of upgrading existing systems.
For cities and counties with lower populations, there may not be enough transactions in a given time period to warrant additional time and costs.
For information about other blockchain initiatives related to real estate, see Legal Update, Illinois Pilot Program Tests Blockchain in Real Estate Land Records Management.
For more information about recordation, see State Q&As: