New technologies have disrupted various industries across the world. Blockchain is one such technology, which may have the potential to revolutionize multiple industries, including but not limited to banking, insurance, real estate, motor vehicle registration etc.

Blockchain, simplistically put, acts as an incorruptible digital ledger and keeps a virtual record of all chain data and transactions. The ‘in-built’ robustness of the system stems from its decentralized nature of identical record keeping spread across multiple systems, which prevents it from being controlled by any single entity or have a single point of failure, and such multiple ledgers self-audit to check for any duplication and, or manipulation at any particular level. The cryptocurrencies, bitcoin being the most prominent of which, are powered by this technology. Essentially being a form of a digital ledger, blockchains can be used to record a wide range of quantities, ranging from electronic currencies to physical assets.

In the past couple of years, we may have read about segmental adoption of blockchain technology with various government authorities and private entities. In fact, multiple state governments, like the states of Maharashtra, Telangana and Andhra Pradesh, have rolled out their own digital policies including the blockchain technology. The reporting suggest that Haryana in Panchkula and Andhra Pradesh in Amravati are working with multinational organizations and private technology start up companies towards implementing pilot projects for demonstrating the ‘proof of concept’ for maintenance of land records through public ledgers maintained through the blockchain technology, before the same can be implemented on a larger scale. Besides India, there are multiple other developed and developing countries which are in the process of completely digitising their land records and maintaining those ledgers by way of blockchain technologies.

If implemented effectively and efficiently, the blockchain technology in the real estate sector has immense potential particularly since title of land and immoveable properties require a complete understanding of “chain” of title (so called history or flow of title). By some estimates, majority of the civil cases pending in Indian courts deal with land related disputes, which also involve establishment of ownership or missing links thereof. The existing legal framework is based on the system of “presumptive ownership”, which leads to higher litigation as land and property, over the course of decades, undergo several mutations, which are not always adequately recorded in the public registers

Maintained in this regard. Moreover, at present, the data related to a specific parcel of land is typically stored in land records or revenue records or government departments which operate in silos, and are in formats and languages which vary from state to state (and to say the least, its not adequately maintained or recorded). Further, access and verification of title through these records is both time and cost intensive, and involves frequent visits to the district where the land is situated and where the local records are being maintained; and the results are not fully reliable.

A blockchain-secured record-keeping process, would typically function by first establishing consensus on what constitutes a valid record, and post which, the market participants would use cryptography and consensus algorithms to create or modify records. For land records, we believe that only select participants, like the revenue or land officials, would be given that responsibility. Moreover, any new transaction would be chained to the old existing entries and records within the blockchain, ensuring that a trail of changes to a record is established since its creation. Such distributed ledger network would obviate the need for a central authority, which would have to maintain and keep those records, as they would be distributed and regularly verified across a system of networked computer nodes and also allow the participants to access and verify the latest version of the record without relying on anyone else.

While blockchain could help in ensuring integrity and veracity of the future transactions, it cannot resolve the existing disputes and challenges in relation to title of properties or the history of such title. Further, blockchain would be of little help in relation to lands whose area is not properly captured, or whose ownership is disputed, or whose encumbrances are not properly recorded or specially family partitions multiple times leading to divisions or fragmentation to very small shares (physical demarcations).

The prevalence of poor quality land records could make introduction of blockchain across the board for all land parcels unviable. To maintain indisputability, blockchain may be introduced initially on land parcels which are relatively free from issues, such as government lands, nazul lands, defence property etc., as these parcels typically have lower concerns related to title as opposed to land parcels held privately. Implementing and securing the records of such lands through blockchain could pay off in the future as the government considers to monetize such land parcels.

Lands which have been mortgaged can also be introduced to the blockchain system. For instance, banks and housing finance companies undertake extensive due diligence to validate the land records, and also seek correction in records of the title to lands that are mortgaged to them.

We believe that the blockchain technology can bring in revolutionary reforms in maintenance of land records in Indian and to bring clarity on the title and ownership of property in India.