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Vermont City, Real Estate Startup Try Out Blockchain for Recording Property Transactions

Examples of local government using blockchain are pretty hard to come by, but one city is testing the technology on property transactions.

Among the many possible uses of blockchain, techno-enthusiasts have long thought of property record tracking as a prime example of how government could use the technology.

Now, a company is working with a Vermont city to test the concept. Since blockchain is still very much an emerging technology, it represents an early example of a city government trying the technology out.

In South Burlington, Vt., population 18,000 or so, a company called Propy has set up a pilot project with the City Clerk’s Office to test out blockchain as a new way to record property transactions.

As of right now, the pilot is pretty limited in scope and runs almost entirely on the company’s side of operations. Propy is a website and mobile app where people can buy properties in distant places, then have the transactions recorded on the digital, decentralized ledger called a blockchain.

In South Burlington, the company wants to start off with some low-level integration into the city’s process of recording those transactions. City Clerk Donna Kinville described the pilot as having four levels:

  • Level one: When somebody buys a property through Propy, the city receives a paper deed just like it would with any other transaction, except that the deed contains the location of the transaction in Propy’s blockchain. The clerk’s office takes no additional steps.
  • Level two: After receiving the deed, the clerk’s office enters into the blockchain an acknowledgment that it has received the deed and the fees associated with it.
  • Level three: The clerk links Propy’s systems with its own land records software, and Propy records deeds within the city’s software electronically.
  • Level four: Propy becomes the city’s land records software.
As of this story’s filing, the city has not yet received any deeds through Propy, though Kinville said the company is working on completing its first one in South Burlington.

Getting to levels three and four might require a lot of work, Kinville said, because it’s not clear whether the state would accept electronically filed deeds rather than electronic ones. It might be possible to perform the transaction electronically and then print out the necessary paperwork to file with the state, but those state requirements could be one place where established law prevents a new method of doing business.

That said, the state government has shown interest in blockchain in the past, and the legislature is considering a bill that would open up a study into the technology's potential for other uses.

Kinville isn’t sure how far South Burlington will go with the pilot, either. Once it receives a deed through Propy, the office’s staff will get an idea of what it’s like to put a record onto a blockchain. If the process is too time-consuming, it might not be worth it to keep doing it.

As for level four — replacing the land records software with Propy — count Kinville as skeptical. She likes the city’s current software, from Conduent, which used to be known as Affiliated Computer Services.

“I don’t know how popular our blockchain process would be, and why would we change over the process for a few deeds a year?” she said.

That said, Kinville does see some benefits the blockchain process could offer. For one thing, it could make the process of buying and selling property more secure. The state has seen its fair share of scammers trying to insert themselves into foreclosure, loan and property purchasing processes.

But blockchain is designed to be transparent. New blocks are verified cryptographically and any alterations to the chain are easy to spot.

It’s also possible that simply moving the process online makes things faster and easier for everybody involved.

“We’re just looking to see … what benefit does it have to our citizens, and the response we received is it should make it much easier for selling and buying because you don’t have to wait for things to get mailed back and forth,” Kinville said.

Ben Miller is the associate editor of data and business for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.