The first title transfer recorded via blockchain in the United States is, in all likelihood, in South Burlington, Vermont. The city clerks, lawyers and entrepreneurs involved can’t say for sure, but their transfer is making noise as the first recorded on the distributed ledger stateside.
A startup called Propy launched a pilot program with three towns in Vermont in January pledging to complete real estate conveyance documents via blockchain. Blockchain is the technology that powers bitcoin and other cryptocurrencies — it’s essentially a virtual ledger system that stores data across participants’ computers, keeping track of who owns something (such as an amount of a currency) as well as transactions. Blockchains can also be used to facilitate secure financial transactions in other areas, too, including banking and real estate.
The first transaction through Propy’s Vermont pilot program was completed by homeowner Katherine Purcell in South Burlington last month.
Purcell worked with Propy, the law firm Gravel & Shea and the South Burlington clerk’s office to transfer the title for a condominium to her own LLC.
“This is the first case of real assets transferred on blockchain — that’s the big meaning for the blockchain community,” Propy CEO Natalia Karayaneva told Inman in an interview. Besides promoting blockchain transactions in Vermont, Propy powers cross-border payments and property transactions globally. Last year, the company boasted that one of its top investors and advisors, former TechCrunch founder Michael Arrington, purchased an apartment in Kiev, Ukraine, over the blockchain.
Purcell heard from contacts at the law firm working with the clerk’s office on implementing blockchain technology that they were looking for a transaction to be the first. She was planning to transfer the title of her condo to an LLC anyway and was interested in learning more about blockchain, so figured it couldn’t hurt to be the guinea pig.
“I thought it was neat that they thought it was the right transaction to try out,” Purcell said. “And I figured I’ll get to see blockchain up close.”
The transaction includes a QR code to link to the record on blockchain and a note that “this conveyance has been recorded in smart contract … of the public Ethereum blockchain.” (Ethereum is a popular type of cryptocurrency and its blockchain has been repurposed by many startups for their own ends.)
Plenty of other real estate transactions in the U.S. have involved paying via bitcoin or another type of cryptocurrency, but the only use of blockchain in those cases has been in the cryptocurrency itself. This transaction didn’t involve any cryptocurrency and is about blockchain technology used as a system of record outside of any digital currency.
The blockchain real estate process as implemented by Propy in South Burlington beyond Purcell’s transaction involves a few steps: documents coming into the city clerk’s office the usual way, with paper copies for backup, along with a record of the transaction on blockchain and recording data about the time and date of those transactions on blockchain.
“That might be as far as we go. The next steps could be many years down the road, for Propy to be able to send deeds electronically through the system we have. I’m not sure if Vermont’s ready for that yet,” South Burlington City Clerk Donna Kinville told Inman in an interview. “The fourth step would be for Propy to become the land records system, but I don’t think it’s ever going to go that far.”
Kinville and her colleagues in Vermont were intrigued by what Propy could offer their offices and citizens. Propy approached towns in Vermont after Vermont enacted legislation promoting blockchain innovation for economic development.
“We’re always looking for ways to cut costs, cut expenses, cut taxes and make things easier for our citizens,” Kinville said. “This seemed to be a way to do that. If we don’t have to do records by hand now, that will save us money.”
Propy is still working with the Vermont towns of Burlington and Shelburne on their pilots. Propy is also exploring similar programs in other states, including Colorado and Arizona.
The first property transfer via blockchain outside the United States was the one recorded in Ukraine by Arrington, according to Karayaneva.
Propy is one of several startups figuring out applications of blockchain for real estate. The blockchain startup ShelterZoom is working on powering payments via cryptocurrencies and instant offers to buy or rent properties.
“The ultimate goal is to make real estate transactions automated so people can transact entirely online,” Karayaneva said.
And Purcell is excited to have been the first to try it out.
“It’s always kind of fun to be the first in the country to do something. I never have been,” she said. “It’s a little nerve-wracking to see what’s going to happen, is this going to be safe, but I think it will be.”