Dubai Land Department, a department set up by the government of Dubai to optimize land usage for economic and social development and plays an administrative role as the national land registration authority, managing land sales, leases and allocations.
THE BUSINESS CHALLENGES
The conventional method of land registry management comes with a lot of inefficiencies and shortfalls. For example, incidents like natural calamities, or disputes between different parties over title ownership of property could have an adverse impact on real estate, and construction projects. The government and contractors have to wait until these issues are investigated and resolved.
Moreover, the traditional land registry management system is prone to corruption. Even though the land registry system is digitized, the audit process takes a lot of time since the ownership records, ownership history, mortgage data, etc are hard to collect. Completing a land registration is a time-consuming process, and there can be a gap of several months between the completion and registration. During this period, legal problems as well as fraud can be a threat to the whole system and can affect the whole efficiency of the system. Some of the major problems associated with the traditional land registry management system are;
- Possible double selling of the real estate and properties
- Lack of complete transparency in many land transactions
- The traditional system is slow and inefficient at registering land transactions.
- It takes 3-8 months to receive the bill of sale and process the title ownership change.
- Document forgery, flawed or incomplete paperwork, and foreclosure defects
- Requires a lot of paperwork
The client put forward the requirement to build a platform to mitigate the problems they faced in the land registry department, which are; document forgery, double selling of the real estate, and the lengthy process for real estate audit. The platform should also enable real estate transactions to be monitored and to access the ownership title history of a property.
Using blockchain technology, the problems faced in land registry management can be mitigated. For our client, we built a blockchain-based land registry management system. The solution incorporates many benefits of blockchain technology, such as the tamper-proof history of transactional records, so that no one can tamper with or forge a record. These records can be viewed by authorized parties at any time. This will create a single source of truth of ownership status and history of a property.
Since the land transactions are executed through smart contracts, the possibility of double-spending/double selling was eliminated. The buyer can be assured of the provenance of the land and the location of the plot, thereby reducing the potential for disputes and the costs and time involved for any given transaction. The solution enabled seamless management of stakeholder identities and facilitated near real-time traceability for each transaction. The automation offered by smart contracts has streamlined the recurrent processes such as tax payment, mortgage payments, etc.
- No need for physical archives of contracts and files.
- No possibility for double selling of the real estate
- Increased resilience and redundancy of the transactional data in the land registry
- Faster and more transparent transactions
- Greater security for users of the system in handling land transactions
The platform attaches a property title to a non-fungible crypto token. The token will store the land registry details like the GPS coordinates, current owner details, etc. The exchange of tokens between two parties can be tracked for each transaction. In a transaction, when a property is sold or transferred, the transaction output belonging to the previous owner is marked as ‘spent’ and simultaneously, TX output belonging to the new owner is created. In such a scenario, if someone needs to identify the titleholder of a property, they can easily go through the transaction history starting from the first transaction and stopping at the ‘unspent’ transaction output.
For the solution, we used Hyperledger Fabric, which is an open-source enterprise-grade permissioned distributed ledger technology (DLT) platform, designed for use in enterprise contexts. Permissioned blockchains operate a blockchain amongst a set of known, identified, and often vetted participants operating under a governance model that yields a certain degree of trust. The fabric has a highly modular and configurable architecture, enabling innovation, versatility, and optimization for a broad range of industry use cases. In addition to that, the platform is permissioned, meaning that, unlike with a public permissionless network, the participants are known to each other, rather than anonymous and therefore fully untrusted. It also supports pluggable consensus protocols that enable the platform to be more effectively customized to fit particular use cases and trust models.
- Eliminated the possibility for double selling of the real estate
- Eliminated the need for storing physical archives of land record
- Real-time visibility of the status of property and sale deed
- Seamless access to the entire transaction history
- Estimated 30% reduction of administrative costs
- Estimated 25% increase in land investments