Why block chain technology can help resolve land transaction woes

land

An edited version to this article was first published on  Business Daily September 2, 2016

Land is dear to Kenyans. Despite how we abhor agriculture, everyone wants to own a plot somewhere. A result of this obsession is a lot of speculation in buying of land, over pricing and graft in the land registries. Law courts are busy deciding cases involving land transactions. And it runs across the divisions in the High Court, from the Land and Environmental Division to the Family Division.

We have recently witnessed high profile land rows where individuals have been accused of selling off a single parcel to many parties. While due diligence is key in investigation of titles especially in the conveyancing procedure, one can never be so sure with the results they get.

There are incidences where the official search results have shown the vendor as the owner only for the real owner to show up after completion of the transaction.

A solution to these pitfalls in the conveyancing process is block chain technology. A block chain is often described as a widespread, global distributed ledger running on millions of devices and open to anyone.

In it, anything of value like money, titles of land can be moved and stored securely and privately. The technology has a system of establishing trust though not through intermediaries like banks but through mass collaboration and powerful cryptography algorithms. This ensures integrity and trust between strangers while making it difficult to cheat. While cryptocurrencies like Bitcoin are the most notable products of block chain technology, land can be transacted through this technology.

The advantages that this type of transaction will have will be the availability of incorruptible land records. This will be availed by the distributed public ledger which tracks and records every transaction whose security is ensured due to its decentralised medium.

Hence where a buyer intends on investigating the title that a land vendor claims to have, block chain technology will enable verification of title since it will show the transaction records of that property and the owner and all previous owners.

South American countries like Honduras, have already committed to replace their existing land records with block chain technology which will eventually allow citizens to sell or buy property online. The distributed ledger is being embraced by more corporations like Factum which is applying it to the non-financial market of data management. The corporation uses public block chain-based identity ledgers in database management and data analytics to support applications.

Factom can be used by businesses and governments in simplification of records management, record business processes, and to address security and compliance issues. It maintains a permanent, time-stamped record of data in the block chain that allows companies and governments to reduce the cost and complexity of conducting audits, managing records while complying with the set laws. The Constitution of Kenya lists transparency as one of the principles of land policy and block chain technology will play a big role in ensuring that there is integrity in the system.

Bitland, a NGO in Ghana is also developing a land title system based on the Tao block chain. It is doing this since the Ghanaian government has failed to develop a fair and efficient land administration system despite numerous attempts. The system will also use GPS and satellite to verify the accuracy of the plots of land. Just like in Kenya where identifying the last owner of property rights over a  piece of land is an issue, they hope the system will reduce the disputes or make them more visible to prospective buyers. This will ensure security and reduce ownership cases.

Challenges

While the distributed ledger might be the technology’s biggest strength, many legal questions arise. The question on who to sue when things go wrong since the entire structure of the block chain is decentralised is major.

Another challenge is on the form of conveyancing transactions, keeping in mind that most transactions that are legally binding are based on precedent forms and documents.

There is hope for this though, since it is expected that as time goes on consensus will develop with code libraries and there will be a uniformity.

While solutions cannot just be copy pasted from another jurisdiction, Kenya can pick lessons from nations that have already started using the technology.