Widespread blockchain technology application across the world has made it difficult to find a sector it hasn’t disrupted. From financial services to healthcare, the new technology has had a positive impact, and is still continuing to do so. And real estate is no exception.
Up to now, real estate transactions have never been conducted through digital channels. Instead, they are conducted offline, involving face-to-face engagements with different entities or are transactions between property lawyers.
In view of the importance of registering legal title to real estate, it is helpful to know that blockchain also provides solutions to these problems. This is where L3COS’ regulated blockchain, the technology that will make life simpler but more secure for the real estate industry players, comes in.
Real estate has long been the investment choice of those wealthy enough to own assets. The issue is that the barrier to entering any real estate market has always been high. These barriers can be citizenship, the need for international bank accounts, having a good credit score, providing the financing, identity accreditation and even access to the right sponsors and fund managers.
In addition to the cost and barriers of entry, third-party intermediaries such as lawyers, brokers and banks can take professional advantage of the complexity of these transactions. Furthermore, according to the United Nations, three-quarters of the money laundered worldwide comes from real estate transactions.
Clearly, greater transparency can help to combat corruption, tax evasion and money laundering, and this is where L3COS has a role to play.
L3COS’ regulated blockchain is designed to speed up lengthy and complicated processes and also increase transparency. Here are three areas in which L3COS will change real estate.
Physical paper-based documents are still being used for identity verification. Such an approach requires not just significant time and effort, but as it is a manual process, there are more likely to be errors which can involve multiple third-party service providers. All of these can be costly and slow down the due diligence process.
By using digital identities in the L3COS regulated blockchain, this entire process can be put securely online — so increasing efficiency, enhancing data security, lowering costs, and reducing the likelihood of manual errors.
And using a L3COS smart contract, which is the representation of the existing legal contract, will also provide a set of pre-agreed conditions that confirm the agreement of all parties to the transaction. The seller, the buyer, the buyer’s bank, the real estate agent and the land registry can record and store the information which will all help to prevent any fraud during the transaction.
They can also streamline the process of transferring property titles while also adding layers of security. All parties involved in the process have their own digital identities and can have the process regulated by an institution or the government.
Losses related to title fraud in the US averaged approximately $103,000 per case in 2015, requiring many buyers to purchase title insurance. Moreover, according to the American Land Title Association title, professionals find defects in 25% of all titles during the transaction process due to unpredictable mistakes,. This means property owners often pay higher legal fees to ensure the authenticity and accuracy of their own property titles.
These title management issues could be resolved by using L3COS’ blockchain technology to create immutable digital records of land titles. This approach will simplify title management, making it more transparent and helping reduce the risk of title fraud and the need for additional insurance. And in cases of domain disputes, L3COS makes it possible for the regulatory authorities to more easily resolve the dispute.
In the real estate sector, millions, if not hundreds of millions, of global transactions are made each year. If the majority of the industry’s players are to transition to the blockchain, then any system will have to be able to handle these transactions seamlessly.
At the moment, Ethereum can only currently handle about 15 transactions per second, and Bitcoin only around 7 transactions a second. In comparison, L3COS boasts very high latency capability, with 50 000+ transactions per second. That’s a record that other blockchains are simply unable to achieve.
The real estate sector is in the midst of a digital transformation, since the methods used to do business and keep records are costly, archaic, and inefficient.
L3COS is a technology that make significant improvements to the real estate industry. L3COS will eliminate the need for third parties to manage transactions, increase trust among those involved, keep records, reduce costs and fraud. Therefore, investors should consider the L3COS approach if they want to be efficient, and enhance returns by avoiding what should be avoidable costs.