Centuries of Land Fraud Ends With AI And Blockchain
Inefficiency, fraud, and obscurity in land registration is a tale as old as time. Look no further for proof than The Statute of Frauds, which England put into law in 1677. At the time, land fraud plagued the country. English courts found themselves bogged down in perjury and forged deeds in land sales.
In the New World, The Yazoo Land Scandal of 1795, saw insiders bribe Georgia legislators to sell 35-40 acres—comprising modern day Alabama and Missisipi—for $500,000 or 1.5 cents per acre.
In the 1850s , following the U.S.’s acquisition of California, hundreds, if not thousands, of forged Mexican-era land grants were produced. They had been counterfeited with “skill as well as boldness unequaled in the history of such frauds,” according to the U.S. Attorney General Jeremiah Black.
The U.S. Land Commission found no fewer than 200 fraudulent claims, made possible by an opaque grant system. Language barriers and destroyed or missing records worsened the problem. Litigation lasted for decades, and the scandal led to violence and mass dispossession.
The traditional systems were beset by inefficiencies. Take a look at the old English-style deed registration system. Buyers were forced to manually trace a “chain of title” back as far as centuries through unreliable paper documents, in which forgery was commonplace and deeds were routinely lost or destroyed. Multiple sales of the same land took place.
Enter the Torrens title system, created by the Torrens title system in Australia in 1858, as an answer to a complex and confusing system. In this scheme, the state would guarantee a title in a bid to mitigate fraud and inefficiency. Yet, it left much to be desired.
Still today, most solutions to titles and land registry are based on the backing of the state. The system, nonetheless, remains susceptible to data tampering and unauthorized alterations, as well as bureaucratic headaches.
The marriage of AI-based fraud detection models and blockchain, however, creates a novel system of detecting fraudulent transactions, as well as discrepancies in land ownership information prior to recording.
This new mechanism for real estate transactions also reduces the fees middlemen can charge, and streamlines notoriously slow bureaucracies.
Blockchain is traceable in real-time, uniting through a peer-to-peer network of attorneys, title agents, notaries, grantors, and grantees into a seamless process.
AI and blockchain models also have proven superior at decreasing transaction latency when combined.
Blockchain has already proven to make these processes more efficient while a backbone for verifiability, transparency, and automation. It also has the potential to reduce fraud and increase security and trust versus centralized solutions, including digital ones. A blockchain-based land registry could transform private property markets.
Immutable blockchain ledgers are used for titles and deeds. AI predictive analytics, in combination with analytics and oracles pull real-world data, such as rents, maintenance, and market trends. Such a system decreases dependence on intermediaries, automates compliance, and uncovers anomalies in real-time, lowering the risk of disputes. Some pilots have shown up to 60 percent in compliance costs.
Image by: Yunus Tuğ
