Technological advancement is an increasingly important consideration for the legal sector. It is vital to understanding our clients’ needs and identifying how technology can help to better serve those needs.
In conveyancing, one of the biggest criticisms is the length of time the process can take. Another is the level of risk in relation to fraud.
Enter Blockchain, the technology which is said to be fraud proof and have the ability to speed up and streamline transactions. Blockchain has been around for a number of years but the idea of using it in legal transactions is now a consideration. Will Blockchain determine the future of property transactions?
Put simply, Blockchain is a method of recording data. It can track verify and transfer money information and assets – key elements in a property transaction.
Blockchain records and verifies transactions, allowing parties to use secure online technology to share documents (or assets) without the risk of fraud and offering the potential to expedite matters. The ledger contains accurate records which could identify the current owner of a property and provide proof that he/she is indeed the owner; removing this fraud risk which arises with paper based transactions.
The system can also be used for ‘smart contracts’ in which specific instructions can be programmed. These instructions would be executed automatically once agreed criteria have been met. For example, an automatic exchange of contracts once a deposit is received, or the automatic transfer of the property title to the purchaser on receipt of purchase funds. The contract could also be programmed to assist with other parts of the transaction, such as automatically paying solicitor and agent’s fees or SDLT; all of which could speed up a transaction.
Linked to Blockchain, is the question over whether Bitcoin will be used in the future for property purchases. One of the most known drawbacks of Bitcoin (or other digital currencies) is its volatility. Whilst the currency has seen a huge growth in value over the last year, it has also been known to drastically fluctuate, even on a daily basis. Over the 6 weeks, 3 months, even 6 months that a property transaction can take to complete, the currency would fluctuate so dramatically that it would be difficult to predict how much Bitcoin would be needed to purchase the property. On the Seller’s side, accepting bitcoin would also leave you unsure of what you would actually gain from the sale of your property – the value of Bitcoin could drastically fall even overnight and leave you with less than expected.
It is too early to fully consider the implications of using Bitcoin and Blockchain technology in property transactions. However with the Government looking into how it can support the legal industry to harness improvements in technology and facilitate a transition to digital conveyancing, who knows what the future of your property transaction will look like?
If you would like to speak to someone about the future of property transaction, please email your enquiry to firstname.lastname@example.org