Blockchain technology has been making its presence known in the Indian real estate industry in the recent past. The Indian real estate sector involves complicated procedures such as several transactions, multiple parties, and detailed due diligence. India needs a better efficiency, accuracy, and transparency system for running such processes. This is where blockchain can help.
Blockchain technology is based on the secure and efficient distribution of digital information. This digital information can be accessed; however, it can’t be copied. Features such as these make the perfect technology for a digital revolution of real estate in India.
Blockchain can be thought of as a chain of transactional records stored in the form of blocks in the system. The technology allows transparency, decentralisation, and encryption whilst making updating or modifying the information stored in the blockchain difficult. A single authority does not manage it. It is protected by a digital signature to verify the transaction’s authenticity.
Initially created to track the bitcoins available in circulation, blockchain technology’s application has moved far beyond cryptocurrencies. It is even being used in unexplored arenas like the Indian real estate sector.
Blockchain technology is now appearing in the real estate sector because it can make the processes of the real estate sector much simpler. These processes involve documentation, records, due diligence, registration, and closure. The buyer will get a passcode/private security key from the seller with blockchain technology. The buyer will be able to access previous property records such as ownership, maintenance payment, etc.
The title records, property tax, encumbrances, etc., can also be accessed by the property buyer after identifying it. With the digitalisation of the records, mortgage, transference of payments, and property registration can be completed very easily. Hence, blockchain technology makes the real estate process much more seamless, faster, and more efficient.
Blockchain technology in the real estate sector would also benefit in several other ways, such as through title fraud elimination, growth of tax revenue collection, removal of government-level corruption, reduction of property disputes, lower transaction costs because of minimal involvement of intermediaries, and complete removal of the physical storage of property papers.
Following are the advantages of blockchain technology for real estate:
The implementation of blockchain technology worldwide is still in the process of development, and many changes still need to be implemented. In India, the real estate sector is a state subject, depending on the state. There are different sets of rules that impact real estate transactions.
For the adoption of blockchain technology in the country, operational efficiencies will need to be boosted to implement the changes across functional areas, which are all very diverse. Computer technology will need to be greatly enhanced to run the blockchain. Any blockchain technology transaction will require a large level of data and electricity consumption.
The roadblocks which are experienced in the implementation of Blockchain for the Indian real estate sector are:
Smart contracts are signed digitally by two or more parties in blockchain technology. If we talk about smart contracts in the Indian context, the Information Technology Act of 2000 allows the use of eSignatures in the signing of almost all documents except notarised documents and registered sale property deeds.
In a court of law, electronic signatures are allowed to show support for the authenticity, acceptance, and existence of a contract according to section 65B of the Evidence Act, 1872. Hence, the regulation already exists. All that is needed is the removal of exemptions of the notarised documents and property sale deeds that is present in the case of eSignatures.
With blockchain, each property documentation will be available on the chain for all to see. Blockchain would make the availability of documents such as the construction agreements, the certificate of commencement of construction, land title, property plans submitted to the local municipal corporation, mortgage lender’s report, Occupation Certificate, NOCs from the fire department much more simple.
Normally the title history and diligence take months and stall the transaction a lot. Blockchain will make the process much more speedy. The diligence of property will also be made much simpler, which will save the cost of lawyers and accounting firms to a huge extent.
The whole world is experimenting with blockchain technology, and it will be an integral part of our future. The implementation of blockchain technology will be seen in all sectors of India in the future; it is only a matter of when. India’s real estate sector will take a huge leap forward in operational efficiency. Along with blockchain technology, two other steps – the implementation of GST and RERA and the digitisation of records- create a transparent and buyer-friendly Indian real estate sector.
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