Tuesday Project Spotlight: Smart Land Records Project
Updated: Mar 4
Oscar sells Blackacre to Alma, who does not record. Then, Alma sells to Bernice. Bernice records. Unfortunately, Oscar, our initial grantor and “dirty double dealer,” then sells Blackacre to Clarita. Assume that Clarita has no actual or inquiry notice of neither the Oscar-to-Alma, nor the Alma-to-Bernice conveyance. Clarita records. Oscar, true to form, has skipped town with the proceeds from both sales. In the contest of Bernice vs. Clarita, who prevails?
My apologies to everyone who read the above and is currently in a fetal position under their desks due to bar prep PTSD. Alternatively, for those of you whose inner gunner is yelling “wild deed,” at their screen, and must know or, rather, confirm your answer, see the footnote that follows for the correct response.1
Regardless of which group you fall into, the fact remains that wild deed fraud has a long and storied history in the United States. For those who are lucky enough not to have agonized over the rules around wild deeds, let alone the Rule Against Perpetuities, a “‘wild deed’ is a deed that purports to convey an interest in property that the grantor does not own. Back in the 1960s, a title insurance executive named Paul Burgess tried to make himself the owner of several thousand acres in the Pinelands by using a wild deed from one of his employees to get the vacant property back on the tax rolls before bringing an action to quiet title. The New Jersey courts ultimately held in a suit by the attorney general, Hyland v. Kirkman, that the wild deed was a nullity and the scheme a fraud on the recording system.”
Blockchain can make such stories a thing of the past and a “southwest Virginia county with about 40,000 residents situated near the Kentucky border” is leading the way.
THE PROPOSED SOLUTION
“Wise County’s Smart Land Records Project aims to store land titles on a private blockchain-like system, with every change immutably logged.”
Wise County Courthouse. Source: Skye Marthaler, CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0, via Wikimedia Commons.
“The goal, said Wise County Circuit Court Clerk Jack Kennedy, is trifold: a database of ‘smart land records’ in Wise and the City of Norton that can pull up 40 years’ worth of transaction history in seconds; roughly 20 paid internships that train Southwest Virginia college students to use blockchain software and title abstracts; and finally, software that harnesses machine learning and artificial intelligence to auto-generate property abstracts (5).”
HOW IT WORKS
The project stores real-estate titles in Amazon Web Services’ Quantum Ledger Database, a hosting arrangement that founder and CEO of Bloqable, the Arlington-based firm working with Wise County on this project, said “lacks the decentralization of a true blockchain but met [Wise County’s] wish to retain more control over its records than a publicly distributed blockchain would allow (6)."
“The immutability of blockchain records, in which every change is jointly recorded by the nodes in that blockchain, makes this sort of theft easier to spot, FitzGerald said. What if an error doesn’t get caught before a title gets written to this immutable ledger? The system allows Wise County to write a new record on top of the old one, which gets displayed first but does not expunge or erase the old record (7).”
“The other part of this project involves automating the process of generating the ‘abstracts‘ that sum up a property’s ownership and (in Virginia) its last 40 years’ worth of transactions. The project aims to develop machine-learning systems to prepare at least part of these abstracts, a task that today, FitzGerald said, requires about three hours of work by trained professionals (8).”
The end result of the project being that wild deed fraud in Wise County could eventually be a relic of times gone by. That said, I’m sorry to say that bar preppers are a long way off from dropping recording statutes rules from their outlines.
WHERE TO LEARN MORE
At press time, Jack Kennedy is still the current Clerk of the Wise County & City of Norton Circuit Court. “Elected clerk of Wise County’s Circuit Court in 1995, Kennedy became the first clerk in Virginia to put land records online. He’s since championed a string of other cutting-edge tech projects in Wise: hosting the country’s first FAA-approved drone delivery, collaborating with NASA on remote sensing programs and beta testing Starlink, the new satellite-based broadband from Elon Musk’s SpaceX, to Wise County residents (9).” For timely updates about the Smart Land Records Project, which Mr. Kennedy hopes will become fully automated by the time his term ends in 2023, you can follow his updates on Facebook.