In 2017, the ownership of a physical asset was transferred via blockchain for the first time in the world. The situation is unique because blockchain-based smart contracts handled the Escrow process. It is also a significant step because smart contracts that handle the Escrow or the settlement process can eliminate manual approval steps from government bodies.
The real estate transaction was for a property in Ukraine. The payment was made in cryptocurrency, and a smart contract held the funds until a human notary confirmed the transfer of ownership. Before that, other paperwork was completed on the Propy platform by the buyer and seller. When the transfer of ownership was completed with the Ukraine registry, $60,000 in crypto funds was automatically distributed via smart contract technology.
Now, Propy’s technology is even more advanced and widely used. Buyers in the United States can use the platform to buy and sell real estate; they can also use USD as the currency of choice.
Before this innovation, Escrow companies, notaries, and closing attorneys needed to oversee the money transfer process manually. These “trusted third parties” were licensed to perform the procedure. However, Propy is envisioning a day when these services are performed instantaneously via software.
The property settlement and closing processes are understood around the world. “If” a party enters a purchase agreement and makes the payment, “then” the ownership of a given property is transferred. The “if/then” rules can be programmed into code. These rules form the essence of Propy’s smart contracts, which aim to eliminate human fallibility in the transaction process.
The Propy Transaction Platform digitally handles paperwork transfers between transaction participants. Propy’s platform “knows” when each party signs the paperwork, and it delivers the documents instantly and securely. The technology uses blockchain-based technology to enforce payment release and e-recording of all steps. As far as Propy knows, such services have never before been available for real estate transaction purposes in the United States.
Why Is Settlement via Software Better?
Propy’s methods offer specific benefits that are easy to explain. Escrow agents no longer need to verify bank transfers and paperwork or input metadata manually. County Clerks no longer need to record deed data or metadata manually. With software, the data is recorded only once and is transferred (without error) during all remaining process stages. Possibilities for human mistakes are eliminated, and closing times are cut from weeks down to hours.
Perhaps most significantly, Propy eliminates the risk of wire and title fraud. Propy’s customers never deal directly with the bank, as Propy completes payment within the buyer’s account. Furthermore, county offices only receive deeds that have been settled within the platform.
The “Amazon” Experience of Real Estate
Propy’s settlement system will offer the “Amazon” experience of real estate. With Amazon’s simple settlement system, Amazon acts as both the guarantor and the Escrow service. A consumer pays for a product, agrees to terms, and shares his or her delivery address. The vendor delivers the product, and the ownership transfer cycle is completed. Those who do not receive products are given refunds.
Likewise, innovative platforms like Propy are helping to make real estate transactions more convenient and secure. The future platforms and processes which will be built upon this technological base are unknown. Currently, Propy is already offering a new standard for people participating in the real estate ownership transfer process.