Yesterday First American Financial announced the launch of a blockchain system for the real estate title production process. It’s common for title insurance underwriters to share policy information between themselves. The new platform aims to enable the exchange of previous title insurance policies between underwriters that are participating in the system.
First American is one of the leading title insurance providers in the US with 2017 revenues of $5.8 million. The third largest title insurer in the US, Old Republic Title Insurance, has agreed to participate. First American designed the system, but the technology used was not disclosed.
The purpose of title insurance is to cover losses if there’s a defect in the title and potentially any related litigation. Hence lenders usually require title insurance, but often cash buyers want it as well.
It’s not just alterations to the property that can cause title issues. For example, the previous owner could have a divorce claim or a tax lien.
When there’s a property sale, the new insurer will investigate changes to the property since the last policy was issued. They’ll look at all the documentation, the survey, changes or construction on the property, and any encroachments on or from a neighbor. But the previous insurance is an important starting point.
“The potential exists to create a robust exchange of title insurance policy information that delivers greater transparency, efficiency and accountability to the industry and enhances the closing experience for consumers,” said Dennis J. Gilmore, CEO, First American Financial Corporation.
Each policy in the system will be coded with a unique property identifier, enabling accurate searches.