The use of Blockchain technology in the legal real estate market

Thomas Ferguson, Senior associate in the Russell-Cooke Solicitors, real estate, planning and construction team.
Thomas Ferguson
7 min Read

By now most people in the real estate industry have heard the term blockchain even if they do not entirely understand the term.

With the popularisation of cryptocurrency, the term entered into the national lexicon but understanding the basics of blockchain technology might now be essential for real estate lawyers as many people think it may become an essential part to simplifying the transfer of property.

In this article I hope to explore how blockchain technology may be used within the legal real estate market and what benefits it may bring. I will also consider whether these benefits are enough to convince the current authorities to adopt blockchain technology to assist with real estate transactions.

What is Blockchain technology?

Blockchain is actually an example of a distributed ledger technology (DLT).

DLT is a very complicated technology, but at the most basic level it is a way to digitally record a transaction where the details are recorded in multiple places simultaneously resulting in the creation of a ledger which is not controlled by any central authority.

The decentralised nature of the technology means the ledger is held on various electronic devices, referred to as “nodes”, that are in different geographical locations and connected through a “peer to peer” system.

Without a master ledger or central authority that controls it the distributed ledger is protected from corruption or manipulation. Any additions or amendments to the ledger needs to be made to each individual ledger stored on each node. Therefore, the ledger becomes immune from any cyber-attacks as they would need to attack each node simultaneously.

In its simplest terms a distributed ledger is an immutable database that can only be amended or updated in line with the rules and protocols of that specific DLT.

This ledger can only be accessible by those with the correct digital key. The term Blockchain refers specifically to a DLT where the data is stored in blocks where each block refers back to the previous block forming a chain. 

How can Blockchain or DLT be applied in real estate law

HMLR has been a leading body on advocating the use of blockchain technology within the legal real estate market.

They undertook a research project, called “Digital Street”, to explore the possibility of using blockchain technology to simplify the process of selling or buying a property in the UK.

In 2019, HMLR built a prototype that would automatically update the land registry once a property had been digitally transferred, using blockchain technology. In order to test the prototype, they recreated the sale of a semi-detached house in Gillingham that originally took 22 weeks to manually complete.

By running the transaction through the prototype each party was able to securely see the current status of the transaction including all the previous data and the future actions required to complete the transfer.

This allowed each party to know when they were required to act next in the transaction process. By running this transaction through the new blockchain prototype with the assistance of smart contracts (automated contracts), the transaction was completed in less than 10 minutes.

The success of “Digital Street” has allowed HMLR to take a step closer to their goal of becoming “the world’s leading land registry for speed, simplicity and an open approach to data”.

HMLR is not the only registry exploring the use of blockchain technology. The USA, Sweden and Georgia are but a few other countries that have all looked into using the technology to assist in the digitalisation of their register of land ownership.

All these countries have the same goal, to reduce both costs and fraud when it comes to the transfer of land, and it seems that they feel blockchain technology is an innovative and effective way to achieve these goals.

Blockchain technology has other possible applications within the real estate industry.


One such application is assisting with property management tasks by automating various processes such as rent collections and payment to property owners.

This is done via smart contracts that are stored on the blockchain and the actions and obligations in the smart contract are executed once a set of predetermined conditions have been met and verified on the blockchain.

Blockchain technology is also thought to be a major advantage for property investors who will benefit from there being one single version of verified information. This secure data sharing gives investors the ability to obtain real-time data on the asset.

Tokenisation of real estate assets

Another major application of blockchain technology is the “tokenisation” of real estate assets.

This will allow the ownership of a property to be digitalised and split into individual tokens which can be sold and transferred on a digital securities marketplace.

This lowers the barriers to entry allowing access to small scale investors which will offer owners access to an alternative form of finance.

What are the benefits of Blockchain and will they benefit the real estate market

There are benefits to using blockchain technology within the real estate industry.

The main benefits being the secure, unchangeable and verified nature of the data stored on a decentralised ledger and the increased speed of transactions.

However, each of these benefits come with their own difficulties that need to be understood and resolved before blockchain will be widely adopted in the legal UK real estate market.

First, the decentralised nature of the ledger is the essential element that allows blockchain technology to guarantee the data stored on the blockchain is incorruptible and immutable.

However, all lawyers know that it is sometimes necessary to change data in a contract or register. Most lawyers have experienced times when a title plan did not accurately represent the property borders on the ground or where there is a mistake in a contract or deed resulting from simple human error.

In such circumstances it is unclear how these errors can be rectified if there is no central body to which you may appeal and has the authority to change the data on the blockchain.

Even if these changes can be rectified in a decentralised ledger between the parties they will result in a significant increase in both time and cost which will detract from the use of blockchain technology.

It is possible to still use DLT that is centralised and ultimately controlled by an authority that can verify data entries and any required changes.

However, this undoubtedly dilutes the incorruptible and immutable guarantee offered via a decentralised DLT as it means that a central body can change the data on the blockchain.

A centralised ledger also eliminates the anonymous nature that can exist on a decentralised ledger which some may consider to be a benefit. An anonymous decentralised ledger would be in direct conflict with the current legislation and guidance which requires identification of the owner of any property within the UK.

Usually blockchains are accessed via a combination of public and private cryptographic keys. However, in terms of real estate transactions it is difficult to see any situation in which the UK Government would not require the identities of the parties to be known. Therefore, any personal key would most likely only be granted to a party that can verify their digital identity with a trusted third party.

The second often cited benefit of blockchain technology is the increase of speed and efficiency for real estate transactions.

I think it is undeniable that this technology could increase the speed and efficiency of real estate transactions.

However, there seems to be a misconception that the introduction of DLT and smart contracts will circumvent the need for legal due diligence and abolish the possibility of complex legal drafting in contracts.

There is no evidence that this is the case and in fact the introduction of DLT may require further due diligence and complex legal drafting to deal with the legal consequences of using this new technology.

To be clear, blockchain technology and smart contacts may be able to increase the speed and efficiency of a transaction. The former offers all parties (including lawyers) instant access to up-to-date reliable historical data and the latter allows lawyers to automate many administrative burdens ie. registering the property.

However, it does not, as far as I can see, allow a legal transaction to be carried out in minutes as implied in some promotional literature for blockchain technology. 


The use of blockchain technology within the legal real estate industry is currently at a crossroad. In theory the use of DLT offers some obvious benefits, however, the technology also presents some practical and legal challenges.

We have already discussed that a decentralised ledger guarantees security and immutability but also results in difficulties should the ledger need to be rectified. DLT can also in theory increase the speed of real estate transactions through easier access to data and automation of contractual obligations.

However, it remains to be seen in practice to what extent it will actually increase the speed of a live transaction. As we know, a centralised real estate blockchain would require identification as a prerequisite to participate. This will eliminate the possibility of anonymity in any real estate blockchain.

It is clear that blockchain technology offers advantages but also raises further difficulties. The ultimate question is therefore two-fold:

1) can these difficulties be overcome; and

2) If so, are the advantages significant enough to convince the current authorities to adapt or completely change the current legal processes for real estate transactions? 

I think that the evidence suggests that most governmental authorities believe that DLT should be incorporated into our legal real estate processes if it can achieve in practice what it is thought to be able to achieve in theory.

However, at the moment it is unclear where the technology or the law is capable of overcoming some of the hurdles without restricting or extinguishing the advantages of a DLT.

Only time will tell if the developments in technology and the law will be enough to overcome these difficulties.

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