Blockchain in mortgages and shared construction: an experiment starts in Veliky Novgorod

An experiment is starting in Veliky Novgorod that will allow the implementation of advanced blockchain technology in working with equity participation and mortgage agreements. Now paperwork takes up to 15 days, and with the introduction of blockchain, bureaucratic delays are expected to be reduced to one day.

Veliky Novgorod will become the first city in Russia where they will begin to develop this technology. The pilot project will become part of the Digital Economy program, which will be included in the comprehensive action plan of the Russian government in 2017-2025.

The experiment is being developed by Rosreestr employees together with Vnesheconombank and the Housing Mortgage Lending Agency (AHML). The technology will make it possible to almost instantly register equity participation agreements and automatically interact with the Fund for the Protection of the Rights of Shareholders, reports the Unified Register of Developers .

“Now, in the best case scenario, when using electronic interaction between Rosreestr and banks, it takes up to 15 days to complete a transaction. We are talking about the fact that a transaction can ultimately be completed in one day, which radically reduces time costs and speeds up all processes in the economy,” said the Minister of Economic Affairs development Maxim Oreshkin.

The most important principle of blockchain technology is the elimination of intermediaries in real estate transactions. According to Oreshkin, now at least four Rosreestr employees are involved in each transaction, and in the future the participation of officials will not be required at all.

Another advantage of blockchain is the reliability of information storage. Data is recorded in blocks and stored on thousands of computers. They cannot be faked, lost or destroyed. Experts cite as an example a case in Ghana, when a building in which archives of real estate records were stored collapsed during an earthquake. As a result, restoring the registry took several years, but some of the data remained lost. Blockchain technology would exclude such a case in principle.

“In our case, the advantages for the population are obvious: instant paperwork; eliminating the need to apply again, since documents cannot be lost or damaged; the ability to quickly check the status of the developer’s contributions and the status of one’s documents,” explained the head of Rosreestr, Victoria Abramchenko. She is confident that the pilot project will make it possible to distribute blockchain technology in the provision of other government services in the future.

However, according to experts, difficulties may arise with canceling transactions and returning everything received under the transaction. As one of the options for solving the problem, instead of canceling the entry about the transaction, a new entry is made in the register about the transfer of rights to the previous owner.

The implementation of blockchain in the field of real estate registration in Russia will begin in stages. “We plan to start implementing the technology from the chain AHML - Rosreestr - Fund for the Protection of the Rights of Participants in Shared Construction. Then we will connect banks and developers, and they, in turn, their counterparties. That is, we will follow the experimental path, and not dive into the abyss,” - explained Advisor to the head of Rosreestr Parviz Tukhtasunov.

Experts say that the main task for the current year is to understand the principles of blockchain. Meanwhile, VEB and Rosreestr are already holding a competition for blockchain solutions in the field of real estate accounting and registration.

Blockchain technology is already being implemented in Sweden, Ukraine, Greece, UAE, Georgia, Japan and Ghana. Let us recall that a few weeks ago in Kiev, for the first time in the world, an apartment was sold using a smart contract on the blockchain, and a buyer from the United States paid the owner with Ethereum cryptocurrency.