By: Bhojani H.B. No. 5067
A BILL TO BE ENTITLED
AN ACT
relating to the establishment and implementation by the General
Land Office of a distributed ledger-based title registry pilot
program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 3, Property Code, is amended by adding
Chapter 16 to read as follows:
CHAPTER 16. DISTRIBUTED LEDGER-BASED TITLE REGISTRY PILOT PROGRAM
Sec. 16.001. DEFINITIONS. In this chapter:
(1) "Distributed ledger" means a peer-to-peer network
that operates without a central administrator or database and uses
a distributed network of devices to utilize cryptography to
immutably record and verify the accuracy of data.
(2) "Hybrid model" means a method of recording title
to real property in which basic information from the deed is
recorded on a public ledger with an identifier to the full document
that is held on a separate, permissioned distributed ledger.
(3) "Like-kind exchange" means a transaction in which
a contractually agreed-upon amount of digital assets are exchanged
for a specific parcel of land or property by delivering the assets
to a trustee who completes the transaction and disburses the funds
as agreed.
(4) "Office" means the General Land Office.
(5) "Onchain recordation" means recording and
verifying the accuracy of data through a central administrator or
database.
(6) "Pilot program" means the distributed
ledger-based title registry pilot program, as established by this
chapter.
(7) "Public ledger" means a method of recording titles
in which all records are documented on a publicly accessible
distributed ledger where the county provides free public access to
all documents.
(8) "Rural county" means a county that is outside the
boundaries of a primary metropolitan statistical area or a
metropolitan statistical area.
(9) "Stablecoin" means a digital asset that remains
stable in value against a pegged external traditional asset class.
(10) "Urban county" means a county that is partially
or entirely inside the boundaries of a primary metropolitan
statistical area.
Sec. 16.002. PILOT PROGRAM. (a) The office shall establish
and implement the distributed ledger-based title registry pilot
program in partnership with the working group described in Sec.
16.003 to record title transfers with distributed ledger
technology. Recording of title transfers in connection with the
pilot program shall be in addition to existing recording methods.
(b) The office shall ensure that the pilot program:
(1) includes at least two counties of which at least
one is a rural county and one is an urban county;
(2) incorporates the recording of property liens
simultaneously with existing recording methods so as to not disrupt
current processes;
(3) collects cost data sufficient to allow comparison
of the costs to a participating county of:
(A) continuing to facilitate onchain
recordation; and
(B) adapting to a distributed ledger;
(4) determines whether existing data must be migrated
to an immutable and public ledger for backwards compatibility;
(5) evaluates both the public ledger and hybrid model
as methods of recording to compare:
(A) costs;
(B) security;
(C) transparency; and
(D) overall complexity; and
(6) considers the guidance that would be necessary to:
(A) allow title companies to utilize government
regulated stablecoins as an acceptable form of good funds for
closing a real estate transaction; and
(B) allow escrow agents to accept digital assets
in transactions involving stablecoins or like-kind exchanges.
(c) To accomplish the goals of the pilot program, the office
shall:
(1) establish a protocol for implementation of
distributed ledger-based recording;
(2) identify counties to be included in the pilot
program;
(3) determine the costs of the pilot program;
(4) work with the selected counties to implement the
program by training, educating, and collaborating with the counties
to ensure that the pilot program is successful, efficient, and
complies with a budget established by the office; and
(5) partner with a software company to create an
application programming interface to integrate existing systems
with the distributed ledger system and ensure that title transfer
records are seamlessly incorporated.
Sec. 16.003. WORKING GROUP. The office shall establish a
framework for a working group to discuss ideas, give feedback, and
explore other opportunities relating to the subject of the pilot
program. The working group shall consist of representatives from:
(1) counties;
(2) title insurance agents;
(3) title insurance companies;
(4) the banking industry;
(5) appropriate regulators; and
(6) the Texas Blockchain Council.
Sec. 16.004. PARTICIPATION OF REGULATORS. The office shall
engage appropriate regulators to participate in crafting guidance
that includes protection for all parties involved in a real estate
transaction the title transfer for which is recorded with
distributed ledger technology.
Sec. 16.005. RULES. Not later than October 1, 2023, the
office shall adopt rules necessary to administer the pilot program.
Sec. 16.006. REPORT. Not later than January 1, 2025, the
office shall submit to the legislature a report on the findings of
the pilot program and any recommendations for legislative or other
action.
Sec. 16.007. EXPIRATION. This chapter expires September 1,
2025.
SECTION 2. This Act takes effect September 1, 2023.