Relating to a study by the General Land Office in partnership with a working group consisting of the Texas Department of Insurance, Department of Information Resources, and other entities on the establishment and implementation of a distributed ledger-based title registry pilot program.

89(R) HB 1043 - Engrossed version - Bill Text

89R20744 SCR-F

By: Bhojani, Curry, Capriglione, Alders,

H.B. No. 1043

Garcia of Dallas

A BILL TO BE ENTITLED

AN ACT

relating to a study by the General Land Office in partnership with a

working group consisting of the Texas Department of Insurance,

Department of Information Resources, and other entities on the

establishment and implementation of a distributed ledger-based

title registry pilot program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. DEFINITIONS. In this Act:

(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) "Office" means the General Land Office.

(3) "Pilot program" means the distributed

ledger-based title registry pilot program to be studied under this

Act.

(4) "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.

(5) "Rural county" means a county that is outside the

boundaries of a primary metropolitan statistical area or a

metropolitan statistical area.

(6) "Study" means the study conducted under this Act

by the General Land Office in partnership with the working group

established under Section 3 of this Act on the establishment and

implementation by the office of a distributed ledger-based title

registry pilot program.

(7) "Urban county" means a county that is partially or

entirely inside the boundaries of a primary metropolitan

statistical area.

SECTION 2. STUDY ON PILOT PROGRAM. (a) The office, in

partnership with the working group established by Section 3 of this

Act, shall conduct a study on establishing and implementing a

distributed ledger-based title registry pilot program to record

title transfers with distributed ledger technology.

(b) A pilot program considered by the study must:

(1) include at least two counties of which at least one

is a rural county and one is an urban county and determine the

potential impact of the pilot program on those types of counties in

particular and counties generally;

(2) incorporate the recording of property liens

simultaneously with existing recording methods so as to not disrupt

current processes;

(3) collect cost data sufficient to allow comparison

of the costs to a participating county of:

(A) continuing to facilitate traditional

recordation; and

(B) adapting to a distributed ledger;

(4) determine whether existing data must be migrated

to an immutable and public ledger for backwards compatibility;

(5) evaluate both the public ledger and distributed

ledger as methods of recording to compare:

(A) costs;

(B) security;

(C) transparency; and

(D) overall complexity;

(6) provide for the recording of title transfers in

connection with the pilot program in addition to existing recording

methods;

(7) determine the ability to expand the pilot program

methods to other types of documents and information relating to

real property;

(8) incorporate the requirements of existing statutes

related to the recording of property liens;

(9) consider the authority of the office to solicit

and accept gifts, grants, and donations to fund the program; and

(10) ensure data privacy and proper protection against

fraud.

(c) The goals of the study shall include:

(1) establishing a protocol for implementation of

distributed ledger-based recording;

(2) identifying counties to be included in a pilot

program;

(3) determining the costs of the pilot program and of

converting to a statewide distributed ledger system;

(4) developing protocols for:

(A) working 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

(B) partnering 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;

(5) identifying and considering issues concerning

transparency and regulation of a distributed ledger-based title

registry system;

(6) determining funding sources for and other

available resources to support implementation of the pilot program;

and

(7) determining appropriate vendor selection

processes.

SECTION 3. WORKING GROUP. The office shall establish a

framework for a working group to discuss ideas, give feedback, and

explore other opportunities relating to the study. The working

group shall consist of representatives from:

(1) counties;

(2) title insurance agents;

(3) title insurance companies;

(4) the banking industry;

(5) the Texas Department of Insurance;

(6) the Department of Information Resources;

(7) the office; and

(8) the blockchain industry.

SECTION 4. PARTICIPATION OF REGULATORS. The office shall

engage appropriate regulators to provide information for the study

regarding the manner in which regulators could participate in

crafting guidance for a pilot program that would include protection

for all parties involved in a real estate transaction the title

transfer for which is recorded with distributed ledger technology.

SECTION 5. RULES. Not later than October 1, 2025, the

office shall adopt rules necessary to administer the study.

SECTION 6. REPORT. Not later than January 1, 2027, the

office shall submit to the legislature a report on the findings of

the study and any recommendations for legislative or other action.

SECTION 7. EXPIRATION. This Act expires September 1, 2027.

SECTION 8. EFFECTIVE DATE. This Act takes effect September

1, 2025.