HB1043 - 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.

  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.