1

Revolutionising Singapore’s

Conveyancing Process with

Blockchain ________________________________________

Group 1: Bonnita Leman, Dylan Mah Hon Sen, Ng Jun Xuan,

See Too Hui Min, Tan Hui Xin

April 2019

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Blockchain technology, with its distributed and

tamperproof properties, could be the key to revolutionising

Singapore’s conveyancing system. This paper explains how

we can simplify the fact-finding process using an

informational blockchain, as well as streamline the

conveyancing process via smart contracts. After explaining

the legal challenges that may arise from utilising

blockchain, this paper lays out some legal and technical

solutions. It concludes with an overview of the

implementation process and steps for the future.

We would like to thank Ms Susan Yuen from Moey and Yuen, as well as Mr Wee Wern Chau and

Mr Bryan Chew from the Singapore Land Authority (“SLA”) for kindly providing us with their

valuable insights.

EXECUTIVE SUMMARY

ACKNOWLEDGEMENTS

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TABLE OF CONTENTS

I. Problem Statement

II. Summary of Research Findings

A. Singapore’s Conveyancing Process

B. Definitions

C. Cross-Jurisdiction Analysis

III. Recommendations

A. REC-I Informational Blockchain

B. SECURE Workflow Blockchain

IV. Legal Challenges & Solutions

A. Contract Law

B. Formalities

C. Liability

D. Data Protection Laws

V. Evaluation

A. Need for Trust

B. Limited to Less Complex Transactions

VI. Implementation

VII. Conclusion

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15

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29

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37

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VII.

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SUMMARY OF

RESEARCH FINDINGS

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In its bid to become a Smart Nation,1 Singapore has embraced technology’s potential for improving

the lives of citizens. However, the present conveyancing system remains mostly paper-based and

inefficient. Thus, this report seeks to investigate how blockchain technology may be used to improve

the conveyancing process in Singapore, specifically for non-HDB residential property. Our paper

targets the purchase of non-HDB residential property because other transactions attract their own

respective rules and procedures, which are not the "core" of conveyancing.2

A. Singapore’s Conveyancing Process3

(1) Timeline

There are four main phases in Singapore’s conveyancing process:

Figure 1: Four phases in the conveyancing process.

1 More information about Singapore’s Smart Nation initiatives can be found on the Smart Nation website:

<https://www.smartnation.sg/> (accessed 7 April 2019). 2 “Ethnic Integration Policy and SPR Quota”, HDB website (last reviewed 29 December 2017)

<https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/resale/ethnic-integration-policy-and-spr-quota> (accessed

7 April 2019). 3 Some of the information in this section was obtained from Ms Yuen, a conveyancing lawyer. We also referred to

“Background to property purchase”, SLA website (updated 17 May 2018)

<https://www.sla.gov.sg/News/articleid/360/parentId/97/year/2003?category=Press%20Releases> (accessed 7 April

2019); and “Option to Purchase: 6 Things to Know Before Exercising It”, Singapore Legal Advice (18 Jan 2019)

<https://singaporelegaladvice.com/law-articles/option-to-purchase-before-exercising/> (accessed 7 April 2019).

I. PROBLEM STATEMENT

II. SUMMARY OF RESEARCH FINDINGS

Pre-Option Period

Option Period

Pre-Completion Period

Completion

6

During the Pre-Option period, the buyer and

seller will generally negotiate the terms of the

Option to Purchase (“OTP”). Once they have

agreed on the terms, the seller will grant the

buyer an OTP in exchange for an option fee,

which is usually 1% of the purchase price. At

this juncture, the buyer will consider how he

wishes to pay the rest of the purchase price. He

could do so using cash, a bank loan, CPF

money, or proportions of each.

After the buyer has paid the option fee, the

Option Period will begin, during which time

(usually 14 days) the property is “reserved” for

the buyer and the seller is not allowed to sell the

property to others. The buyer can exercise the

option by paying the balance deposit, which is

usually 5-10% of the purchase price. Otherwise,

the OTP will expire, the buyer forfeits the

option fee, and the seller can sell the property to

another buyer.

Upon payment of the balance deposit, the

buyer’s conveyancing lawyer lodges a caveat to

protect the buyer’s interest.4 The lawyer also

4 Land Titles Act (Cap 157, 2004 Rev Ed) s 115(2). See

also: Alrich Development Pte Ltd v Rafiq Jumabhoy

[1993] 1 SLR(R) 598 at [37], and Cathay Theatres Pte

Ltd v LKM Investments Holdings [1998] 1 SLR(R) 234

at [32]. 5 Traditionally, a charge involves a transfer of ownership

from the chargor to the chargee, but a mortgage does not

involve a transfer of ownership from the mortgagor to

the mortgagee (see: “Section 5(A)(2): (2) Differences

between “charge” and “mortgage” no transfer of

ownership in a charge” at

<https://www.singaporelawwatch.sg/About-Singapore-

Law/Commercial-Law/ch-22-banking-and-finance>).

However, in the context of property law, mortgages and

sends out legal requisitions and prepare the

transfer, charge5 and other required documents.

The sale is complete once the seller discharges

his charge. The lawyer then submits the

documents to the SLA so that the SLA can

register the title in the buyer’s name. Finally,

this title will be reflected on the land register and

become indefeasible.

(2) Important Steps

During the Pre-Option and Option Period, the

buyer’s lawyer needs to conduct title searches

on the property. This is to verify that the seller

has good title to the property and that there are

no encumbrances to prevent fraudsters from

attempting a sale when they do not have title to

the property. A title search is done online via the

Integrated Land Information Service (“INLIS”)

portal. It is relatively costly to conduct a title

search.6

The lawyer also needs to conduct bankruptcy

and litigation searches on the seller. If the

seller shows risks of bankruptcy or is involved

in litigation, it is possible that the seller cannot

charges essentially have the same effect. This is because

the Land Titles Act (Cap 157, 2004 Rev Ed) s 68(3)

dilutes the difference between the two, by stating that a

“mortgage shall not operate as a transfer of the land

mortgaged, but shall have effect as a security only”.

Hence, the terms “mortgage” and “charge” will be used

interchangeably in this report. 6 The INLIS website can be accessed here:

<https://www.sla.gov.sg/inlis/#/> (accessed 7 April

2019). According to the website, it costs $16 to do a

search on “Property Title Information”.

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transfer good title to the buyer. 7 Bankruptcy

searches are conducted online via the

Insolvency & Public Trustee's Office on the

Ministry of Law (“MinLaw”) E-services

portal8. Litigation searches are also conducted

online via the E-litigation portal. 9 As the

searches are expensive, lawyers may turn to

third-party portals such as Questnet 10 and

D&B,11 which are cheaper and more efficient as

they can generate combined searches from one

search.12

Once the buyer has paid the balance deposit, the

lawyer needs to lodge a caveat via the online

Singapore Title Automated Registration System

(“STARS”) eLodgement portal.13

The lawyer also needs to send out legal

requisitions to the various government

agencies. Legal requisitions are applications

made to obtain more information about the

property. For instance, requisitions may be

made to the Public Utilities Board to find out

whether the land is affected by drainage

reserves. This is necessary as OTPs may make

it a condition for legal requisitions to be

satisfactory. Legal requisitions can be sent

online via the InteReq portal.14

Figure 2: InteReq’s illustration of how law firms can use

the portal to send out legal requisitions.15

7 According to the Bankruptcy Act (Cap 20, 2009 Rev

Ed) ss 107 and 111, when a person is declared a

bankrupt, the Official Assignee shall take possession of

his property and has the power to deal with the property.

This affects the seller’s title to the property. 8 The MinLaw portal can be accessed here:

<https://www.mlaw.gov.sg/eservices/io/xhtml/layout/Fra

me.xhtml> (accessed 7 April 2019). 9 The eLitigation portal can be accessed here:

<https://www.elitigation.sg/_layouts/IELS/HomePage/P

ages/Home.aspx> (accessed 7 April 2019). It costs $16

per search per year. 10 The Questnet portal can be accessed here:

<https://www.questnet.sg/> (accessed 7 April 2019). 11 The D&B (Dun & Bradstreet) portal can be accessed

here: <http://www.dnb.com.sg/> (accessed 7 April

2019). 12 Ms Yuen shared with us that many conveyancing

lawyers turn to alternative portals such as Questnet an

D&B, since it is relatively costly to conduct searches on

portals like e-Litigation. This is particularly since these

portals are cheaper and more efficient, as they can

generate combined searches from one search. 13 The STARS eLodgement portal can be accessed here:

<https://www.sla.gov.sg/starsELS/jsp/common/index.jsp

> (accessed 7 April 2019). 14 The InteReq portal can be accessed here:

<https://www.starsinfo.com.sg/lriweb/pfk/PfkMainServl

et?pContents=/lri/WalkinUrl.jsp&pAction=FIRST&pPor

talId=LRI> (accessed 7 April 2019). More information

on InteReq can be found on InteReq’s brochure:

<https://www.crimsonlogic.com/Documents/pdf/resourc

eLibrary/brochures/eGovernmentConsulting/Intereq_Bro

chure.pdf> (accessed 7 April 2019). 15 Taken from InteReq's brochure:

<https://www.crimsonlogic.com/Documents/pdf/resourc

eLibrary/brochures/eGovernmentConsulting/Intereq_Bro

chure.pdf>.

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Next, the lawyer prepares the transfer and charge documents. A hardcopy “wet” signature is

required from the parties. Upon completion of the sale, the lawyer must submit these documents

online, as well as physically to the SLA’s office16 no later than 1 pm on the next working day after

the online submission.17

(3) Problems

First, efficiency is not maximised. Lawyers rely on multiple online platforms, which often require the

same set of information (e.g. particulars of the buyer, property address, etc). As such, there is

unnecessary repetition in terms of data entry. Furthermore, the process is not fully digital; some

documents have to be submitted physically, and wet signatures are required. This is not only costly

but also time-consuming.

Second, there is still a lack of trust between the parties. With “wet” signatures involved, there is a

risk of forgery. Moreover, lawyers may represent both the buyer and seller at the same time, which

could result in an actual or potential conflict of duties. Parties are wary that the lawyers may not act

entirely in their interest.

16 Land Titles (Electronic Lodgement) Rules (G.N. No. S 275/2003, 2004 Rev Ed) rule 6 states that “[e]xcept for

instruments described in s 57(3) of the Land Titles Act and rule 15A of the Land Titles Rules … all instruments on

paper form shall be lodged for registration in person … after the same instruments in electronic form has been

electronically lodged” (emphasis added). This means that hardcopy submission is required for these particular

documents. 17 Land Titles (Electronic Lodgement) Rules (G.N. No. S 275/2003, 2004 Rev Ed) rule 8 states that paper lodgement

shall be submitted no later than 1pm on the next working day after the corresponding electronic lodgement.

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B. Definitions

(1) What is Blockchain?

Simply put, blockchains are decentralised and

distributed ledgers18 which record changes in data.

Replications of the data store occur in real-time

across a number of systems. Cryptographic

methods are used, including digital signatures to

prove authenticity, as well as hashes for references

that allow for read-write access control. 19 A

blockchain is also tamperproof and has an auditable

trail. In other words, it has mechanisms which make

it difficult to change data records, and easy to detect

when someone is trying to do so.20

(2) What is a Smart Contract?

Despite its name, “smart contracts” are not the legal

contracts which are familiar to lawyers. A “smart contract”

is merely computer code that is executed if – and only if –

pre-specified requirements are met.21 It is akin to a software

vending machine, in which the exchange of an item in return

for payment is automated.

In the context of conveyancing transactions, a smart contract can, for example, be employed to ensure

that the transfer of title from one party only occurs when specified conditions are met. However, these

required conditions are ultimately derived from a pre-existing legal contract.

18 Antony Lewis, “Part 6: Blockchain Technology” in Antony Lewis, The Basics of Bitcoins and Blockchains (Mango

Publishing Group, 2018) 324-351 at 326. 19 Id, at 335. 20 Antony Lewis, “A Gentle Introduction to Blockchain Technology”, Bits on Blocks (9 September 2015)

<https://bitsonblocks.net/2015/09/09/gentle-introduction-blockchain-technology/> (accessed 6 April 2019). 21 Chamber of Digital Commerce, “Smart Contracts: Is the Law Ready?” (September 2018).

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C. Cross-Jurisdiction Analysis

The benefits of integrating blockchain into the conveyancing process have been recognised in

numerous countries. The following table illustrates examples of countries that have embarked on such

projects, as well as their respective levels of integration, as observed and categorised by Graglia and

Mellon.

Figure 3: The more advanced the level of integration, the higher the level.22

In following subsections, we take a closer look at how blockchain technology has helped improve

foreign conveyancing systems. The Republic of Georgia (“Georgia”), Sweden, and Dubai have been

chosen for their varying degrees of integration.

22 Michael Graglia, Christopher Mellon, “Blockchain and Property in 2018: At the End of the Beginning”, The MIT

Press Journals (10 July 2018) <https://www.mitpressjournals.org/doi/pdf/10.1162/inov_a_00270> (accessed 7 April

2019).

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(1) Georgia

In 2016, Bitfury Group developed a pilot project in collaboration with Georgia’s National Agency of

the Public Registry (“NAPR”). These are some notable features:

1. Private, permissioned blockchain with a distributed digital time-stamping service: This

allows NAPR to verify and sign a document containing a citizen's essential particulars and

proof of ownership of property.23 This adds “immutability and allow[s] the owner of the

document to prove that the receipt existed no later than the time of time-stamping, and that it

was authorised by NAPR.”24

2. Verification features: Before a transaction is concluded, the nodes of the blockchain can

verify that the buyer has enough funds and that the seller has ownership of the property.25

3. Land titles are recorded on the blockchain: The entire registry is placed on the blockchain.

Title can registered and searched on the blockchain itself (see Figure 3 above).

(2) Sweden

In 2018, Sweden’s Lantmateriet jointly developed a project with ChromaWay with the following

features:26

1. Private blockchain and smart contract application: The private blockchain is open-source,

checked by Lantmäteriet, and run by other nodes.27 As the transaction progresses, updates are

recorded onto a blockchain.

2. Lantmateriet’s database: Registration of title takes place on the blockchain. Lantmateriet

then retrieves the updates in ownership from the blockchain and changes its registry

accordingly.28

23 Ian Allison, “Bitfury trumpets blockchain land registry with Republic of Georgia at Harvard and UN,” International

Business Times (9 Nov 2017) <https://www.ibtimes.co.uk/bitfury-trumpets-blockchain-land-registry-republic-georgia-

harvard-un-1646616> (accessed 7 April 2019). 24 Qiuyun Shang, Allison Price, “A Blockchain based Land Titling Project in The Republic of Georgia”, The MIT Press

Journals (28 Dec 2018) <https://www.mitpressjournals.org/doi/pdf/10.1162/inov_a_00276> (accessed 7 April 2019) at

p 76. 25 Id, at p 77. 26 “The Land Registry in the block chain — testbed”, Chromaway (March 2017)

<https://chromaway.com/papers/Blockchain_Landregistry_Report_2017.pdf> (accessed 7 April 2019). 27 Id, at p 59. 28 Ibid.

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3. File storage: All parties possess digital files representing various documents, such as

agreements of ownership and mortgage deeds.29 This eliminates the need for storage of

physical documents. The original files are kept separately.30

4. No bearer instruments: No bearer instruments are stored on the blockchain for precautionary

reasons. Nevertheless, they could be so in the future, subjected to risks and potential

legislative issues.31

5. ID-solution: Instead of relying on a private key to identify individuals, a customised ID-

solution is used instead. One key benefit is that it is easy to add more levels of security, such

as biometric information , so as to tailor to varying security requirements.32

Figure 4: Illustration of the Swedish blockchain platform application.33

(3) Dubai

Thus far, Dubai’s project is the most advanced case of blockchain integration by a governmental

body. The project has five notable features.

1. Title deeds and smart contracts: The project aims to record all properties, documents and

transactions on a blockchain by 2020.34

29 Id, at p 68. 30 Id, at p 59. 31 Id, at p 68. 32 Ibid. 33 Ibid. 34 Samburaj Das, ”100%: Dubai Will Put Entire Land Registry on a Blockchain” CCN (9 October 2017)

<https://www.ccn.com/100-dubai-put-entire-land-registry-blockchain> (accessed 6 April 2019).

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2. Integration with other government services: The blockchain portal will be connected to

utilities providers such as electricity, water, and telecommunications systems. It will also be

connected to personal tenant databases, e.g. Emirates Identity Cards and residency visas.35

3. Consolidated online portal: Users will not have to go to different service centres; all

transactions are to be completed using the same portal, including tenancy contract renewals,

utilities payments, and conveyancing.36 Moreover, users can deal in properties online without

visiting a registration office at all.37

4. Listing: Properties for sale will be listed on the blockchain, which allows for “real-time listing

of information, with no duplications or outdated information... [and] once a property is sold it

is automatically delisted.”38

5. Mortgages: Banks can create a node, connect it to the Land Department’s node, and

mortgage/re-mortgage/de-mortgage property.39

Figure 5: Screengrab of the blockchain portal displaying information on a property. The column on the right titled

“Blockchain Activity” shows all the activities related to the property as recorded on the blockchain.40

35 Ibid. 36 Government of Dubai Media Office, ”Dubai Land Department becomes world’s first government entity to conduct all

transactions through Blockchain network” (7 October 2017) <http://mediaoffice.ae/en/media-

center/news/7/10/2017/dubai-land-department.aspx> (accessed 6 April 2019). 37 Lara Abdul Malak, ”Dubai Land Department to Implement Four Blockchain Projects in 2019” UNLOCK (24 May

2018) <https://www.unlock-bc.com/news/2018-05-24/dubai-land-department-to-implement-four-blockchain-projects-

in-2018> (accessed 6 April 2019). 38 Ibid. 39 Ibid. 40 QuantaLoop, ”Blockchain Use Case Study: Dubai Land Registry” <https://quantaloop.io/blockchain-case-study-

dubai-land-registry/> (accessed 7 April 2019).

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RECOMMENDATIONS

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While some countries seek to use blockchain’s transparency to solve the problem of corrupt

administrative systems, 41 Singapore’s authorities are renowned for being corruption-free 42 and

already enjoy a high level of trust from its citizens. Hence, our recommendations will focus not only

on removing the need for trust between actors in the conveyancing process, but also on increasing

efficiency. This follows in the footsteps of countries such as the United Kingdom, where blockchain

is envisaged to make transactions almost instantaneous.43 In particular, we aim to reduce transaction

time, eliminate repetition, and remove the need for physical lodgement of documents.

Our recommendations consist of two components working in tandem:

(1) an informational blockchain named “REC-I” (Real Estate Conveyancing Information); and

(2) a smart workflow platform built on smart contracts known as “SECURE” (Singapore

Electronic Conveyancing Unified Real Estate).

41 For example, blockchain was adopted in Honduras to combat land title fraud. Previously, politicians had hacked into

the land registry database and changed the records to reflect that they owned expensive land. With a tamperproof

blockchain solution that all members of the public can monitor in real-time, the government expects to reduce corrupt

behaviour. Gertrude Chavez-Dreyfuss, “Honduras to build land title registry using bitcoin technology” Reuters (16 May

2015) <https://www.reuters.com/article/usa-honduras-technology/honduras-to-build-land-title-registry-using-bitcoin-

technology-idINKBN0O01V720150515?irpc=932> (accessed 6 April 2019). 42 Adrian Lim, “Singapore rises to third place in annual ranking of least corrupt countries” The Straits Times (29 Jan

2019) <https://www.straitstimes.com/politics/singapore-rises-to-third-place-in-annual-ranking-of-least-corrupt-

countries-global-study> (accessed 4 April 2019). 43 Lorna Stark, “Blockchain: Rewriting the Way Government Does Business” KPMG Insights (26 September 2017)

<https://home.kpmg/xx/en/home/insights/2017/09/blockchain-rewriting-the-way-government-does-business.html>

(accessed 6 April 2019)

III. RECOMMENDATIONS

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A. REC-I Informational Blockchain

One of the pain points of the existing system lies with informational governance.

The data required to complete a sale-and-purchase transaction resides in

multiple different sources. For example, INLIS is used when conducting a title

search, InteReq is used for legal requisitions, and third-party databases such as

Questnet are used when conducting a litigation search. Not only is it troublesome to visit so many

sources, it is also confusing as users need to familiarise themselves with many different interfaces.

Moreover, each source charges a fee per use, increasing the costs borne by lawyers and clients.

Additionally, the information in third-party databases may be outdated, since they retrieve their data

from the official sources only on a periodic (e.g. quarterly) basis. Finally, there is a risk that

information from third-party sources may be erroneous or otherwise unreliable.

Pain Points of Current System Benefits of REC-I

Data stored in multiple systems with varying

user interfaces

Information is consolidated and intuitively

organised

Users pay a fee per use, per search Cheaper/potentially free for users

Third-party databases are updated periodically Always up-to-date

Results displayed by third-party databases may

not be accurate

Data comes directly from official sources

To resolve this, we propose creating a single portal which utilises blockchain technology to record

the information. The blockchain is a permissioned one: only approved parties will be able to upload

information onto the blockchain, while members of the public – such as buyers, sellers, and banks –

can view the data, but cannot modify it. The aforementioned approved parties consist of these

government-affiliated organisations:

(a) SLA INLIS, providing title and encumbrance searches;

(b) SLA MyProperty, providing basic information about the property;

(c) MinLaw's Insolvency & Public Trustee's Office, providing bankruptcy records;

(d) E-litigation, providing litigation records; and

(e) InteReq, providing legal requisitions.

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The SLA will be the operator of the blockchain, giving them the authority to decide which parties

have the permission to add information onto the blockchain. This allows the SLA to adapt to any

future changes in the database providers (e.g. if a new database provider enters the market) or if an

existing database provider has been compromised.

The platform will be supported by a user-friendly interface, as demonstrated below.

Homepage

CorpPass credentials are

required for log-in. This

promotes interoperability as

many of the existing databases

require CorpPass credentials.

Search Page

The page is optimised for

simplicity. Generally, the

information that users need can

be divided into two categories:

information about (1) the

buyer/seller, and (2) the

property.

Individual Search Results

At the top, the page segregates

information neatly into two tabs.

Under the “Individual” tab,

there is a sidebar that users can

click on to display the desired

information.

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Property Search Results

The layout for the “Property”

tab is similar to that of the

“Individual” tab.

(1) Limitations

REC-I will require participation from many government

agencies, but data-sharing between agencies continues to

pose administrative difficulties. However, the long-term

benefits outweigh the costs of co-operation between

agencies. Additionally, initiatives such as the Public Sector

(Governance) Bill44 already seek to encourage secure data

flow across agencies.

Further, some information may not be placed on the blockchain. For instance, law

firms conduct know-your-client and anti-money laundering checks before they agree

to work for a client. These require information from non-government institutions

who may not have the capacity to be a node on the REC-I blockchain. Another

example would be requisitions from condominium management committees

(“MCs”). While some MCs use InteReq’s online legal requisition services, many

MCs do not even have an online presence. It would be cost-prohibitive to force all

MCs to join the REC-I blockchain.

44 Public Service Division, Prime Minister’s Office, “Media Factsheet on the Public Sector (Governance) Bill” (8

January 2018)

<http://www.nas.gov.sg/archivesonline/data/pdfdoc/20180108011/Media%20factsheet%20on%20the%20Public%20Se

ctor%20-%20Governance-%20Bill.pdf> (accessed 6 April 2019).

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B. SECURE Workflow Blockchain

Apart from REC-I, a transaction workflow blockchain, SECURE, is also proposed to enhance the

speed and ease of conveyancing property. By moving the transaction onto the blockchain, costs can

be reduced and risks lowered by eliminating:

(a) the need for repeated title and bankruptcy checks,

(b) the need for manual in-person submission of documents,

(c) the payment of the monies to the various parties, and

(d) the risk of transferring money without title being obtained.

The SECURE platform is powered by semi-private blockchain. Thus, the public will be able to

perform conveyancing transactions on the blockchain. However, only a consortium of trusted parties

will be nodes in the blockchain with permissions to modify the blockchain. These parties will include,

inter alia, the SLA, partner banks, and the judiciary.

(1) Offline OTP

The first step of the conveyancing process starts with the issuance of the OTP. We propose that this

part of the process remains offline, due to the need to involve lawyers when negotiations are likely to

take place regarding the terms of sale, price, and the duration that the OTP is to be valid for.

(2) Creation of Offer on the Blockchain

Once the parties are in broad agreement, the seller will create a digital OTP on SECURE by

entering key details of the transaction (i.e. parties’ names, property information and price).

20

SECURE will then verify that the seller has good title and that there are no other outstanding OTPs

issued for the same property. This prevents the problem of “double spending” in the context of

conveyancing transactions. Furthermore, a digitised copy of the OTP contract will also be hashed and

placed onto the blockchain. This prevents any party from unilaterally modifying the terms of the

contract and reduces the risk of forgery and fraud.

The OTP will be placed on a private segment of the blockchain, ensuring that only the potential buyer

is able to view the OTP. The potential buyer will then be able to accept the OTP by paying the option

fee on SECURE.

(3) SECURE’s Payment System: Escrow Bank Account

All payments on SECURE will be made by way of an escrow bank account that is controlled by a

smart contract. This bank account is likely to be set up by the SLA. However, the funds in the account

can only be accessed and moved by the smart contract.

In the past, conveyancing monies were deposited with lawyers into a client account. However, this

allowed fraudulent lawyers to easily abscond with client monies. Now, modern conveyancing practice

requires lawyers to open specialised conveyancing (“CVY”) accounts for conveyancing monies to be

deposited in, reducing the likelihood of fraud. Nonetheless, these CVY accounts are costly and the

handling of conveyancing monies are governed by detailed rules.45

45 Conveyancing and Law of Property (Conveyancing) Rules 2011 (No. S 391) rule 5(1)(b). See also rule 2, which

equates a “conveyancing account” with a CVY account.

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On the SECURE platform, only the smart contract has control over the deposits in the bank account.

This significantly reduces the likelihood of fraud and misappropriation. Furthermore, SECURE can

put into place specific requirements that must be fulfilled before funds are disbursed to the seller’s

bank account.

For example, at the stage of the issuance of OTP, once the smart contract receives the option fee from

the buyer, it is able to ensure that the offer for the OTP is still valid and that the seller still has good

title to the property. Once the relevant nodes have verified that these requirements are fulfilled, the

smart contract will disburse the funds to the seller. Updates will then be made to the public REC-I

blockchain, so that “the world” is made aware of the transaction.

Conversely, if the smart contract is unable to verify that the seller still has good title, the buyer's

money will remain in the escrow account. The buyer will then have the option to withdraw his/her

money. Thus, the buyer’s funds are protected at all times.

(4) Obtaining Financing and Execution of OTP

At this stage of the conveyancing transaction, the buyer and seller will negotiate the precise terms of

the sale and purchase of the property. Once the terms of this agreement are finalised, a tamperproof

copy will be placed onto the blockchain.

The buyer will also usually seek financing options (e.g. bank loan, CPF money) to fund the purchase

of the property, rather than pay in cash. Based on practitioners in the field, this phase of the

conveyancing is usually time-consuming. This is because (1) the buyer needs to apply to multiple

banks, using essentially the same information; and (2) upon receiving the application, the various

banks have to perform their own due diligence and research before offering a quote. We believe that

SECURE is able to increase the efficiency in this phase of the transaction.

SECURE may act as a centralised platform for the buyer to request and accept loans quotes from

various banks. The platform itself already has the pertinent information of the buyer and the

property from the OTP, reducing duplicate paperwork.

22

Further necessary information such as the buyer’s credit history, personal information, outstanding

loans and CPF balance can then be obtained by pinging various agencies and placing the information

on a private segment of the blockchain.46 The buyer will then grant access to the information to the

banks he wishes to obtain quotes from.

The various banks with all the necessary information in the blockchain are then able to expediently

calculate the terms of loan that they are willing to offer.

46 Private information is a common feature amongst permissioned blockchains. See “Channels”, Hyperledger Fabric

<https://hyperledger-fabric.readthedocs.io/en/release-1.4/channels.html> (accessed 7 April 2019).

Banks' Offers

The banks' offers will be

collated and presented to

the buyer so that he may

compare the suitability of

the various offers.

23

After the buyer selects a bank and accepts the bank’s terms, the agreement is signed and placed onto

the blockchain, together with information of the charge that the bank is expected to obtain. This

allows for auditing and the automatic creation of the charge once the conveyancing transaction is

completed.

Having obtained financing for the purchase, the buyer may then exercise his/her OTP by paying the

balance deposit through the SECURE escrow system. The smart contract once again verifies that

there have been no changes to the seller’s title. Once verified by the relevant nodes, the exercise

money is disbursed to the seller, together with an automatic caveat lodged on behalf of the buyer over

the property. This simultaneous transfer of funds and lodging of caveat ensures that the buyer’s

money is protected at all times.

The centralisation of financing for the buyer brings about gains in efficiency through the reduction of

duplicate paperwork. Moreover, as the transaction is taking place on the SECURE platform, the banks

are assured that the seller has good title, such that any eventual security interest they have in the

property will also be good.

Furthermore, the digitised and decentralised nature of SECURE allows banks to tap into the

information to continually innovate themselves.47 For example, one can imagine that through the

increased digitisation of relevant information, banks can begin to harness artificial intelligence to

automatically offer quotes to the buyer, reducing turnaround times for buyers to obtain a quote. The

increased ease of obtaining financing quotes from various banks also allows buyers to seek out the

best available terms. This increase in market efficiency may further reduce the cost of obtaining

financing for buyers.

(5) Legal Requisitions and Discharge of Charge

After the execution of the OTP, the parties’ lawyers will then rely on the REC-I platform to perform

the necessary due diligence. The consolidation of information reduces duplicate data entry and costs

associated with obtaining information the seller and buyers.

The discharge of the existing charge over the property will have to be obtained from the seller’s bank.

The seller’s bank can be made privy to the information on the blockchain such that they may verify

47 Mr Wee shared that a decentralised blockchain can allow for quicker innovation by various players in the ecosystem,

and we found his idea of a centralised platform for purchasers to obtain loans highly interesting.

24

the details of the conveyancing transaction. This is relevant for the bank to determine if the sale price

is sufficient to discharge the balance of the loan. The seller’s bank may then sign off on the discharge

of its charge on the property, subject to the repayment of the loan balance. This sign-off is securely

placed on the blockchain for use during the completion process.

At this point, parties are ready to complete the transfer of the property and the payment facility for

completion will be opened.

(6) Completion

Both the buyer and the financing bank will transfer funds into the SECURE escrow account. The

smart contract will then verify that all required steps have been completed (e.g. legal requisitions and

discharge of the existing charge). Most importantly, it will verify again that title still resides with the

seller. Once verified, the smart contract will disburse funds to all the relevant parties such as the

seller’s bank, the Inland Revenue Authority of Singapore (“IRAS”), the SLA and the seller himself.

Simultaneously, the SLA will be notified of the completed conveyancing transaction, leading to the

change of ownership and the creation of a new charge in favour of the buyer’s bank. Similar to earlier

transactions, the simultaneous nature of the transfers ensures that monies are not disbursed without

the buyer obtaining his property. The conveyancing transaction is thus complete, together with an

auditable record of all the steps and documents in the process.

What does SECURE automate/streamline?

Automatic verification of title Smart and secure escrow account

Speedy collation of loan offers Automatic creation of caveats

25

LEGAL CHALLENGES &

SOLUTIONS

26

In the bid to improve Singapore’s conveyancing process, certain legal challenges may arise. This

paper focuses on four key concerns: (1) contract law; (2) statutory formalities; (3) allocation of

liability; and (4) data protection laws.

A. Contract Law

(1) Ambiguity

While the code in a smart contract is necessarily black-and-white,48 contracting parties often desire

“wriggle room” in their contractual terms. They may use inherently ambiguous language (e.g. “bona

fide” or “reasonable”), which cannot be reduced to code.

Figure 6: Example of common terms in a sale-and-purchase agreement which cannot be codified due to the ambiguous

portions highlighted in bold.49

Hence, for the foreseeable future, it is not possible for a smart contract to contain a whole OTP or

sale-and-purchase agreement. Only key and clearly-defined contractual terms will be executed by the

smart contracts.

(2) Conflict between Natural Language Contract and Smart Contract

The smart contracts in SECURE do not replace a natural language contract.50 Instead, they merely

automate certain aspects of the parties’ agreement. As such, any smart contract will need an

underlying natural language contract.

Unfortunately, this creates a risk that the terms of the natural language contract might conflict with

those of the smart contract. For example, parties may state on paper that the option fee is “1% of the

48 Chamber of Digital Commerce, “Smart Contracts: Is the Law Ready?” (September 2018) at p 24. 49 The example was extracted from the LawOnline Singapore website at <http://lawonline.com.sg/forms/> (accessed 6

April 2019). 50 Chamber of Digital Commerce, “Smart Contracts: Is the Law Ready?” (September 2018) at p 23.

IV. LEGAL CHALLENGES & SOLUTIONS

“Before delivering vacant possession of the Property to the Purchaser, the Vendor must ensure

that the Property has been completed so as to be fit for occupation and must remove all

surplus material and rubbish from the Property.”

27

purchase price”, but state in the smart contract that the fee is “1% of $2 million”. What happens if

the seller decides to increase the purchase price beyond $2 million? The buyer would probably pay

only $20,000 into the escrow, thereby automatically receiving an option despite the seller’s protests.

Currently, how the courts will deal with such scenarios is uncertain, given

the lack of legal guidance. To eliminate this uncertainty, parties should

utilise a hierarchy of precedence clause. This clause would clarify that the

natural language document should prevail over the smart contract in the

event of any inconsistencies. This is an ideal solution as the effectiveness

of these clauses have been tried-and-tested in local courts.51

Even without a hierarchy clause, a court might find an implied term that the

natural language contract should take precedence. To prove that the term

exists, parties need to show that (1) they did not address their minds to the

lack of a hierarchy of precedence clause; (2) the term is necessary for

business efficacy; and (3) the parties would have responded “Oh, of

course!” if the proposed term had been put to them at time of the contract.52

However, it is uncertain whether the court will imply the term, since the

exercise depends on the facts and the threshold of necessity is high.53

Even if the court does not imply a term, parties could argue that the facts

are analogous to the issue of conflicting documents in an agreement. Two

situations could arise:

(a) If the conflict cannot be reconciled, the court will prefer the more

specific term over a general one; or

(b) If the conflict can be reconciled, the court will try its best to reconcile

the terms.54

In situation (a), the natural language contract would probably prevail as it is more specific than the

smart contract. For the natural language contract, parties have carefully negotiated its terms and added

in details such as ambiguous clauses. In comparison, the smart contract is pre-programmed by

51 See for example: The“Inai Selasih” (ex “Geopotes X”) [2005] 4 SLR(R) 1 at [18]. 52 Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 at [101]. 53 Id, at [100]. 54 Sintalow Hardware Pte Ltd v OSK Engineering Pte Ltd [2017] 2 SLR 372 at [53]–[55].

3. Conflicting Documents

1. Hierarchy

of Precedence

2. Implied Terms

28

SECURE and is only concerned with executing a few key provisions. Therefore, it is likely that the

natural language contract will prevail.

In situation (b), parties risk a re-interpretation of their obligations. Using the example of an option

fee expressed as “1% of $2 million” versus “1% of the purchase price”, the court might find that

parties intended for the purchase price to be fixed at $2 million, even though such a constraint is not

expressly stated in the natural language contract.

(3) Voidability

Courts may declare a contract voidable or void ab initio

under certain circumstances. For instance, parties may

have lacked mental capacity at the time of contracting.55

Alternatively, parties may have been under undue

influence. 56 These are vitiating factors that a smart

contract platform can neither detect nor avoid. Upon

declaring a contract void, parties need to be restored to

a position as if the contract had never existed.

Unfortunately, transactions recorded in a blockchain are practically immutable and cannot be

“deleted”.

Although the transaction cannot be deleted, courts can enforce their judgment by adding a block that

essentially nullifies the previous transaction. For example, if a sale-and-purchase agreement is

declared void, the new block would reassign ownership back to the seller.

55 See for example: Woo Swee Har v Yeo Boon Kim [1991] 1 SLR(R) 637, where the transaction was set aside as the

seller had lacked mental capacity. 56 See for example: Che Som bte Yip v Maha Pte Ltd [1989] 2 SLR(R) 60, where a mortgage deed was set aside on the

grounds that the mortgagor had been acting under undue influence.

29

B. Formalities

(1) Recognition of Blockchain Records by the SLA

Presently, several documents only require electronic lodgement, for

instance, documents for the lodgement of caveats.57 However, both

electronic and physical lodgement are required for documents such

as charge documents and documents for the registration of title.

“Wet” signatures are still required on physical documents.

The SECURE platform dispenses with the need for both physical and electronic lodgement. Instead,

the blockchain records form a reliable trail of the entire conveyancing process. Thus, the SLA can

rely on the blockchain records in place of the forms which are presently approved for physical or

electronic lodgement. This would eliminate the energy- and time-consuming process of physical

lodgements, and streamlines the lodgement of all necessary forms with the SLA.

As a result, the Registrar should consider recognising SECURE's blockchain records as an approved

form of an instrument intended to affect registered land, pursuant to s 51(1) of the Land Titles Act.58

Additionally, the requirement for either physical or electronic lodgement of forms can be gradually

phased out as the SECURE platform achieves more widespread use.

(2) Enforceability and Digital Signatures

Section 6(d) of the Civil Law Act requires a conveyancing agreement to be signed and in writing in

order for it to be enforceable.59 The SECURE system utilises digital signatures at each stage to ensure

that only the right parties who are involved at the respective stages can read and write on the platform,

as well as to automate aspects of a conveyancing agreement. Digital signatures are a type of electronic

signature which provides an additional security layer through asymmetric cryptographic systems.60

A question therefore arises: does a digital signature satisfy the requirements under s 6(d)?

57 Land Titles Act (Cap 157, 2004 Rev Ed) s 57(3)(d); Land Titles Rules (G.N. No. S 40/1994, 1999 Rev Ed) rule 15A;

and Land Titles (Electronic Lodgement) Rules (G.N. No. S 275/2003, 2004 Rev Ed) rule 6. 58 Land Titles Act (Cap 157, 2004 Rev Ed) s 5(1). 59 Civil Law Act (Cap 43) Rev Ed 1999 s 6(d). 60 Electronic Transactions Act (Cap 88, 2011 Rev Ed) s 1(1), Third Schedule.

30

At first glance, it appears as if they are sufficient, since s 8 of the Electronic Transactions Act (“ETA”)

states that electronic signatures can satisfy the legal requirement for documents to be “signed".61

However, conveyancing agreements are excluded from the application of s 8 by operation of the First

Schedule.62 Thus, electronic signatures have yet to be legislatively recognised as sufficient for the

formalities requirements of conveyancing contracts.

Despite this, the High Court in SM Integrated Transware v Schenker Singapore63 has held that

electronic signatures can fulfil the requirements of s 6(d).64 In this vein, since digital signatures are a

type of electronic signature, digital signatures could arguably be recognised for this purpose too.

Nevertheless, to accord greater certainty to the status of digital signatures, they should be given

legislative recognition in the context of the enforceability of conveyancing agreements. We propose

that the First Schedule of the ETA be modified to remove the exclusion of contracts for the sale of

immovable property. Following this, since digital signatures would meet the requirements under s 8,

conveyancing agreements signed digitally on the SECURE platform would be enforceable.

Concerns may arise over (1) the security and (2) the

cautionary effect of an electronic signature. Given the

high value of conveyancing agreements, one might be

wary of replacing “wet” signatures with electronic

signatures. However, such concerns can be alleviated.

First, the SECURE platform can caution users

whenever they are entering into an enforceable

agreement using, for instance, a pop-up notification. Second, digital signatures are likely to be more

secure than "wet" signatures. This is because "wet" signatures are easy to forge, whereas digital

signatures use keys that allow for an individual's identity to be reliably ascertained. Moreover, they

are explicitly recognised as a secure electronic signature under the ETA.65

61 Electronic Transactions Act (Cap 88, 2011 Rev Ed) ss 7 and 8. 62 Electronic Transactions Act (Cap 88, 2011 Rev Ed) First Schedule. 63 SM Integrated Transware Pte Ltd v Schenker Singapore (Pte) Ltd [2005] SGHC 58. 64 Id, at [91]. 65 Electronic Transactions Act (Cap 88, 2011 Rev Ed) s 3.

31

C. Liability

In the event of programming errors resulting in any malfunctions of the REC-I and SECURE

platforms, the issue of who should take up liability arises. Ordinarily, affected users would directly

sue the programmers; however, this would hamper the adoption of the platform, as users would balk

at incurring heavy legal fees to obtain compensation for losses caused by someone else.

We propose that the SLA’s Assurance Fund66 can be

tapped into for the purposes of compensation, but the

SLA would retain a contractual right to require

contribution from the software developer up to a limit

of the overall contract price (which may be further

raised or reduced, depending on what the SLA deems

appropriate). Currently, the Assurance Fund is

maintained through a proportion of fees incrementally collected by the Registrar of Titles.67 It is

acknowledged that drawing from the fund to compensate users may severely drain the reserve if there

are losses suffered with respect to high-value properties. However, unless the SLA bears some risk,

it is unlikely that any software development company would agree to create the platforms in the first

place. Allowing the software developer to limit its risk will help the SLA get the projects off the

ground, and reap long-term rewards in the form of enhanced efficiency, security, and innovativeness.

Moreover, post-transition, the platform could ultimately reduce the risk of the Registrar committing

a mistake or misfeasance, since it eliminates the need for physical lodgement of forms. Finally, the

SLA should rigorously test each platforms’ software during the pilot stage.

To put this solution into effect, we recommend that the statutory grounds for claims for compensation

– which currently include the sustaining of loss through the Registrar’s mistake, omission or

misfeasance68 – be legislatively expanded to include programming errors in REC-I and SECURE.

66 Land Titles Act (Cap 157, 2004 Rev Ed) s 151. 67 “Ch. 29 Land Law” Singapore Law Watch (6 July 2018) <https://www.singaporelawwatch.sg/Headlines/ch-29-land-

law> (accessed 8 April 2019) at para 29.7.6. 68 Land Titles Act (Cap 157, 2004 Rev Ed) s 155.

32

D. Data Protection Laws

Singapore’s data protection regime comprises the Personal

Data Protection Act 2012 69 (“PDPA”) and sectorial

regulations.70 The PDPA requires organisations71 to comply

with nine core obligations 72 when they collect, use and

disclosure personal data, unless they are excluded from the

PDPA73 or fall under one of the prescribed exceptions.74

Although sectorial regulations exist, this paper will focus on the PDPA as it sets the baseline standard

for data governance, and SECURE's users will be from different industries and sectors.

(1) Extent of PDPA’s Application

One preliminary point is the extent of the PDPA’s applicability to SECURE. In this regard, we have

to ascertain which kinds of data and which participants are regulated under the PDPA.

First, the PDPA regulates “personal data”. As "personal data" is broadly defined,75 it likely includes

most of the data in the transactions on SECURE will constitute “personal data”. For example, the

parties' names, a residential property address, and bank account details are probably personal data.

69 Personal Data Protection Act 2012 (No. 26 of 2012) (“PDPA”). 70 Examples of sector-specific regulations include the Monetary Authority of Singapore Notice 644 on Technology Risk

Management and the Monetary Authority of Singapore Notice CMG-N02 on Technology Risk Management. Where the

provisions of the PDPA are inconsistent with the sector-specific regulatory instruments, the latter will prevail: Personal

Data Protection Act 2012 (No. 26 of 2012) s 4(6)(b). 71 “Organisation” is defined in PDPA s 2 to include “any individual, company, association or body of persons, corporate

or unincorporated, whether or not: (a) formed or recognised under the law of Singapore; or (b) resident, or having an

office or a place of business, in Singapore”. 72 Parts III to VI of the PDPA address the substantive part of personal data protection (the “Data Protection

Provisions”). The other Parts concern other matters such as the Do Not Call Registry and appeals to court. 73 The Data Protection Provisions do not apply to individuals acting in personal or domestic capacity, employees acting

in the course of employment and public agencies or their agents: PDPA, s 4(1)(a)–(c). 74 Exceptions to the Data Protection Provisions are stipulated in the Second Schedule to the Sixth Schedule of the

PDPA. 75 “Personal data” is defined in PDPA s 2 as “data, whether true or not, about an individual who can be identified: (a)

from that data; or (b) from that data and other information to which the organisation has or is likely to have access”.

By virtue of limb (b), since the participants is likely hold information that would aid in identifying an individual,

transactions will likely involve the collection, use and disclosure of personal data. For example, a postal code

identifying the property of a seller may not constitute personal data per se. However, a participant on the platform

would likely have access to a database which could identify the seller by executing a search with that postal code. See

also Re Credit Counselling Singapore [2017] SGPDPC 18, at [8]–[10], which decided that data such as email addresses

could constitute personal data.

33

Next, the SLA, 76 individuals acting in a personal or domestic capacity, 77 and employees 78 are

excluded from compliance. However, other participants, such as banks and law firms, will have to

comply with the PDPA. These users should consider the following issues when creating their platform

(“the Organisation’s Platform”) to connect to SECURE.

(2) Clarifications and Technical Requirements for Compliance with the PDPA

While the PDPA imposes nine core obligations (subject to exemptions) on organisations, we will

focus on the (1) consent, notification and purpose limitation obligations; (2) correction and retention

limitation obligation; and (3) protection obligation, which are the most likely to pose difficulties.

First, organisations must notify79 the data subject of the purpose80 of their

collection, use and disclosure of his personal data, and obtain his/her

consent. 81 Therefore, the Organisation’s Platform should contain

mechanisms to bring notice of the relevant purposes and obtain consent

from the transacting individuals when collecting their personal data, as

well as before using or disclosing such data to another participant on

SECURE.82 This requirement should not be difficult to fulfil since existing

solutions, such as R3's Corda, have such a feature.83

Second, the correction and retention limitation obligations require organisations to alter or dispose of

personal data in certain situations, which may be an obstacle given blockchain technology’s

tamperproof editable trail.

76 Personal Data Protection Act 2012 (No. 26 of 2012) s 4(1)(c), read with Personal Data Protection (Statutory Bodies)

Notification 2013 para 2. 77 Personal Data Protection Act 2012 (No. 26 of 2012) s 4(1)(a). 78 Personal Data Protection Act 2012 (No. 26 of 2012) s 4(1)(b). 79 Personal Data Protection Act 2012 (No. 26 of 2012) s 20(1)–(2). 80 Id, s 18. 81 Id, ss 13 and 14(1). 82 Personal Data Protection Act 2012 (No. 26 of 2012) s 18 provides that the collection, use and disclosure of personal

data must be pursuant to a purpose notified to the individual and that purpose must be one which a reasonable person

would consider appropriate in the circumstances. Therefore, there would be no need for a mortgagee-bank to disclose

the financial information of a mortgagor-individual to another bank which is not participating in this particular

transaction. 83 Mike Hearn, “Corda: A Distributed Ledger” (29 November 2016) at p 51. Corda is said to be privacy-preserving and

does not broadcast transactions throughout the network but rather, it transmits the relevant data only to participants that

need to acquire such data to carry out their transactions.

1. Consent,

Notification & Purpose Limitation

34

Regarding the correction obligation,84 we propose that instead of deleting an

existing record, one could create a mechanism where the older record is

flagged as invalid and a newer, updated record would be created to take its

place.85

However, complying with the retention limitation obligation86 may be less

straightforward. It has been suggested that compliance with this obligation

can be met by destroying the private keys used for decrypting the personal data

stored on the ledger, as that would amount to removing the means by which the personal data can be

associated with the individual.87 However, it is unclear whether, in practice, there is a unique private

key for every transaction or whether a private key is used for multiple transactions. Where there is a

high volume of transactions, it may not be practicable for an organisation to have a unique private

key for every transaction.

In this case, it is suggested that instead of destroying the private key, the Organisation’s Platform

could be designed as follows: A time limit is set for the transaction to be completed and this limit is

communicated to the data subject during the collection of personal data. When the time limit is

reached, the organisation can no longer access the personal data on the application layer, unless the

data subject consents to an extension of the limit. The personal data may still exist in the foundation

layer. However, the means of associating the personal data with the data subject is removed at the

application layer. A subsequent unauthorised attempt to access the personal data at the foundation

layer would then render the organisation in breach of the retention limitation obligation.

Notwithstanding the above suggestion, it would be desirable for guidelines to be issued by the PDPC

or the SLA to clarify how organisations may comply with the retention limitation obligation.

84 Personal Data Protection Act 2012 (No. 26 of 2012) s 22. Broadly speaking, the correction obligation allows the data

subject to request for his personal data held by the organisation to be corrected. The organisation must correct the

personal data as soon as practicable if it is satisfied that a correction should be made. However, where the organisation

feels that a correction should not be made, it should annotate that a request has been made but no correction was

effected. 85 Yeong Zee Kin, “Blockchain Records Under Singapore Law” Law Gazette (September 2018)

<https://lawgazette.com.sg/feature/blockchain-records-under-singapore-law> (accessed 06 April 2019). 86 Personal Data Protection Act 2012 (No. 26 of 2012) s 25. The retention limitation obligation requires the organisation

to cease retaining documents containing personal data or to remove the means by which personal data can be associated

with the data subject once there is no longer a purpose of retaining the personal data and there is no longer any legal or

business purpose for that retention. 87 Supra n 85.

2. Correction &

Retention Limitation

35

Third, organisations need to protect personal data in their possession with “reasonable security

arrangements”.88 Blockchain technology is often claimed to be more secure

than traditional database technologies.89 However, in the event of a data

breach that results in the unauthorised disclosure of personal data on

the Organisation’s Platform, the question of whether the organisation

has complied with the protection obligation is highly context-specific.

For example, there may be programming vulnerabilities in the

Organisation’s Platform.90 In addition, non-technical weaknesses, such

as the lack of enforcement of security policies or of adherence to reporting

procedures,91 may found a breach of the protection obligation. It is unlikely that the use of blockchain

technology per se will allow organisations to satisfy the protection obligation. Thus, they should be

wary of technical and non-technical weaknesses.

88 Personal Data Protection Act 2012 (No. 26 of 2012) s 24. 89 Nir Kshetri, “Blockchain’s Roles in Strengthening Cybersecurity and Protecting Privacy” Telecommunications Policy

2017; 41: 1027–1038. This paper argues that blockchain technology offers greater security than cloud computing

technology and that blockchain could be a “nightmare for cybercriminals, data manipulators and others who mishandle

personal data”. See also: Dylan Yaga, Peter Mell, Nik Roby & Karen Scarfone, “Blockchain Technology Overview”

National Institute of Standards and Technology Internal Report 8202 (October 2018)

<https://nvlpubs.nist.gov/nistpubs/ir/2018/NIST.IR.8202.pdf> at 37–38 (accessed 06 April 2019), which emphasises

that the enhanced security promised by blockchain technology takes effect only after the transaction is committed to the

ledger. Prior to such confirmation, transactions are vulnerable to network-based attacks, such as denial of service

attacks and zero-day attacks, and programming errors. 90 Numerous reports have revealed the prominence of security concerns in blockchain platforms. See for example: Ana

Alexandre, “Report: Over 40 Bugs in Blockchain and Crypto Platforms Detected Over Past 30 Days” (14 March 2019)

Cointelegraph <https://cointelegraph.com/news/ripple-co-founder-gives-25-million-donation-in-xrp-to-san-francisco-

university> (accessed 06 April 2019). See also: Vincent Chia, Pieter Hartel, Qingze Hum, Sebastian Ma, Georgios

Piliouras, Daniel Reijsbergen, Mark van Staalduinen & Pawel Szalachowski, “Rethinking Blockchain Security: Position

Paper” (12 June 2018) <https://arxiv.org/pdf/1806.04358.pdf> (accessed 06 April 2019), which identifies smart

contracts as the main source of security concerns, beyond cybersecurity incidents arising due to inadequate operations

security measures. 91 See for example: Re Singapore Health Services Pte Ltd and Integrated Health Information Systems Pte Ltd [2019]

SGPDPC 3, where two organisations were found in breach of the protection obligation, notwithstanding the fact that the

data breach in question was caused by a highly skilled and sophisticated perpetrator, due to reasons such as poor staff

awareness of the policies in place and the lack of timely incident reporting.

3. Protection

36

EVALUATION &

IMPLEMENTATION

37

This section makes two main observations on

our proposed solution – namely, that there is a

need for trust, and that the proposed solutions

are limited to less complex transactions.

A. Need for Trust

Despite remarks about the earlier variants of

blockchains being “trustless” (i.e. parties only

need to trust the code and not humans),92 parties

necessarily need to have trust in the

government, programmers, and participants, in

order for our proposed solution to be effective.

Firstly, since the government will provide key

information on REC-I to enable transactions on

SECURE, parties need to trust that the

information provided is accurate.

Secondly, given the high degree of dependence

on code, there is a need to trust that REC-I,

SECURE and the smart contracts created on

them are, to the greatest extent, practicable and

free from programming errors.

Thirdly, there must be trust in the participants

to not collude and act maliciously (e.g. by

intentionally providing false information). In

this regard, blockchain technology does not

guarantee the correctness of the information

input into the platform, but merely ensures the

integrity of that information through an

auditable trail.93

B. Limited to Less Complex

Transactions

Clauses commonly found in complicated

contracts, such as frustration clauses or

ambiguous language, can possibly be coded into

smart contract in the near future. 94 For the

present, our proposed solution will be limited to

less complex transactions, where most parts can

automated by smart contracts.

92 Jean Bacon, Johan David Michels, Christopher

Millard & Jatinder Singh, “Blockchain Demystified: A

Technical and Legal Introduction to Distributed and

Centralised Ledgers” [2018] Richmond Journal of Law

& Technology 1, at para 7. “Trustlessness” is more

commonly used to describe permissionless blockchains,

such as Bitcoin and Ethereum, where parties transact

using pseudonyms and rely primarily on consensus

protocols, rather than trust in an intermediary or a

transacting party, to validate transactions.

93 See generally: Victoria Louise Lemieux, “Trusting

Records: Is Blockchain Technology the Answer?”

Records Management Journal 2016; 26(2): 110–139. 94 See for example: Legalese website,

<https://legalese.com/aboutus.html> (accessed 06 April

2019). Legalese is a legal technology startup which is

attempting a create a domain-specific language for law.

If successful, the language, L4, will be able to capture

legal semantics and logic, allowing legal documents to

be coded in the same manner as it is drafted.

V. EVALUATION

38

We envision the implementation to be carried out in three phases:

In the first phase, pilot testing of REC-I and SECURE should be carried out in a closed

environment among stakeholders, before expanding the programme to a select group of

transactions, such as transactions in a new property launch. Public consultation should

then be carried out to understand the concerns of existing stakeholders when migrating

to the platform. Having gathered the feedback, the public can be educated on the

platform and the underlying technology.

The next phase will involve amending aforementioned legislation to enact

changes with regard to complying with formalities, enforceability of digital

signatures, as well as allocation of liability.

The last phase will see a gradual extension of the platform from

the select group of pilot transactions to all private property

transactions. Subsequently, it can be extended to HDB

property transactions, as well as non-residential property and

transactions involving testamentary instruments.

VI. IMPLEMENTATION

39

In conclusion, the current state of conveyancing in Singapore provides ample room for improvement.

We believe that the blockchain has vast potential to revolutionise conveyancing practice in Singapore

to increase efficiency and security. The REC-I and SECURE platform can reduce the costs, time and

risk of fraud in the conveyancing sector. Nonetheless, such a shift must be supported by changes and

clarifications to the law of contract, property and data protection to create confidence in the new

system. This confidence is further developed through a phase-by-phase implementation of the

platforms to ensure the concerns of all stakeholders within the conveyancing ecosystem are heard and

addressed, before the expansion of the platform.

VII. CONCLUSION

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