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