Presumably, if this were really implemented, the way it would work would be something like this: you'd upload your legal documents to the blockchain, and sign them with your private key, your notary's/lawyer's public keys, the realtor's public keys, and the hash of the previous owner's legal documents, and so on.

But of course this isn't really a blockchain, it's just a CMS with a PKI interface.

> Because presumably that means that if someone guesses or steals my password, they now own my house.

You'll register your private keys with a PKI. In practice the worst case scenario would be needing to go to the DMV to register your new phone or something.

The way it works now is you rely on a third party to guarantee the property isn't owned by someone else, and then you buy insurance to protect the lender in case the third party screwed up.