there needs to be admin tools to restore the NFT to the proper owner.

The whole point of the blockchain technologies is that they’re (supposedly) immune to state interference. What’s on the blockchain is the “truth”. The state wouldn’t have any power to restore the proper owner of the NFT / house because they chose to trust blockchain instead of having control over the database.

If states can “restore ownership to the lawful owner”, they can also seize people’s cryptocurrencies.

That’s why no state would ever have house registries on a blockchain that they didn’t control. And if they did control it, there’s no point in using a blockchain when they could just use a traditional database.