For these reasons, real estate professionals will need to stay informed on how these scams operate, and more importantly, convey that information to their clients from the outset of their interactions. Licensees must remain vigilant, safeguarding both themselves and their clients, as they navigate the process of listing, selling and buying real property.
Regulators would be remiss if they failed to alert the public, stakeholders and licensees in their respective jurisdictions about the different types of AI-enabled scams occurring, how to recognize warning signs, and provide preventative tips to help defend against these advanced forms of fraud. To further the relevance of regulators in this matter, licensees and consumers alike should also be encouraged to report any instances of fraud they encounter.
The takeaway
The discussion of AI and real estate compliance often reminds me of virtual real estate brokerages. Interestingly, in California, many brokerages operate “virtual offices,” not explicitly covered in Real Estate Law.
Until the California Department of Real Estate provided guidance to its licensees, it remained unclear how the department viewed and might potentially enforce this activity. However, without codified rules in this area, these operations and issues are usually examined and investigated case by case.
It is no different here. Brokers and agents are currently using AI technology to perform various tasks in their jobs, and it remains to be seen if any of this activity will lead to non-compliant practices, be exploited by some licensed individuals and firms, and how regulators will respond.
Honestly, it’s too early to predict how exactly AI, and real estate compliance enforced by regulators, will coexist, but a few practical measures don’t have to wait. If you are a real estate professional considering or already utilizing AI in your business, you might consider the following tips to stay on the right side of the law:
1. Cross-check your use of AI against the law. Identify how you intend to use and apply AI in your daily business, ensuring these programs, practices, and products align with existing laws and regulations in your state. This might involve reviewing core principles, including some issues highlighted in this piece and cross-referencing them against the specific legal framework you operate within.
2. Do not dive into something new without doing your homework. As a licensed real estate professional, you have a duty to be diligent and purposeful in your actions. If you have questions, seek answers.
Contact your state regulator and local trade organizations, talk to your supervisors, managing brokers, and colleagues. Look for advisories, real estate bulletins or expert guidance. Stay updated on the law (and any changes), AI technology, potential problems and learn how to mitigate risks or address issues before they arise.
3. Monitor enforcement actions taken by regulators in your state. I have always advised my clients on the value of reviewing and monitoring enforcement actions against agents and brokers. This information provides valuable insight into the regulatory climate, revealing the types of non-compliant activities that lead to violations of the law, how regulators interpret and enforce the law, and the nature and extent of disciplinary actions taken.
It is the old adage of learning from others’ mistakes. Being aware of how licensees get into trouble can help you eliminate compliance blind spots in your own business and increase your chances of avoiding regulatory scrutiny.
