LEGAL CORNER: Artificial Intelligence: The New Frontier

LEGAL CORNER: Artificial Intelligence: The New Frontier
John Dolgetta, Esq., Dolgetta Law, PLLC.

Artificial Intelligence (AI) is certainly the new “new frontier” filled with all the promise and all the dangers that customarily accompany any new journey into uncharted territory or newly introduced technology. AI has taken front stage in our daily lives, and it is only the beginning. There are a multitude of articles and news stories that come out each day focusing on AI and its effect on business, education, investment, lending, real estate, manufacturing, the job market and every other aspect of our daily lives.

This nascent industry will undoubtedly and forever change the way people work, live, learn, educate and interact with one another. Many believe it is the next best thing to the iPhone or automobile, others believe it could possibly be the most dangerous invention since the development of the atomic bomb. Either way, it is an important technology that must be understood, developed, controlled and above all, utilized in a careful and thoughtful manner. While AI is a technology that has been in development for decades, it has gained more recent notoriety with the advent of ChatGPT introduced by OpenAI [see]. This article will delve into the promise and perils of AI.

A Primer: Predictive AI vs. Generative AI

In an article entitled “Predictive AI vs. Generative Ai: Unveiling the Distinction,” author Ishan Kapoor states there are two distinct branches of AI that have emerged [see]. Kapoor explains that “Predictive AI systems are designed to forecast outcomes based on historical data patterns and existing information. These models rely on machine learning algorithms to identify trends, correlations and statistical patterns in data sets. By analyzing vast amounts of historical data, predictive AI can make accurate predictions and estimations about future events.” These traditional AI systems are more akin to the traditional search engine and search engine optimization (SEO) uses (e.g., Google, Amazon, YouTube, etc.).

Kapoor points out the importance of Predictive AI when it comes to marketing, as it “enables businesses to anticipate consumer behavior, optimize advertising campaigns, and identify potential leads. Predictive AI algorithms can be trained to forecast customer preferences, predict market trends and provide valuable insights for decision-making.” This form of AI can be extremely important in the real estate industry when it comes to locating specific properties, identifying trends in particular areas and marketing those properties to potential customers.

On the other hand, Kapoor explains that Generative AI “focus[es] on the creation of new and original content. It employs sophisticated algorithms to generate novel outputs that mimic human-like creativity. By learning from large datasets, generative AI models can generate text, images, music, and even videos that exhibit a high level of authenticity.” He points out that “One of the most notable applications of generative AI is in the field of content creation.” Generative AI can assist with writing, designing, web-development, marketing, producing art and other artistic content, and the list can go on and on. With Generative AI the possibilities are endless and as Kapoor so eloquently states, “It pushes the boundaries of human imagination and offers creative possibilities that were previously unexplored.” However, it must also be carefully developed and utilized, and safeguards must be put in place.

The Pitfalls and Dangers of AI

Brian Levine, Esq., HGAR’s General Counsel, in his monthly column in Real Estate In-Depth shows how AI could be used to generate portions of an article [see]. He details the pros and cons real estate practitioners should consider when using AI technology in their business. Levine points out the pitfalls when utilizing AI and stresses the importance of assessing the legal and ethical considerations when deciding to use this new technology in connection with everyday business operations. He also stresses that AI technology, which “learns” from historical data and garners information from vast amounts of data and databases that exist on the Internet, could “contain biased information that perpetuates unfair practices (i.e., fair housing).” That is why it is extremely important to exercise discretion when deciding to implement AI technology and include it in your business.

AI, Copyright Issues & the NAR Code of Ethics

The National Association of Realtors points out the new issues that are popping up in the real estate industry as a result of the increased use of AI. Christina Hoffman, in her article entitled “AI Use in Real Estate Comes with Copyright Concerns” [see], points out that there are a number of recent cases that deal with AI-related issues. In one case, Thaler v. Perlmutter, a plaintiff filed a lawsuit against the U.S. Copyright Office for denying his registration for an AI-generated image produced by him and his AI System, Creativity Machine, because it was not produced by a human. [See]. In another case, Getty Images (US), Inc. v. Stability AI, Ltd., Getty Images sued Stability AI for using more than 12,000 images (and its accompanying metadata) belonging to Getty to “train” its AI system. [See].

NAR also points out that Realtors should be aware of the ethical concerns when using AI to promote and market properties. Chloe Hecht, Senior Counsel at NAR, stresses that Realtors should look to Articles 2 and 12 of the Realtor Code of Ethics when using AI to stage or generate images of a property, or use when they use images. Under Article 2, “REALTORS® shall avoid exaggeration, misrepresentation or concealment of pertinent facts relating to the property or the transaction.” Article 12 further provides that “REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing and other representations.”

Hecht provides a perfect example of crossing the line, “using AI to remove a structural crack from a wall violates those two Articles, but removing a hose and bucket accidentally caught in a picture is different.” Hoffman pointed out “three takeaways” offered by Hecht when utilizing AI:

  • Always review AI-generated content for accuracy.
  • Don’t use AI to create a work you want to be able to protect.
  • Don’t assume any third-party content was created by AI and, therefore, available for your use. Always get permission in writing for the way you want to use the work, and save that documentation.

ChatGPT and AI: Still in its Early Stages

Recently, in a well-publicized New York Times article [see], an attorney utilized ChatGPT to prepare a court motion for a personal injury lawsuit, which “was filled with fake judicial opinions and legal citations.” The lawsuit involved a passenger who was injured by a meal cart on a flight. The airline requested the judge to dismiss the lawsuit because the statute of limitations had expired. The plaintiff’s attorneys submitted a 10-page motion citing cases in support of their position that the lawsuit should be allowed to move forward. When the airline’s attorneys asked for copies of the cases cited in the motion, the attorneys for the passenger could not come up with them as they did not exist.

The attorney who used ChatGPT to prepare the motion has been practicing law in New York for more than 30 years and who is now faced with certain disciplinary action. The attorney told the judge that he never used ChatGPT before and had learned about it from his children and articles that he had read. He explained to the judge that he did not understand the limitations of ChatGPT “and could not comprehend that ChatGPT could fabricate cases.” The authors of the New York Times article citing Stephen Gillers, an Ethics Professor at New York University Law School, stated that “The worldwide publicity spawned by the episode should serve as a warning…. ‘Paradoxically, this event has an unintended silver lining in the form of deterrence.’” This event stresses the importance of becoming knowledgeable about any new technology before utilizing it and understanding its limitations as well as its boundless potential.

I have also experimented with ChatGPT and realized fairly quickly that the technology is limited in what it could do. First and foremost, ChatGPT does have a disclaimer that information after September 2021 is limited. I ran a test query and requested information on certain statutes and areas of the law, and found that many references to the sections of the law that I had inquired about were not accurate or just plain wrong. I also used ChatGPT to prepare a simple escrow agreement and post-closing undertaking agreement, and while the resulting document was rather rudimentary, one could see the potential once the technology is perfected. It provided a basic form of a document that could be developed into something useful.

The Real Estate Professional: The Use Case for AI, Now

While it is clear that one must exercise caution when utilizing AI, there are many instances where AI can be utilized safely and effectively. According to Jimmy Burgess, in an article in Inman, ChatGPT is an excellent tool to increase your social media footprint. [See]. He explains, “ChatGPT has so many opportunities and applications to help agents, one is assisting us with optimizing our reach on social media.” In his article, Burgess provides distinct queries that can be entered into ChatGPT to generate posts with increased SEO for the following platforms: Facebook, Instagram, LinkedIn, and YouTube.

He also suggests that one could “compound” the content created for each of the platforms to create content for many other platforms. Burgess points out, “There are only a few generational technologies that come along with the potential to revolutionize the efficiencies in our businesses. ChatGPT is one of these generational technologies. Take advantage of it now and the early adopters will be rewarded.”

Jim Dalrymple II, in his article in Inman [see], provides a list of invaluable resources that real estate professionals can utilize in the field of AI to increase their productivity, exposure and, ultimately, their bottom-line. He provides links and descriptions to: (1) “chatbots” (e.g., ChatGPT, Google Bard, Microsoft Bing); (2) “image generators” (e.g., DALL-E 2, Midjourney, Stable Diffusion, DreamStudio); (3) “AI Powered Real Estate Platforms” (e.g., OJO, BHR,, Scout, Rezora, RESAAS, ListAssist); and (4) “Other Exotic AI Tools” (e.g., Adobe products, Eleven Labs, DI-D, Runway). These companies provide products and services that cover a wide array of AI technology and tools available to the real estate professional.

Inman has also made available an excellent instructional video presented by Dalrymple and Kent Czechowski entitled “How ChatGPT and AI Technology Will Impact Productivity, Creativity, and Efficiency in Real Estate” [see]. The Hudson Gateway Association of Realtors Broker-Owner-Manager Committee and Young Professionals Network hosted an exciting event on AI on Tuesday, June 13th.

AI Technology Being Utilized by Lenders And Other Real Estate Professionals

According to an article in The Motley Fool, authored by Jeremy Bowman [see], there are five areas where AI is being utilized extensively. One is in the area of “Predictive Analytics.” He points out that both Zillow and Redfin are using AI to generate proprietary valuation estimates for properties. Another area is in “3D modeling,” where he points out that “Visual representations have become increasingly important in real estate, and it’s one of a number of industries that are taking advantage of…AI-based computer images that allow users to explore a space digitally.” Another area is the use of AI in “Smart Home Devices.”. Bowman points out that AI can be used in smart home products to monitor the home and assist with issues that may come up while a person is away. AI is also being utilized in the field of property management.

Another important area in which AI is being utilized with more frequency is in the mortgage industry. AI is being used by underwriters to approve borrowers much more quickly and efficiently. Bowman points out that “In underwriting, AI is used to analyze borrower information such as credit scores, income, and employment history to evaluate the borrower’s risk profile and find the best rate to charge.” AI can also assist with fraud prevention and loan servicing (e.g., assist with payment processing, customer service and support, etc.). He points out that some lenders, like Rocket Mortgage, are able to issue a loan approval within eight minutes by utilizing AI.

The AI Frontier is Upon Us, Be Careful on the Journey

AI is exciting and many professionals have set out on the journey with much enthusiasm. The uses for AI, in all its forms and across all industries, are limitless, however, as with all new technologies there are inherent dangers and pitfalls. Everyone must be careful when utilizing AI and be weary of the legal, ethical and societal consequences in implementing existing AI technology. We must all remember that we are at the very beginning of the AI journey, and there is still a long way to go.

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