California's Real Estate Regulator Says Using AI Does Not Alter Three Fundamental Principles

California's real estate regulator has a message for its licensees about AI. Using it "does not alter" three fundamental principles, the regulator says. Only persons or corporations it has licensed may do licensed real estate work. Brokers must reasonably supervise the work done under their license. And brokers and their affiliated licensees owe fiduciary duties to their clients.

The Department of Real Estate set this out in an advisory dated March 17, 2026, Artificial Intelligence in California Real Estate. It is written for the people the department licenses. It lists common uses of AI in real estate. Some are drafting listing descriptions and running chatbots to help manage inquiries. Others are summarizing documents and screening tenants. Parts of the advisory follow, not the whole.

Who Answers for the Tool

A broker's duty to supervise reaches the tools used for licensed or unlicensed work, the advisory says. That includes AI-powered software. Say an AI tool produces inaccurate information. Or misleading ads. Or improper messages to consumers. Under current law, responsibility rests with the licensee and their responsible broker. It is "not the technology provider."

So licensees have a duty to use AI responsibly, the advisory says. They should treat it as a support tool, not as an independent decision-maker. Using AI tools to do licensed work "may be equivalent" to asking an unlicensed assistant to do it. And asking an unlicensed assistant to do licensed work breaks California real estate law, the advisory says. It points licensees to information on the department's website about what unlicensed assistants are permitted to do.

Professional judgment must be used at all times. AI output should be checked for accuracy and approved by the licensee. That should happen before anyone relies on it in a deal or a message to a consumer. A licensee who fails to review AI output could face discipline, the advisory says. It names breach of fiduciary duties, negligence, substantial misrepresentations and failing to make required disclosures. Brokers could face discipline too, for failing to reasonably supervise their affiliated licensees.

Ads, Images and the Facts in Them

All real estate ads in California must be truthful, accurate and not misleading. That holds whether a person wrote the ad alone or with help from AI, the advisory says. Licensees who use AI to draft listings, marketing emails or online ads must check the facts themselves. That includes claims about a property's features, price, availability and possible uses.

Inaccurate claims may be treated as the licensee's violation. Use of an AI tool "will not excuse" it, the advisory says.

The usual rules still apply to ads made with AI. Solicitation materials that are a consumer's first point of contact must carry the licensee's name and license number. They must also name the responsible broker.

As of January 1, 2026, licensees must also disclose clearly when images in their ads have been digitally changed in a way that alters how the property looks. That includes changes made or improved by AI. The original, unaltered image must also be made available to consumers. A licensee who fails to check AI-made images may break the rule "even if the alteration was unintentional."

Client Data and Fair Housing

Many AI platforms need consumer data, the advisory says. That can mean names, contact details, financial details and transaction histories. Licensees must make sure that collecting, sharing and using such data, and the consent for it, comply with applicable privacy laws. One it names is the California Consumer Privacy Act.

Before using an AI tool, a licensee should know what data it collects and how long it keeps it. They should know whether it shares the data with third parties or makes it available to the general public. And they should know what safeguards protect it. Licensees should avoid putting confidential or sensitive client information into "public or unsecured AI platforms," the advisory says.

AI tools often rely on large data sets to make predictions or recommendations. If those sets reflect past patterns of discrimination or bias, the output may raise fair housing concerns. Licensees should be especially careful when AI is used for targeted ads, tenant screening, ranking leads or pricing advice. Even criteria that look neutral may lead to discriminatory results, the advisory says. Using AI does not protect a licensee from liability under real estate law or fair housing and lending laws.

Responsible Use of AI in Real Estate Practice

The advisory asks licensees to treat AI as a helper, not a substitute for legal and professional responsibility. Its best practices include learning how a tool works, what data it uses and how it reaches its results. Licensees should always review and verify AI output for accuracy and legal compliance before it is published or used with clients. Brokers should adopt policies on AI use and make sure their affiliated licensees know them and are trained. Licensees should keep records showing how AI output was reviewed and verified. And they should keep track of new laws and rules that affect AI use.

Keeping records of review, training and compliance may also help show good-faith efforts to follow the law if questions arise, the advisory says.

The record is the part of a review that someone else can check. A review that leaves no trace is hard to show when questions arise.

If questions arise about a listing an AI tool drafted, what in the brokerage's files would show how it was reviewed?