Executive Order on AI Singles Out Tenant Screening
Real estate faces the potential for multiple areas of needed compliance, including some that specifically calls out the industry.
The White House announced an executive order on Monday for the “safe, secure, and trustworthy development and use of artificial intelligence.” It may sound like an action aimed at technology companies, and it is, but it probably will have effects on commercial real estate as well.
AI is a very large category of technologies with great current popularity, with generative AI products that promote themselves as able to create writing, images, video, and audio, or perform insightful data analysis. Those are the categories getting the most press right now. Other categories are all but certain to follow.
Put altogether, the collection offers software companies many opportunities to promote AI content while listing wide ranging features that could interest many potential customers. That applies to commercial real estate just as it does to every other industry. The promises are many, the results — probably not as broad as claimed, although it could still be useful.
But the attention that AI has received might put not just the vendors but the users under the microscope of regulators. This is from the purpose section of the executive order: “Harnessing AI for good and realizing its myriad benefits requires mitigating its substantial risks. This endeavor demands a society-wide effort that includes government, the private sector, academia, and civil society.”
The order goes on to list guiding principles: safe and secure; promotion of responsible innovation, competition, and collaboration; giving workers a “seat at the table;” consistency with equity and civil rights; protection of the interests of Americans who use AI; protection of privacy and civil liberties; managing the government’s use of AI; and having the federal government “lead the way to global societal, economic, and technological progress.”
The framing of the order makes clear that software vendors and the companies that use the products will be expected to act in the way the administration wants. That includes commercial real estate. Additionally, the industry gets specific additional attention:
“Within 180 days of the date of this order, to combat unlawful discrimination enabled by automated or algorithmic tools used to make decisions about access to housing and in other real estate-related transactions, the Secretary of Housing and Urban Development shall, and the Director of the Consumer Financial Protection Bureau is encouraged to, issue additional guidance: addressing the use of tenant screening systems in ways that may violate the Fair Housing Act (Public Law 90-284), the Fair Credit Reporting Act (Public Law 91-508), or other relevant Federal laws, including how the use of data, such as criminal records, eviction records, and credit information, can lead to discriminatory outcomes in violation of Federal law; and addressing how the Fair Housing Act, the Consumer Financial Protection Act of 2010 (title X of Public Law 111-203), or the Equal Credit Opportunity Act (Public Law 93-495) apply to the advertising of housing, credit, and other real estate-related transactions through digital platforms, including those that use algorithms to facilitate advertising delivery, as well as on best practices to avoid violations of Federal law.”
CRE companies using software that has AI capabilities might begin considering, with legal consultants, how they might consider structuring compliance.