Service animal case points up the importance of clear communication between housing providers and tenants.

Editor’s Note: After publication of this story, we discovered an update in the court proceedings. On March 30, 2023, the 9th Circuit District Court awarded $14,800 in damages to the plaintiff, Ashley McClendon, finding that the defendant reasonably should have known of McClendon’s disability based on the communications between the defendant and co-applicant [McClendon v. Bresler, 20 CV 7758(link is external) (C.D. Cal. Mar. 30, 2023)].

McClendon v. Bresler, 2022 WL 17958633, (9th Cir. Dec. 27, 2022)

The use of service animals has been one of the most contentious fair housing issues in recent years, mainly because of the growing use of animals in emotional-support situations. One case—involving a housing provider who said he didn’t allow dogs, regardless of whether they were service animals—was recently sent back to district court by the U.S. Court of Appeals for the Ninth Circuit. At issue: whether language by an applicant that implies a disability constitutes the requisite evidence to make a housing provider aware the applicant actually has a disability.

The case: In July 2020, Ashley McClendon and Sarah Gailey applied to rent Peter Bresler’s property. Bresler’s rental advertisement included a “no dogs” policy. Nonetheless, Gailey asked for permission to bring McClendon’s support animal, a 50-pound terrier mix named Tinkerbell. In an email, Bresler said the dog’s size was a problem.

Although communications between Bresler and Gailey didn’t detail McClendon’s mental and physical impairments, Gailey said Tinkerbell was a “verified support animal.” Her emails also referenced the Americans with Disabilities Act and noted the animal’s presence would be a “reasonable accommodation.” After Bresler denied the application, McClendon sued under the Fair Housing Act and California’s Fair Employment and Housing Act, alleging disability discrimination and negligence.

The U.S. District Court for the Central District of California initially awarded summary judgment to Bresler, noting the email correspondence didn’t indicate Bresler was aware McClendon had a disability. The court found descriptions of the dog as a registered and verified support animal merely amounted to assumption. McClendon appealed.

The ruling: The Ninth Circuit overturned the lower court ruling, noting that a prospective tenant “who requests accommodation[s] for a service animal need not affirmatively identify his or her disability to trigger [Fair Housing Act] protection.” Statements like “I have a therapy animal” or “I have an assistance dog” should reasonably alert a housing provider, the court said. The suit has been remanded to the district court for a ruling on whether Bresler should have known of McClendon’s disability status. The appeals court highlighted the applicants’ use of phrases such as “reasonable accommodation,” “discrimination” and “service dog” as potential evidence. The appeals court also reversed the judgment dismissing negligence claims. In the pending case, the plaintiff will have to prove Bresler reasonably should have known of her disability; a reasonable accommodation is necessary for her to enjoy the rental; and the defendant refused to accommodate her.

The takeaway: Discrimination based on disability status includes refusing to make reasonable accommodations so all tenants have equal opportunity to use the rental, so:

• Avoid blanket policies that could discriminate against those with protected characteristics.
• Pay attention to phrases like “reasonable accommodation” or references to the Americans with Disabilities Act, which could trigger duties to accommodate.
• Make sure to reasonably accommodate a prospective tenant.

Learn about HUD’s 2020 guidance on assistance animals in this Window to the Law video.

©National Association of REALTORS®
Reprinted with permission

It’s an opportunity to explain to your clients what your role is in the transaction and how they’ll benefit from your services.

Real estate agents don’t always ask their clients to sign a buyer representation agreement—but there are plenty of reasons they should, according to the National Association of REALTORS®’ latest “Window to the Law” video. Such an agreement is a legally binding document that details the agent-client relationship, such as the services you’ll provide, agency relationship and compensation. It protects both the agent and the buyer and helps avoid misunderstandings, explains Deanne Rymarowicz, associate counsel at the National Association of REALTORS®.

“While jurisdictions vary in what is required in terms of written agreements when it comes to compensation, most states require that any exclusive brokerage or agency relationship be in writing. And about half of states require written disclosure of an agency relationship in order for the real estate professional to be paid for the services,” says Rymarowicz, urging agents to check with their state REALTOR® association to make sure they’re in compliance.

The buyer agreement can be a talking point with clients about the value you bring to the transaction. Some clients may be skeptical at first when asked to sign an agreement, which is an opportunity to provide clarity about your services and build trust. Review the agreement as you explain your duties and obligations to your clients and reinforce that you’re a professional who follows a Code of Ethics.

For more guidance on conversations about compensation, NAR has a website—competition.realtor—to help agents articulate their value.

“A signed agreement may be helpful in the event of a procuring cause dispute or, in rare instances, a legal dispute with a buyer,” Rymarowicz says. She points to a recent case in Montana in which the court leaned on the buyer representation agreement in its ruling that a broker did not have an obligation to disclose available zoning information.

“Buyer representation agreements are a win-win proposition for both real estate professionals and consumers,” Rymarowicz says. “They assist in building trust and a mutually beneficial relationship by promoting transparency through upfront conversations, providing clarity regarding services consumers can expect to receive and how their real estate professional will be compensated.”

©National Association of REALTORS®
Reprinted with permission

Real estate professionals experimenting with content creation through artificial intelligence should keep the Code in mind as case law evolves.

Although copyright law is rooted in human authorship going back to a Supreme Court decision from the 1880s, various cases involving fast-moving artificial intelligence technology are challenging that rule of law today, Chloe Hecht, senior counsel at the National Association of REALTORS®, said at the Risk Management Issues Committee meeting during the REALTORS® Legislative Meetings(link is external) in Washington, D.C.

Hecht shared a few cases that illustrate the murky legal issues involving AI-generated works.

Plaintiff Stephen Thaler, for example, is suing the U.S. Copyright Office (in Thaler v. Perlmutter) because it denied him copyright for an image produced by his AI system, the Creativity Machine. He claims it was a work made for hire between himself and the AI generator. Despite various denials by the Copyright Office, “Thaler argues that human authorship isn’t required and, therefore, his work should be entitled to protection,” Hecht said.

Thaler has indicated he will appeal his case to the Supreme Court if necessary, she added. 

In another case, an artist and author wrote text for a graphic novel and created images using AI. The Copyright Office granted her protection initially but limited the registration to the text and arrangement of the images when it learned they were AI-generated. “But the author maintains she didn’t just input a prompt,” Hecht elaborated. “She took the image and asked AI to change and tweak it until it reflected what she wanted.”

Finally, Hecht described a case involving stock image giant Getty Images, which this year sued an AI company, Stability AI Inc., for using 12 million Getty images and their accompanying metadata to “train” its system. “That’s a sticking point for creators,” Hecht said of the technology. Someone developing AI uses others’ work to train their system, which lets AI generate new work based on those originals.

The cases leave a lot of unanswered questions for real estate practitioners and others seeking to use this evolving technology. Nonetheless, the Code of Ethics offers guidance, Hecht said, citing Articles 2 and 12.

Article 2 holds that “REALTORS® shall avoid exaggeration, misrepresentation or concealment of pertinent facts relating to the property or the transaction.” Article 12 says, “REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing and other representations.”

As an example, Hecht noted, “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.”

In addition, she offered three takeaways for using AI as safely as possible:

1. Always review AI-generated content for accuracy.
2. Don’t use AI to create a work you want to be able to protect.
3. 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.

©National Association of REALTORS®
Reprinted with permission

Your clients who are relocating across state lines may be surprised at the requirements for pets that are coming with them. Consult this state-by-state breakdown.

Many home buyers keep their pets top of mind when shopping for a property, with 43% of pet owners saying they’re willing to move to accommodate their furry friend, according to research from the National Association of REALTORS®. But once buyers have decided on the perfect home, they’ll want to make sure their pets are ready for the move, particularly when relocating to another state. Many states have requirements around bringing pets across borders.

The majority of states require, at a bare minimum, that cats and dogs have a valid health certificate and a current rabies vaccination upon arrival. But some states require more. Hawaii, which hasn’t recorded a case of rabies in more than a century, is the strictest state when it comes to new residents moving with animals, according to a new study from HireAHelper, a marketplace for finding professional movers. In Hawaii, dogs and cats are required to have two rabies vaccinations and an antibody test—conditions that must be met within five days or less of arrival. If the pet owners fail to meet those requirements, the pet has to be placed in quarantine for 120 days.

New York and Nebraska require health certificates from a veterinary inspection issued within 30 days of travel, according to the study. Also, a rabies vaccine is required for any animal that is at least three months old and must be administered at least 30 days prior to entering the state. Further, “there is a cluster of states in the Northeast—namely New York, Connecticut and Massachusetts—that have some of the strictest rules for certificates of veterinary inspection that every cat and dog coming to the state needs to have,” the study notes.

On the other hand, North Carolina may be the easiest state to move to with a cat or dog, according to HireAHelper’s analysis. North Carolina doesn’t require animals to have a certificate of veterinary inspection when they enter the state. Also, animals at least four months old can enter the state without a rabies vaccine, but they will need to get one within a week of arrival. Check out the chart below from HireAHelper, which ranks the 10 strictest states when moving with pets.

©National Association of REALTORS®
Reprinted with permission

Consumers are demanding increased transparency about how their personal information is being used. Follow these best practices when handling sensitive client data.

As more aspects of a transaction head online, real estate professionals are collecting more client information digitally, from Social Security numbers to bank account information and copies of driver’s licenses. How you collect and store that information could get you into legal trouble if you’re not careful.

Enforcement of data privacy laws have ramped up nationwide as more states enact rules. It’s critical that real estate brokerages understand how this could impact their business and how to handle sensitive information they collect, says Maame Nyamekye, associate counsel at the National Association of REALTORS®, in the latest “Window to the Law” video.

While there are no federal laws regarding data privacy that apply to real estate, more states are adopting comprehensive data privacy laws to protect consumers’ personal information. Nyamakye says these laws often grant consumers several rights:

• To know what information a business collects on them.
• To ask a business to delete or correct the data.
• To know if the business is selling their information.

Almost all states have enacted rules around data breach notifications, requiring businesses to notify individuals when their personal information may have been compromised. Many states also have adopted data disposal laws that require businesses to destroy, dispose of or encrypt personal information to protect individuals’ privacy.

NAR has supported efforts to protect consumers’ sensitive personal information. The REALTOR® Code of Ethics acknowledges members’ obligation to help preserve the confidentiality of their clients’ personal information in any agency or nonagency relationship.

REALTORS® shouldn’t take their role lightly when collecting client data information, Nyamekye says. Greater enforcement increases “the likelihood that a violation of a data privacy law may be detected and pursued,” she adds. “So, to avoid harm to your business—both financially and reputationally—it is important to ensure that your business is complying with applicable state laws.” She notes that even if an agent is located in a state that does not have a comprehensive data privacy law, the agent can still be subject to another state’s law if he or she collects personal information of out-of-state clients.

In the video, Nyamekye shares some of the best practices for data privacy, including:

1. Publish and maintain a privacy policy. Explain your policy to consumers to put them at ease about how your business will manage their personal information.
2. Know the laws. Understand state laws and consumer rights regarding data security and privacy that could affect your brokerage. For example, some states have laws that require businesses to have a written information security program in place or to dispose of personal information that serves no business purpose.
3. Adopt document retention and data breach notification policies. The Federal Trade Commission shares five key principles for businesses to follow when creating a data security program: Take stock, scale down, lock it, pitch it and plan ahead.

Access NAR’s data security and privacy toolkit, which includes an example of a written data security policy, for more tips.

©National Association of REALTORS®
Reprinted with permission

Artificial intelligence is shaking up how agents and brokers do business. But there are some legal pitfalls to watch out for.

Artificial intelligence is enabling real estate professionals to streamline some of their work by generating instant responses to customers or even predicting the next client. But using the technology in your business comes with the potential for liability, warns Chloe Hecht, senior counsel for the National Association of REALTORS®.

In the latest “Window to the Law” video, Hecht details the risks for real estate pros, whether using AI for chat bots, personalized advertising or automated messaging. AI tools are being used to craft social media posts, draft property descriptions and improve lead generation, among other tasks. The public awareness of AI technology has increased due to the recent launch of platforms like ChatGPT and Stable Diffusion.

Hecht offers these tips when using AI tools in your business:

1. Watch for accuracy. “AI platforms are not 100% accurate, which makes your oversight critical,” warns Hecht. When using AI, especially to write listing content like property descriptions, you must ensure the information is correct. Hecht reminds NAR members that they are bound to the REALTOR® Code of Ethics, which prohibits exaggeration, concealing pertinent facts and misrepresentation in communication and representations to clients.
2. Watch for copyright laws. “Under U.S. copyright law, a work must be authored by a human to qualify for protection, meaning AI-generated works are not protectable,” Hecht says. However, laws governing AI are likely to evolve over time.
3. Watch how you use it. Avoid using AI to draft contracts, modify standard forms or provide legal advice to clients, Hecht says. She adds that many state laws, as well as Article 13 of the Code, prohibit the unauthorized practice of law. “AI is not a licensed professional, and the platforms make no reliable warranties or representations,” Hecht says.

©National Association of REALTORS®
Reprinted with permission