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Transcript

Could Your AI Tools Get You Sued? · Net Effective

• 0:00
  Jay Harris: What do you do when the consumer is providing more about herself or himself to your chat bot in the transaction and asking not just is there a pool on the property, but I earn this amount of money, I have this kind of credit Would I qualify at your property?
• 0:15
  Jay Harris: Yeah, it definitely helps.
• 0:16
  Jay Harris: Now, I would say the other thing, though, to your point, also helps enforcement.
• 0:20
  Jay Harris: We do see that this is being used by testers to make their more efficient and enforcement counseling to make their more efficient.
• 0:29
  Jay Harris: You and I may be dead by the time we get a comprehensive privacy law.
• 0:34
  Jonas Bordo: I think our children might have passed on by that point, Jay.
• 0:36
  Jonas Bordo: That's Jay Harris, and I'm Jonas Bordo, founder of Dwellsy and host of Net Effective.
• 0:41
  Jonas Bordo: Welcome back for another week of good conversation about AI the residential rentals industry.
• 0:47
  Jonas Bordo: Today we have Jay Harris, who is a partner with Hudson Cook, legal brain focused on the residential property management Jay, so glad to have you on the show.
• 0:58
  Jonas Bordo: Welcome.
• 0:59
  Jonas Bordo: Tell us a little bit about yourself.
• 1:01
  Jay Harris: Thanks for having me, Jonas.
• 1:02
  Jay Harris: Uh, delighted to be here today.
• 1:04
  Jay Harris: So uh I'm in the Washington, D.C.
• 1:07
  Jay Harris: office with Hudson Cook.
• 1:08
  Jay Harris: I run our property management practice there.
• 1:10
  Jay Harris: Uh I'm in the rental housing space, uh, focused on issues for a few decades now, both as uh regulatory counsel and as a lobbyist for the industry.
• 1:20
  Jay Harris: So I'm delighted to talk about artificial intelligence issues and data privacy issues.
• 1:26
  Jay Harris: One of the key issues that affect uh each part of the housing lifecycle today.
• 1:32
  Jay Harris: Conventional wisdom is that the law lags what's going on on the technology side.
• 1:37
  Jay Harris: Uh, and yet we have seen things, for example, in the area, where the law is uh maybe running ahead in some states and imposing some new obligations on marketing background that arguably are already addressed under existing law.
• 1:53
  Jay Harris: I'm not sure we need a new statute.
• 1:55
  Jay Harris: We've got several attorneys general out there who say, tell you how existing fair housing laws and other laws are out there cover AI-enhanced transactions.
• 2:05
  Jay Harris: And you know, New Jersey has done this, Massachusetts has this among other states.
• 2:10
  Jay Harris: That doesn't mean they won't continue to legislate in these areas.
• 2:13
  Jay Harris: But I think we've seen, you know, in states like California, Wisconsin, and some others, questions about uh in the marketing process that apply to a landlord who's the image that they have in the marketing process.
• 2:27
  Jay Harris: Uh and so some of the starting the for sale space into the rental space in California, for example, where as of the first of the year, if you've modified a picture of a unit, a property, the features on it, then the expectation is that you'll also post with the enhanced uh image the original image of the unit or something like that.
• 2:52
  Jay Harris: And we've talked to more than one housing provider who's sophisticated, and they said, Yeah, we've used this same for five or ten years.
• 3:01
  Jay Harris: We got it when we bought the property, we made some Uh, where did this come from?
• 3:06
  Jay Harris: What's the benefit?
• 3:07
  Jay Harris: Who does this help?
• 3:08
  Jay Harris: And so forth.
• 3:09
  Jay Harris: Uh, and so it'll be interesting to see.
• 3:12
  Jay Harris: California starts it, Wisconsin also has uh maybe a less restrictive law, but it'll be interesting to see how both advertisers as well as the ad channels handle this uh early next year.
• 3:26
  Jonas Bordo: Yeah, that one is wild.
• 3:27
  Jonas Bordo: That one feels to me like the uh, you know, it's kind of like the photographer employment bill, if you will, because there's nothing is shown out of camera.
• 3:36
  Jonas Bordo: It would be irresponsible for a professional photographer a property to deliver untouched images to the client.
• 3:45
  Jonas Bordo: Like that's just not done.
• 3:46
  Jonas Bordo: So all of the images should be, if professional photography has been done, should be retouched in some way to look their And that's just the reality of photography, whether you're doing property photography or wedding photography or portrait or whatever it is.
• 4:01
  Jonas Bordo: So I feel like everybody needs to go shoot new photography as a result of this.
• 4:05
  Jonas Bordo: It's such an odd thing.
• 4:07
  Jay Harris: It may be, it may be a full full employment act, like you for rental housing photographers everywhere.
• 4:13
  Jay Harris: But I think it does point out that just because you thought you could continue to do it this way with the new technology, you know, in fact, expectations are changing.
• 4:22
  Jay Harris: And, you know, I you know, candidly, some of the are just that, you know, that the modification of what a single-family rental property looks like, you know, that housing provider puts out there, uh, what it actually looks like is very different than what was advertised.
• 4:39
  Jay Harris: So, yeah, we understand the intent.
• 4:40
  Jay Harris: Yeah, but it this is just a new area.
• 4:43
  Jay Harris: Is it the end of the world?
• 4:44
  Jay Harris: Absolutely not, but it's a new area to be aware of.
• 4:48
  Jay Harris: The other has been, you know, that's it's also marking, has been uh synthetic performers, right?
• 4:52
  Jay Harris: You know, so we use voiceovers, we use automated You know, we see it, you and I have probably worked at where this would be in the training, for example, employee And similarly, you know, this is a good, efficient way to rail properties.
• 5:07
  Jay Harris: You know, here as well, some disclosures are expected, and you know, vendors are on top of this, uh, whether it's on site or through an ad channel, that you're gonna be that you're not talking to a real dealer, but that you're to some sort of synthetic performer.
• 5:25
  Jonas Bordo: Is that happening now?
• 5:25
  Jonas Bordo: Is that being required on a you know regional or national basis, or is it just coming?
• 5:31
  Jay Harris: California has always led in this area, uh, but there have other disclosure requirements in other states.
• 5:38
  Jay Harris: Uh, you taught us had a chatbot disclosure obligation for you're giving uh the chatbot is giving certain kinds of advice that has been around for a couple of years now and been modified over time, as have other states as well.
• 5:53
  Jay Harris: So I think the practical issue is in the game of property compliance whack-a-hole, these are just new things to look keep your eyes out for, and stands off of it.
• 6:07
  Jonas Bordo: Yeah, I feel like already with the cookies requirements, with everything else, we're gonna end up in a situation where like 17 disclosures you need to accept just in order to, you look at an apartment on a website.
• 6:16
  Jay Harris: Right.
• 6:16
  Jonas Bordo: Doesn't feel in total consumer friendly to me, but you I'm not thinking of the big picture or I'm not representative.
• 6:24
  Jay Harris: There's a consumer interest in fairness in advertising, these get at that fairness concern.
• 6:30
  Jay Harris: And some of the egregious cases really are egregious.
• 6:33
  Jay Harris: And and to solve for some of these things is not the hardest thing in the world necessarily depending on the law.
• 6:39
  Jay Harris: But you know, we we are seeing situations where plaintiff's counsel will decide to bring suit for sharing information the advertising context for, you know, under some law that designed 40, 50 years ago to handle a very different kind of transaction that was written with very broad language.
• 6:57
  Jay Harris: And, you know, they'll trot it out again because the scheme under the statute is pretty, pretty favorable.
• 7:03
  Jay Harris: California did this and improved a little bit an law from the 70s, CIPA, that uh has been over the last few used by plaintiff's counsel in uh kind of a shakedown to go after unauthorized sharing of quote wiretapping by a that a property operator might be using.
• 7:24
  Jay Harris: And so, you know, it's it there was some good that came out of Sacramento to address this.
• 7:28
  Jay Harris: But you know, fact is that some of these old statutes were pretty broadly, and you know, there's always an opportunity to recast them when new tools come out.
• 7:40
  Jonas Bordo: Absolutely.
• 7:40
  Jonas Bordo: And and there are a lot of new tools, that's for sure.
• 7:42
  Jonas Bordo: So why don't we take just a quick step back and look at the scope?
• 7:46
  Jonas Bordo: You know, as you think about AI for property owners and from a legal perspective, what do you think are the main that people should really be thinking about, worrying about now?
• 7:59
  Jay Harris: So we talked about marketing a little bit.
• 8:01
  Jay Harris: I think another area has been around sort of eligibility, as it relates to fraud prevention as well as just using automated decision-making tools, scores, and that under the law in states like Colorado and California.
• 8:16
  Jay Harris: So what's to think about?
• 8:19
  Jay Harris: I mean, I think kind of the through line on all this is you need to be aware of it.
• 8:23
  Jay Harris: You need to understand, have done the analysis uh before the effective date about what kinds, what parts of the property operations are really going to be affected.
• 8:32
  Jay Harris: Uh, and then the degree to which the housing provider is for compliance, they have, you know, to give a disclosure or something like that, uh, or they have to provide a appeal right in in the review process or something like versus what's the vendor's obligation, right?
• 8:49
  Jay Harris: I remember you and I were talking about this uh a couple of weeks ago, because often the housing provider is the one who may not understand the rule, and maybe not understand how use the tool.
• 8:59
  Jay Harris: And, you know, even though they have the role, and even they signed up and said, yes, I'll comply with the applicable law, they're not aware enough, haven't done the internal enough to carry out that function.
• 9:09
  Jay Harris: So I think making sure that the, you know, if you're a provider, that you understand what states, what type, the transactions or your operations are affected by this, and then whether the you know the operator or the vendor owns the risk is sort of minimum table stakes to understand how following the law and doing and you know, performing your Because you've got it, you've got a bunch of functions uh artificial intelligence can be super helpful say, the privacy interest of the consumer is not that strong.
• 9:40
  Jay Harris: There may be there are several beneficial uses as it to sort of the operations of the property where you don't need to know on an individualized basis about the people who are involved in the transaction, but it's very to know if there's some sort of leak detection tool where that pattern on your utility usage can be incredibly Or the the rate of usage in the parking lot or things like features in the property and how how frequently they're used.
• 10:08
  Jay Harris: I mean, the ability to analyze, especially across a larger these relative usage rates of different features in the can be tremendously helpful to see how we're going to the next one, how are we going to reposition certain parts of the asset when it comes to asset management so that it can maybe more attractive to the consumer.
• 10:27
  Jay Harris: And then on operating costs, you know, where's the leakage coming from in a way that we can do something about?
• 10:35
  Jonas Bordo: You know, it's interesting as you talk about some of those It's very easy to come to the wrong conclusions when presented with new data.
• 10:41
  Jonas Bordo: I remember this one property that I delivered when I was operator where we had this beautiful gym, beautiful, and nobody ever used it, but it sold the heck out of that property for And if we made decisions based on the utilization of the gym, we would have come to the wrong conclusion because I guarantee you we were getting significant additional rent and less as a result of having that gym on property that nobody used, everybody thought they were going to use it.
• 11:07
  Jonas Bordo: Everybody dreamed of using it because it was just gorgeous, So got to be really careful about how you how you make use of that kind of new information.
• 11:15
  Jay Harris: I think that's absolutely right, Jonas.
• 11:16
  Jay Harris: What's your decision-making process?
• 11:18
  Jay Harris: And frankly, you know, how frequently are you teeing this up again that you already have decided last quarter?
• 11:24
  Jay Harris: We're going to do it a certain way.
• 11:25
  Jay Harris: We've decided to stick with the gym.
• 11:26
  Jay Harris: It's a great asset.
• 11:28
  Jay Harris: It sells well, even if it you know doesn't get as much use as maybe we we thought when we built the property.
• 11:33
  Jay Harris: And instead of having to revisit that issue, you know, let's make sure we understand what we're trying to change this and move on.
• 11:41
  Jay Harris: So, yeah, I mean I'm a lawyer, not a business guy, but when it comes to business operations, you do need to have from you know all the stakeholders to the asset about what trying to get done with the property and frankly, what you what battles you're not fighting this year.
• 11:58
  Jay Harris: You already went through that in budgets, and you're not to revisit that for another six months.
• 12:02
  Jonas Bordo: Yeah, absolutely.
• 12:03
  Jonas Bordo: Jay, from a legal perspective, one of the things that me about this era that we're in is that the application for apartment is one of those rare cases where you do actually to disclose a lot of PII.
• 12:14
  Jonas Bordo: Right.
• 12:15
  Jonas Bordo: It's kind of like your employer and your landlord get And those are two of the only circumstances in which that's case.
• 12:23
  Jonas Bordo: So then how do you overlay the interaction with AI in that If you have, you know, say an application process that AI into it, if you have a chatbot that's following up with uh on behalf of the property manager, you haven't social security number yet, and we need that in order to check your credit.
• 12:47
  Jonas Bordo: What do you think the implications are of that overlay of that kind of information in this context?
• 12:54
  Jay Harris: It's a good question, Jonas.
• 12:54
  Jay Harris: Um we, you know, we know obviously data security is going to be paramount in terms of how the transaction is conducted.
• 13:02
  Jay Harris: I think that the standard of practice in the industry and the awareness of data security obligations and taking PII transaction is well understood, and at least among the names that are widely used, rental housing inquiry, process, and so forth, there's good understanding about You know, if you were to when you type in your income your social information, date of birth, and so forth, that generally speaking, is pretty well contained in your environment through the vendor and through the property You know, a new edge case of this has been what do you do when the consumer is providing more information about herself or himself to your chatbot in the transaction and asking not is there a pool on the property, but also, hey, I'm I earn amount of money, you know, I have this kind of credit would I qualify at your property?
• 13:58
  Jay Harris: You know, what what kind of security deposit would I pay?
• 14:00
  Jay Harris: You know, and so that is a real issue where smart limits on what the bot can and can't talk about and whether it in that case, you know, depending on what the acceptable use policy is, depending on how the product is designed, on the level of uh risk that the housing provider has.
• 14:21
  Jay Harris: Is that a question you're going to refer to a live agent to answer?
• 14:24
  Jay Harris: Is that something that uh can be addressed appropriately by the bot with a decent answer?
• 14:30
  Jay Harris: You know, particularly when a question often comes at you 11 o'clock at night when nobody else is uh is working in the leasing office and somebody just wants to know the see if they should be looking further at the property or So, you know, those are kind of the the bot questions, but those are the kinds of questions we've had for years in of can I get in, let me know, tell me what's going on.
• 14:52
  Jay Harris: And I I think so relatedly we've seen more a push especially to disclose more information about what are the You know, what do I need to get in at this property?
• 15:03
  Jay Harris: Uh, how does the process work?
• 15:05
  Jay Harris: And uh, you know, are units generally available?
• 15:08
  Jay Harris: So there are a lot more uh disclosure obligations in the process that used to be left until the consumer had already gone through all the application process.
• 15:17
  Jay Harris: So that I think I think is beneficial.
• 15:19
  Jay Harris: So that's a little bit about the edge case.
• 15:20
  Jay Harris: I think that the core activity that you're talking about, know, I'm I'm going through the transaction, I trust secure, but you know, what what happens with the data?
• 15:29
  Jay Harris: How is that governed?
• 15:30
  Jay Harris: You know, I want to make sure just because I applied to your property that, you know, you're not going to send me 75 emails if I don't want them.
• 15:37
  Jay Harris: And not just you, but you know, whatever related businesses that that that might be shared with.
• 15:43
  Jay Harris: So I think the key here is that for decades, federal and privacy laws have covered wide source of these transactions.
• 15:53
  Jay Harris: As an example, the Fair Credit Reporting Act is one of the Goldies Bagutis from federal law that's a consumer that gives notice and dispute opportunities, appeal rights consumer for where information about them is they want more information about the information held about them in the eligibility process, uh background process.
• 16:19
  Jay Harris: And the Fair Credit Reporting Act is so well established as states uh over the last 20 so years have passed state privacy laws, typically they have exempted transactions that are covered by the Fair Credit Reporting Act or a related federal law that applies to financial institutions, the Plyleigh Act's privacy provisions.
• 16:44
  Jay Harris: And so the good news is that in many states, they're aware the existing overlay at the federal level.
• 16:53
  Jay Harris: You and I may be dead by the time we get a comprehensive privacy law.
• 16:59
  Jonas Bordo: Hopefully, I think our children might have passed on by Jay.
• 17:03
  Jonas Bordo: I think you're right.
• 17:04
  Jay Harris: Yeah.
• 17:04
  Jay Harris: That's a very long-term game, I think.
• 17:08
  Jay Harris: Uh, but we have federal privacy laws.
• 17:11
  Jay Harris: We have state laws that sit on top of them and that that their exempt uh transactions that are clearly consumer reporting transactions.
• 17:22
  Jay Harris: And so in this case, it's the application information you're talking about, it's the decision you're talking about.
• 17:27
  Jay Harris: And so now we see some interesting wrestling matches going between federal law and then states, Colorado being you recent example of this, that said, well, you know, where is an automated decision, where a score is a um key component, uh, you know, materially influences the decision whether to admit an individual and at what price as it relates to, say, a security deposit amount that might be risk-related.
• 17:55
  Jay Harris: You know, for that kind of question, they've said, well, we think the state should have some additional laws.
• 18:01
  Jay Harris: Colorado should have some additional laws.
• 18:03
  Jay Harris: And it will be interesting to see how that plays There are clearly some preemption arguments that the law preempts the state.
• 18:10
  Jay Harris: Uh, and 27, I think if you're operating in Colorado, 27 be a time when quite possibly you'll need to provide some disclosures if you're using a score or certain kinds of tools in the screening process.
• 18:24
  Jay Harris: And again, is this the end of the world?
• 18:26
  Jay Harris: No.
• 18:26
  Jay Harris: Is it another thing to put on your checklist of how do you these things?
• 18:31
  Jay Harris: You know, it's sort of, I don't know, AI trivia night on nights at the bar.
• 18:36
  Jay Harris: And you got to make sure that you've covered each of the nights.
• 18:38
  Jay Harris: This is this is an area.
• 18:41
  Jay Harris: And yes, it's in Colorado and California now, but would not be surprising, you know, 12 months from now, if we're back again to be talking about this in a couple other states that have uh had their data privacy laws, but have said, hey, a second, this doesn't cover this use case of automated not just in REL, but in other, you know in other situations, you know, uh including employment eligibility and pricing products and things like that.
• 19:07
  Jonas Bordo: Yeah, that's such an interesting, you know, just trying out the right path through all of that is gonna be really for all of us to wrestle with as time goes by.
• 19:16
  Jonas Bordo: Uh just the, you know, related privacy issues, everything it's gonna be challenging.
• 19:21
  Jay Harris: Well, yes.
• 19:21
  Jay Harris: I mean, some of these we thought we had pretty well under and then regulators, litigators wanted to do it a way.
• 19:28
  Jay Harris: And it does elevate the importance of a topic that a few ago was could be delegated to the site level, let's just to one certain marketing function, and maybe to call back and say, no, you know, we need to make some about this, you know, at a corporate level, you know, look at this, review the contract language with our vendors in more detail.
• 19:51
  Jay Harris: I think, you know, you and I were talking about this oh, a year ago is related to pricing information, right?
• 19:57
  Jay Harris: Then, you know, we have antitrust expectations under the Act and guidance under that.
• 20:02
  Jay Harris: So what's going on in that area, but then increasingly and local laws that are each different and probably likely stay around for a while and not be preempted by a uniform that we could all live by, but instead be a locally rule that you really need to handle given the potential and the impact on business operations at the executive in order to get it right.
• 20:30
  Jonas Bordo: You know, it's it's funny because I'm both worried and about AI's impact in this area, because on one hand, there are all of these new compliance requirements that are going to come through as a result of this.
• 20:41
  Jonas Bordo: But on the other hand, I feel like AI might make it easier to comply with the existing requirements.
• 20:47
  Jonas Bordo: I remember looking at compliance with a certain body of business I was responsible for.
• 20:54
  Jonas Bordo: And we had 55 different jurisdictions, 55 different sets of It felt nearly impossible to be compliant with all of those.
• 21:03
  Jonas Bordo: And I feel like now we could have fed that into AI and what are our responsibilities here?
• 21:08
  Jonas Bordo: How can we make sure that we've got the right data, that we've got the right reporting, and there's a way that we could have taken care of it that we couldn't then?
• 21:15
  Jonas Bordo: So is that a cause for optimism in all of this, that it actually make it easier to be compliant, even if the regulatory burden is going up, even if the reporting burden is going up?
• 21:26
  Jay Harris: I think you're on this up to out of that, Jonas.
• 21:28
  Jay Harris: I mean, we, you know, as a as a law firm, we have found the application of AI that consistent with our professional helps improve the tracking of uh state and local Uh and I would say, you know, not just laws and regs, but uh settlements that are out there that are material that multiple industry providers and one to ones to watch an uh industry operator or or two will agree not to engage a certain Practice that isn't clearly prohibited under the but as a way of settling and resolving the matter and the distractions so we can get on with the business of safe and affordable housing.
• 22:11
  Jay Harris: Operator may say, yeah, this is this is nuts to fight this more and settle out.
• 22:15
  Jay Harris: And it's useful where you'd have a couple of providers that and the same plaintiff's counsel bringing these It is useful to look at and see to look at that trend too, just at the uh legislative agreement sort of So yeah, I think there is some room for optimism in using tools.
• 22:33
  Jay Harris: Yeah, we're familiar with what we provide in the market, that not only do we have the information, but also are able to with clients who are saying, you know, we're really operationalize this and say we've got new laws in these two states that went into their going into effect in 60 days, they understand where they are on the workflow of So compliance management, this is you know, sort of not new for other industries that our firm and you know others work with in terms of how you stay on top of compliance on a basis.
• 23:06
  Jay Harris: But I think for rental operators, it's good to move from of the law to really how are we going to operationalize this and how do we stay after a new law, a new state where they're multi-you know it affects the marketing process, it affects the billing process, it affects the uh what the collection and some contractor process.
• 23:25
  Jay Harris: So good workflow management for compliance, uh, good management system is going to help you stay after that on top of it.
• 23:34
  Jay Harris: So I think, yeah, it definitely helps.
• 23:36
  Jay Harris: Now, I would say the other thing, though, to your point, also helps enforcement, right?
• 23:40
  Jay Harris: And so, yeah, we've seen situations where you know we talked a little bit about total price disclosures, right?
• 23:48
  Jay Harris: And so Federal Trade Commission currently in the process, think, of doing kind of a 180-degree turn on two years ago to exclude conventional rental housing from coverage under fee disclosure.
• 24:02
  Jay Harris: Short-term rental was covered, hotels were covered, but made a balanced, economically sound decision that of landlord tenant law out there right now already covering rental housing.
• 24:14
  Jay Harris: We don't need to have additional fee disclosure rules.
• 24:16
  Jay Harris: Uh, and then 30, 60 days later, uh entered into, you know, another suit, entered into a settlement.
• 24:23
  Jay Harris: So that now we have both invitation homes, the grace star in this case, and we're waiting on a rule from the federal from the FTC, uh, over rental fee disclosure.
• 24:34
  Jay Harris: And we'll see when we get that proposed rule.
• 24:37
  Jay Harris: If you were to ask me, I say it might have been out by now, but I don't have a perfect crystal ball, obviously.
• 24:42
  Jay Harris: But you know, it's a way of saying today to go to an ILS and look and see the properties that are disclosing total and those that are not, uh, it's much easier to see some of these badges and be aware of who's meeting that standard and who isn't.
• 25:00
  Jay Harris: So we do see that this is being used by testers to make their job more efficient and enforcement counsel to make their more efficient, not just to make compliance more efficient.
• 25:12
  Jonas Bordo: This is one of those areas where, you know, as much as it been a great experience for uh our friends in the industry uh had to go through this with the FTC, I think the outcome the consumer and honestly for the property manager is a good because I think full disclosure just makes it easy at the line to get the lease signed.
• 25:29
  Jonas Bordo: There's no surprises at that point, you know, less of churn as a result of that, happier resident.
• 25:35
  Jonas Bordo: Uh people just know what they're getting into earlier on.
• 25:38
  Jonas Bordo: And I don't think there was any intent to not include those I think it was just, you know, people think about the price, and that's it in most cases.
• 25:47
  Jonas Bordo: And so I think this is good progress.
• 25:49
  Jonas Bordo: But I actually want to change gears a little bit and cover topic for a minute, which is data.
• 25:53
  Jonas Bordo: We had another guest on the podcast a couple of weeks ago, uh, Carol Enoch, who's an owner representing about uh 6,000 units, and she was talking about ownership of data.
• 26:03
  Jonas Bordo: And we're seeing some very different utilization of data in AI era than we had before.
• 26:08
  Jonas Bordo: And you know, it's interesting how data can kind of now.
• 26:14
  Jonas Bordo: You know, you ask a question to your AI, and all of a OpenAI has all of your data about your portfolio and about your tenants.
• 26:22
  Jonas Bordo: And what's your thinking on that?
• 26:24
  Jonas Bordo: How do we think about ownership of data?
• 26:26
  Jonas Bordo: How do we think about data compliance, you know, data in this era?
• 26:31
  Jay Harris: Yeah, so uh it's probably another podcast under itself, but yeah, a lot to I would I I've not heard Carol's uh remarks.
• 26:40
  Jay Harris: I'd I'd be interested.
• 26:41
  Jay Harris: I'll I promise I'll go back and hear that one.
• 26:43
  Jay Harris: Uh but I'd be interested to hear that.
• 26:45
  Jay Harris: But you know, so I I think sometimes there can be a between the operator and the vendor uh in terms of additional uses that the vendor might have for data in the And so it's it's good to you know uh to make sure that the and the vendor are on the same page about how the data is to be used.
• 27:03
  Jay Harris: And if the vendor is a co-controller of the data with to then productize it and make additional offers as a with comparable rights to the property manager, that happens sometimes.
• 27:19
  Jay Harris: Certainly, vendors who have the business model, and there a lot of good reasons for it.
• 27:25
  Jay Harris: Um think they can that this helps the valuation and the the company where they they have data assets as a not simply as a processor of the data.
• 27:36
  Jay Harris: But often, you know, we will see that for many transactional services supporting VRP operations, that the vendor is the processor of the data who is carrying out whatever that authorized, which is everything from parking services to you know other fulfillment, let's say, related to that may be possible.
• 27:59
  Jay Harris: So you you need to understand, the operator needs to uh and make sure that you're on the same page about this is a uh traditional vendor relationship as a processor, whether there's some or co-controller right that the vendor is claiming.
• 28:13
  Jay Harris: And if so, then how to resolve any any issues come up where the consumer has to be exempted out of any marketing offers going forward or has to do the deletion of their data.
• 28:26
  Jonas Bordo: Yeah.
• 28:26
  Jonas Bordo: How do you think about data deletion when it's been you know to a chatbot that just, as a matter of course, internalizes information as part of its context going forward?
• 28:38
  Jay Harris: So increasingly, we are getting more, a wider set, a richer set of communications outside of just the employee you know, employee to applicant, employee to consumer We had this before, you know, we've had this for years with call centers and things like that.
• 28:55
  Jay Harris: Uh, we've had this with a property website vendor or ad channel that's capturing information about, tell me about the property and even identify, help you to identify that fit with the criteria that the consumer has.
• 29:10
  Jay Harris: But yeah, you're there's no question, more information is captured on behalf of the property by a vendor that the provider would want to know, yeah, would want to know more about queries about the property, where are they showing up, how does that fit into the marketing process, queries, and kinds of questions people are asking as it comes to this to help refine their marketing characterization and Uh, but then also, you know, as it relates to, I want to sure that you know I'm not providing to a vendor this set proprietary data that's going to be used by my competitors, used by others in the space.
• 29:48
  Jay Harris: There again, you know, the deletion rights at the end of relationship, to the degree possible, at least to the this data are important.
• 29:56
  Jay Harris: Does that get you 100% of the way?
• 29:58
  Jay Harris: Often it doesn't.
• 30:00
  Jay Harris: Often it is difficult to unwind this.
• 30:02
  Jay Harris: Even if you have a local instance of the application, you specific to your company, and you ask to delete the Uh, often anonymized learnings are kept or not protected applicable law and may or may not be addressed in your vendor agreement.
• 30:17
  Jay Harris: So, you know, it's important to understand if the breaks out, what is the anonymized or otherwise data that's going to be left with the vendor that they continue to have rights in?
• 30:29
  Jay Harris: So you have some of the considerations.
• 30:30
  Jay Harris: Uh, and obviously they to the degree that there's a strategic relationship, a lot of this information is is shared with vendor, and then potentially can be shared with in the marketplace.
• 30:41
  Jay Harris: It's important that the sanctions and the enforcement are are well thought through with council as well.
• 30:49
  Jay Harris: Those are some considerations.
• 30:51
  Jay Harris: I mean, we do see some vendors who really pay close to the data protection agreement and terms in the uh and then others uh where basic language is a little more and and uh doesn't uh handle the complexities that uh an operator might expect.
• 31:11
  Jonas Bordo: There's a lot in those complexities for sure.
• 31:13
  Jonas Bordo: I always, you know, I think in this context too, it's it's because there are partners who the owners and operators have ability to really create a distinct relationship with.
• 31:24
  Jonas Bordo: But I always remember having to work with Craigslist back day, and Craigslist was incredibly important to my business an operator, but they wouldn't return a call, they an email.
• 31:33
  Jonas Bordo: If there was something we didn't like, there was absolutely we could do about it under any circumstance.
• 31:36
  Jonas Bordo: It was use the service or don't use the service.
• 31:39
  Jonas Bordo: And I feel like, you know, an open AI or an anthropic are are in that same bucket.
• 31:42
  Jonas Bordo: I don't know that there's anybody in our industry who has the scale to get a call back from those organizations right now.
• 31:49
  Jonas Bordo: Probably isn't anyone, uh, to be honest.
• 31:51
  Jonas Bordo: And so given that, they're kind of at the mercy of whatever the policies of those organizations are and they have to with it.
• 31:59
  Jay Harris: I agree with that.
• 32:00
  Jay Harris: And I so therefore you're very careful about what you share.
• 32:03
  Jay Harris: You know, you may ask questions rather than provide the agreements, you know, for an analysis of what to do.
• 32:10
  Jay Harris: You obviously want to agree that there are local versions additional privacy protections rather than the standard version.
• 32:19
  Jay Harris: You you want to take the additional steps to protect But you're right.
• 32:23
  Jay Harris: I mean, these larger institutions that are offering AI are often on a take it or leave it agreement basis.
• 32:31
  Jonas Bordo: Yeah, very much.
• 32:31
  Jonas Bordo: Well, a couple of quick questions for you, Jay, uh, as we up.
• 32:35
  Jonas Bordo: First, I'm curious, what are the top three AI-related queries you're getting as you're uh talking to people, as you get calling you?
• 32:42
  Jonas Bordo: What are the biggest topics that you're hearing about?
• 32:45
  Jay Harris: I would say right now, one is marketing issues.
• 32:47
  Jay Harris: So we we covered before, sort of new laws that affect generally.
• 32:51
  Jay Harris: Second one goes to uh some of the fee disclosure laws, fee fee permissibility laws, which I think are as much how do I present this?
• 33:02
  Jay Harris: Can I do this?
• 33:04
  Jay Harris: And you know, a lot of these are sort of compliance that are that vary at the state and local level.
• 33:10
  Jay Harris: They're partially AI questions, but they're also really to the basic question, can I do this?
• 33:15
  Jay Harris: So that's that's the second category.
• 33:17
  Jay Harris: I think the the third go to the data rights that we talked you know, as between me, the operator and the vendor, how do I show this on my privacy policy on the website?
• 33:28
  Jay Harris: How do I handle a consumer who comes to me and says, know, I want all my data back, give me a copy of what you And importantly, then how if the relationship breaks off with the vendor and I'm not going to use him any anymore, what my rights to make sure that the proprietary data I have uh widely shared and you know, is uh you know, that I've got protection in case that happens.
• 33:53
  Jonas Bordo: That's fantastic.
• 33:54
  Jonas Bordo: Thank you.
• 33:55
  Jonas Bordo: Curious from a tools perspective, what are your favorite that you're working with right now?
• 34:00
  Jay Harris: Right now, uh, we're using co-pilot within the firm.
• 34:03
  Jay Harris: Uh, and then individually, uh you know, outside use Chat GPT for just little Skunkworks projects that that have to better track what's going on in our industry uh you know, use that for trying to make my life simpler and that.
• 34:20
  Jay Harris: Increasingly, I I will tell you, we get uh clients whose analysis of an agreement is you know, I ran this through AI tool and it said, look for this, this, and this.
• 34:32
  Jay Harris: What else do you see here?
• 34:33
  Jay Harris: And sometimes it's a sophisticated prompt with a lot of questions, which we can add to, and other times it's you kind of off the mark and not well prompted.
• 34:43
  Jay Harris: So I do think there's probably a you know basic hour or lesson for executives in the industry about how to use the better, how to think about not just prompting, but you creating loops and other recurring approaches to leverage the technology to make life easier and improve recurring uh and recurring search terms.
• 35:06
  Jay Harris: There's a lot we can all learn from that.
• 35:10
  Jonas Bordo: I think that'd be a fantastic seminar for you guys to I would love to go to that one myself because it it certainly is uh easy and convenient to toss a contract you've just uh into one of those tools and just you know see what the top line is uh on it and go from there.
• 35:24
  Jay Harris: Yeah, I've I've seen more product specific training on you a certain tool.
• 35:29
  Jay Harris: There's certainly you know anecdotal information out there that.
• 35:32
  Jay Harris: Some people are using Quad or some tool like that.
• 35:34
  Jay Harris: But it I have not seen a lot of rental industry specific use cases that could be adapted and could be the a source of doing this smarter and you know coming up with persona and uh characterizing deliverables with certain language make it more readable and less AI lingo and and more readable.
• 35:58
  Jonas Bordo: So yeah, absolutely.
• 35:59
  Jonas Bordo: All right, last question for you.
• 36:01
  Jonas Bordo: Personal use of AI.
• 36:02
  Jonas Bordo: Uh any favorite tools or projects or hacks that you found for your personal life from AI?
• 36:08
  Jay Harris: Oh, that's a good question.
• 36:10
  Jay Harris: So it's certainly useful for travel planning.
• 36:13
  Jay Harris: I will tell you, I'm conservative in unleashing a tool to for me, you know, and I've not gone down that route yet.
• 36:22
  Jay Harris: But certainly in travel planning, figuring out time of year to visit different places, preparing to pack, preparing outline of places to go on a certain trip and uh itinerary, that's in one helpful area.
• 36:37
  Jay Harris: So I I think that's that's that's probably the the use I like most.
• 36:41
  Jay Harris: I don't know.
• 36:41
  Jay Harris: I don't know.
• 36:41
  Jay Harris: What about you?
• 36:42
  Jonas Bordo: Well, I've definitely done that.
• 36:43
  Jonas Bordo: My son and I had a great weekend in uh Los Angeles a couple months ago now, I guess.
• 36:48
  Jonas Bordo: The entire thing was was planned by AI, which was just And really, like, you know, plotted out travel times between and what the best mode of transportation was, and you know, us find things to do.
• 36:58
  Jonas Bordo: And it was really quite elegant.
• 36:59
  Jonas Bordo: My favorite one right now is actually I uh I was looking for a book on my bookshelf yesterday, and I knew it was there, not find it, took a picture of the bookshelf, gave it to Claude and said, Where is this book?
• 37:11
  Jonas Bordo: And it was like third shelf from the left, about seven books in.
• 37:15
  Jonas Bordo: I was like, wow.
• 37:16
  Jonas Bordo: Impressive fantastic.
• 37:20
  Jonas Bordo: That made my evening, I have to say.
• 37:23
  Jay Harris: Yeah, the image detection, you know, image detection with uh, you know, just uh synthesizing the information.
• 37:30
  Jay Harris: Yeah, it's it's remarkable.
• 37:32
  Jonas Bordo: Yeah, it's just it's amazing.
• 37:33
  Jonas Bordo: You know, some of these things are seemingly magical.
• 37:35
  Jonas Bordo: Well, Jay, it's been such a pleasure to have you on the podcast.
• 37:37
  Jonas Bordo: Thank you again for coming on.
• 37:39
  Jonas Bordo: Uh really appreciated the conversation.
• 37:41
  Jay Harris: Jonas, this has been wonderful.
• 37:42
  Jay Harris: Thanks for having me.
• 37:43
  Jay Harris: Look forward to uh staying in touch on this.
• 37:45
  Jonas Bordo: How can people get in touch with you, Jay?
• 37:47
  Jay Harris: So I'm in our uh Washington, D.C.
• 37:49
  Jay Harris: office with with Hudson Cook.
• 37:50
  Jay Harris: Hudson Cook's a national law firm, but uh my profile is is on the website under HudsonCook.com.
• 37:56
  Jay Harris: And happy to talk to people.
• 37:58
  Jay Harris: I run our uh residential property management practice, so our focus is entirely on operations issues for multifamily family operators.
• 38:06
  Jay Harris: So happy to talk to people about this.
• 38:08
  Jay Harris: I'll be out at the optech conference coming up here in a few weeks.
• 38:11
  Jay Harris: So good chance to talk some more about these issues with uh a lot of thoughtful opinion leaders in the space.
• 38:18
  Jonas Bordo: Fantastic.
• 38:18
  Jonas Bordo: Well, again, thank you, Jay.
• 38:20
  Jonas Bordo: Really appreciate you coming on the podcast.
• 38:21
  Jay Harris: Thanks, Jonas.
• 38:22
  Jay Harris: My pleasure.
• 38:23
  Jay Harris: Thanks for having me.
• 38:24
  Jonas Bordo: That's Net Effective, new episodes weekly.
• 38:26
  Jonas Bordo: If you're running rentals and figuring out AI, hit like, follow, or whatever your app makes you do to get more of the And if you'd like to come on as a guest or subscribe to the updates, go to neteffective.show.
• 38:37
  Jonas Bordo: I'm Jonas Bordo.
• 38:39
  Jonas Bordo: Thanks for listening.