The AI Freeze Failed, Now It’s Up to Real Estate to Get It Right

The U.S. Senate voted overwhelmingly (99-1) to remove the provision that would have banned states from regulating AI for a decade. This decision followed significant opposition from both Republican and Democratic governors and state officials who expressed concerns about the potential negative impacts of such a moratorium.

Maybe it initially sounded great. Less paperwork, more consistency, easier for IT and legal teams to manage. But in real estate, things aren’t that straightforward and this would have been a disaster.

This industry doesn’t operate in a vacuum. We work in cities and neighborhoods, with real people and their homes, offices, and daily lives. That means our use of technology, especially AI, needs to reflect the local realities that tenants and property managers deal with every day.

AI is already here and property managers are using it for everything from answering tenant questions to predicting maintenance issues, adjusting energy use, and even helping with lease renewals. These tools often plug into cloud platforms and span multiple buildings and states.

But real estate is a local business. What works in Florida may not be okay in Illinois. Tenants in California may care a lot more about how their data is used than tenants elsewhere. Some states have stringent laws (like Illinois’ BIPA) that restrict how facial or fingerprint data can be collected and stored.

If the bill had passed and all state-level regulation and innovation was frozen for ten years, we would have been saying essentially that local concerns don’t matter. That’s not just a compliance risk, it’s a trust issue.

Imagine you install a facial recognition system to let residents into a building faster. Sounds like a convenience. But if you're in a state like Illinois, you’re now dealing with strict laws about how that data is stored and used. If those laws were frozen or ignored, tenants may have felt like their privacy was at risk, even if technically they were following federal rules.

And when people feel their privacy is at risk, it only takes one negative story or a resident complaint to erode trust across your portfolio.

A decade-long pause on state rules might have seemed like a green light for innovation. But it was more like a yellow light. It would not have stopped people from asking hard questions about how their data is used. It also would not have stopped tenants from demanding transparency. And it definitely would not have protect property owners from reputational or vendor risks if things went wrong.

In fact, the proposed freeze could have created a false sense of security where real estate operators felt they had a decade to “figure AI out” instead of addressing it now in the present tense.

This is a good lesson for our industry. Don’t wait for laws to catch up. Lead with your own internal policies. Make sure you can explain how your AI systems work. Have clear guidelines for vendors. And involve legal and compliance teams from the beginning, not as an afterthought.

And above all, put people first. AI should help make tenant experiences better, not just save money or reduce headcount.

We are in a transition period. AI is going to be part of how we manage buildings, communicate with tenants, and run operations. But we can’t treat this like just another tech upgrade. We need to think about the impact, the ethics, and the expectations of the people we serve.

The idea of a regulation freeze might have sound like a breather. But for real estate, it could have meant stepping into a decade of uncertainty. We narrowly avoided that setback.