Is It Safe To Use AI For Real Estate Decisions In New York?

Most people buying, selling, or investing in New York real estate now ask ChatGPT, Claude, or Gemini about their deal before they ever speak to a lawyer. According to Alexander Paykin, Esq., founder of Paykin Law, that now describes the majority of clients who come to his firm. Many arrive with an AI-generated strategy already worked out and the belief that they only need someone to file the paperwork.

Paykin uses AI in his own practice and sees real value in it. But he says consumers who rely on it alone run into two problems they rarely see coming: one legal and one practical.

Your AI Chats May Not Be Private

Before getting to whether the advice is right, Paykin raises a more basic issue. A recent court decision, known in shorthand as Heppner, held that a consumer’s use of AI to prepare for litigation is not protected by privilege. The prompts a person types and the answers the AI gives back can become part of discovery.

“It’s not a concern for me that ChatGPT is going to tell opposing counsel what I told it,” Paykin said. “It’s a concern to me that opposing counsel, as part of their discovery, can send us a demand to have our client turn over all his chats.”

Attorneys are in a different position. Paykin uses a paid, secure platform, and an attorney’s use of AI is treated as work product. The decision did not address whether a consumer using a paid AI platform would have any protection, and Paykin does not want a client to be the one who finds out. For anyone who may end up in a real estate litigation matter, information that would have been privileged if shared only with their lawyer could end up with the other side.

The Answer Is Only As Good As The Question

The bigger problem is substance. Paykin says AI tools hallucinate far less than they used to. The issue is what users give them to work with.

“If you don’t phrase the query correctly, if you don’t identify the issues and the supporting information first, and feed it to the AI in the correct way, you’re going to get a wonderful, eloquent, beautiful-sounding answer, which will tell you what you wanted to hear, but not what you needed to know,” he said.

He regularly reviews AI breakdowns of a client’s situation that would be accurate if the client’s version of events were the whole story. Once he starts asking about the facts and the evidence, new details come out that would have changed the AI’s answer. Knowing which facts matter, he says, takes professional expertise in any field.

Closing costs are a common example. Ask AI what your costs will be and it fills the gaps with assumptions, such as that you’re buying in the county you’re logged in from, purchasing a single-family home, and paying cash. A real answer depends on the county, the property type, whether you’re financing and how much, the down payment, whether you’re buying as an individual or through an LLC, and whether a power of attorney is involved. “Almost no matter is truly default on anything,” Paykin said.

Why AI Flags Terms That Aren’t Problems

Contract review is another weak spot. Paykin recently saw a client run a commercial lease through AI and ask for a list of every issue. The tool produced about 80 bullet points. Going line by line, Paykin found that most of them were standard terms or landlord-friendly provisions that no landlord would agree to remove.

One example was snow removal. AI flagged it as a burden the tenant should push back on. But when a commercial tenant controls the parking lot, that obligation is normal. Pushing back on it, Paykin said, only hurts the tenant’s position, because the owner will point out that the tenant is renting the building and the lot. Unless the prompt includes the local standards and the type of transaction, AI does not know what is negotiable and what is not.

The cost can add up. When a client runs an attorney’s advice back through AI and sends the AI’s objections in return, each round takes billable time to answer. Paykin says clients get the most value when they let their lawyer make the determinations and use AI with the right expertise behind it.

Where AI Actually Helps

Paykin’s view is that AI is very good at explaining concepts in plain language. A buyer can safely use it to learn what a mortgage contingency is or what common terms mean. Drafting an actual contingency clause for a contract is different. A lawyer can use AI to produce a first draft, but the lawyer’s job is to read it, edit it, and stand behind it.

“In the end, I’m the one with the malpractice policy, and I’m the one who’s expected to get it right,” he said.

The better approach, he says, is a shared AI thread where the lawyer writes the prompts and the client reads and interacts with the output. That gives clients a clear picture of their case without the risks of going it alone. In his words, a good client says: “Here’s my facts. Here’s my evidence. Now you figure it out, and you and your AI tell me what to do.”

Alexander Paykin, Esq. is the founder of Paykin Law, a New York real estate and commercial litigation firm based at 45 Rockefeller Plaza in Manhattan. The firm represents clients in real estate transactions, real estate and commercial litigation, foreclosure defense, landlord-tenant matters, and co-op and condo issues across New York City, Long Island, and Westchester.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.