Strata Tip of the Week - The Risk of Liability When Relying on AI for Strata Document Reviews

In 2023, the BC Financial Services Authority (BCFSA) published an article titled “What You Should Know When Using Artificial Intelligence”, highlighting the growing role of AI in real estate and the risks professionals should be aware of.

As AI technology becomes more integrated into various aspects of the real estate industry, including strata document reviews, it’s essential to recognize both its capabilities and its limitations. While AI can rapidly scan and summarize large volumes of data, it is not infallible, and relying on it exclusively can expose real estate professionals to liability if critical information is missed or misinterpreted.

Some Limitations of AI in Reviewing Strata Documents

1. Quality of Input Data Matters

AI tools are only as good as the data they process. Strata documents can vary widely in terms of their quality, with some being very blurry, incomplete or containing inaccurate information. Even with Optical Character Recognition (OCR) technology, certain documents may be unreadable. If AI fails to extract key information due to poor input quality, crucial details could be overlooked.

2. Lack of Context

Another significant limitation is AI's limited ability to understand context. While AI can identify patterns and extract information, it often falls short when it comes to comprehending the nuances and implications of the data it processes. For example, merely counting the number of times that "water ingress issues" or "leaks" are mentioned in documents provides only a partial picture. Understanding the source of the leaks, the strata's response to water ingress problems, as well as its timeliness in addressing systemic issues are all important factors to consider when evaluating a strata corporation and deciding whether or not something may pose a risk.

3. Lack of Client-Specific Insights

AI often lacks the information or capability to understand unique preferences, priorities, and concerns of individual clients. Each real estate transaction is unique, and clients may have specific must-haves, red flags or deal breakers that AI cannot discern. For instance, while some clients may view discussions about implementing an age restriction bylaw as a red flag, others may not share the same sentiment. It is the role of a knowledgeable real estate professional to remain aware of these preferences when reviewing strata documents.

The Risk of Liability

Real estate professionals should be cautious when relying on AI software for strata document reviews. While AI can be a valuable tool, it is not (at least yet) a substitute for a comprehensive review conducted by a qualified professional. The risk of liability arises when AI software fails to detect crucial information, misinterprets data, or lacks the ability to contextualize findings. In such cases, real estate professionals may be held responsible for any oversights or errors that lead to unfavourable outcomes for their clients.

Balancing Technology with Expertise

At Condo Clear, we embrace new technologies to enhance efficiency, but we believe there is no substitute for hands-on expertise. Every strata document review we conduct is completed by licensed professionals with years of strata management experience. We meticulously review each page to ensure that potential risks, financial concerns, and operational issues are properly assessed and explained.

We also take the time to meet with you and your clients, as many times as needed at no additional cost, to discuss key findings, answer questions, and provide the clarity needed to make informed decisions.

Want Confidence in Your Strata Document Review?

Let our knowledge and experience be your guide. Contact Condo Clear today to ensure a thorough, accurate, and fully contextualized review of your strata documents.

That’s it for this week. If you have any suggestions for other topics you’d like us to cover, please let us know at info@condoclear.ca.

Disclaimer: The information provided is for general purposes only. It is not intended to provide legal advice or opinions of any kind. No one should act, or refrain from acting, based solely upon the materials provided, any hypertext links or other general information without first seeking appropriate legal or other professional advice.

A little about Condo Clear:

They are a fully licensed brokerage under the BCFSA, and carry Errors and Omissions (E&O) insurance.

They have been in business since 2017 and have completed over 3,000 strata reviews to date province-wide.

Their Review Advisors have firsthand knowledge and experience. They’ve all been practicing strata managers.

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