Landlord AI Systems Eye Legal Shield

 

"Data company RealPage is confronted with state and local efforts to ban its algorithmic pricing system for landlords in the rental-apartment market.

 

Now, a provision buried in House Republicans' tax bill is throwing the company a lifeline.

 

The bill that the House passed last week would prevent state and local governments from regulating artificial intelligence and automated decision systems for 10 years.

 

That decadelong moratorium faces an uphill battle in the Senate. And the bill would do little to halt class-action lawsuits that allege RealPage violated antitrust and consumer-protection laws.

 

But if the House bill becomes law, it would provide RealPage with significant legal relief. The provision would effectively muzzle some of the dozens of local and statewide efforts to outlaw algorithmic pricing systems, including RealPage's.

 

Federal, state and local regulators accuse rental-data algorithms such as RealPage and Yardi Systems of collecting and crunching confidential data to help landlords illegally collude on pricing. That was partly to blame for the double-digit rent surges of the pandemic era, they allege.

 

RealPage has denied the allegations and has said landlords aren't required to use its price recommendations.

 

Still, several U.S. metro areas, including San Francisco, Philadelphia and most recently Providence, R.I., have banned algorithmic-pricing software. Others such as Jersey City, N.J., and San Diego are on the verge of implementing bans. In Colorado, a statewide prohibition on algorithmic pricing systems is on the governor's desk waiting for a signature.

 

Congress could reverse all of that.

 

"We would no longer be able to enforce this ban," said Providence City Council President Rachel Miller. The law has been in place for less than two weeks.

 

Local government officials like Miller said their first line of defense would be to sue the federal government. Some would be ready to lean harder into other tenant-protection laws. Local Progress, the progressive policy group that helped draft sample legislation to inspire the local RealPage bans, said it was prepared to increase its advocacy efforts.

 

"Rent control -- that would be the biggest tool if folks are using algorithms to jack up rents," said Jersey City Councilman James Solomon, who is sponsoring a proposal to ban algorithmic pricing in the city.

 

For RealPage, Yardi and landlords who use their rent-setting software, Congress's tax-bill provision would be a significant victory in their effort to repel the bans.

 

RealPage is already suing the city of Berkeley, Calif., over its ban on rent-pricing software. And apartment trade groups such as the National Multifamily Housing Council have been lobbying harder against algorithmic-pricing regulations.

 

Last year, NMHC staffers and leaders across several other industries participated in a bipartisan task force led by the House Financial Services Committee to shape a regulatory framework for AI.

 

That framework was largely the basis for this tax-bill provision, NMHC President Sharon Wilson Geno said. NMHC sent a letter of support last week to the House committee that added the provision to the tax plan.

 

"This would make it much easier for multifamily owners to feel confident that they are operating on the side of the law and they will not get sued," Wilson Geno said. "The current class litigation has cost millions."

 

Even so, RealPage is facing dozens of price-fixing lawsuits and class actions from state regulators and private plaintiffs. The Justice Department also is suing the company and several major landlords that use its software.

 

Those suits will likely still move forward because their allegations are based on existing antitrust and consumer-protection laws and don't specifically single out AI.

 

"I don't think this has any real impact on the lawsuits," said Spencer Van Every, an analyst at the Washington, D.C., policy-risk advisory firm Capstone. "And the lawsuits are the bigger risk for RealPage."

 

RealPage could face roughly $73 billion in monetary damages from these lawsuits, according to Capstone.” [1]

 

1. Landlord AI Systems Eye Legal Shield. Picciotto, Rebecca.  Wall Street Journal, Eastern edition; New York, N.Y.. 28 May 2025: B1.