The Intermediary – August 2026 - Flipbook - Page 90
T E C H N O L O GY
Opinion
AI in the real estate
finance legal sector
I
n November 2022, a San
Francisco-based tech
firm released an artificial
intelligence (AI) powered bot
called ChatGPT. Within five
days, it had amassed more
than a million users.
AI is now transforming the legal
profession, and the real estate finance
sector is among the areas experiencing
significant change. Traditionally,
real estate finance lawyers have
spent a considerable amount of time
reviewing title documents, leases,
security documents, conditions
precedent, corporate authorities, and
transaction reports.
Many of these tasks involve
analysing structured information and
identifying key risks. AI-powered
legal technology can automate
aspects of these processes by quickly
reviewing large document sets,
extracting relevant information, and
highlighting anomalies or potential
issues. This enables lawyers to focus
more of their time on legal analysis,
negotiation, and client advice rather
than repetitive administrative tasks.
One of the most significant uses is
document review and due diligence.
Large property financings oen
involve extensive title packs, lease
portfolios, planning documents, and
security documentation. AI tools, if
used properly, can rapidly identify
clauses relating to rent review,
assignment restrictions, break rights,
security interests, guarantees, and
termination provisions.
Used responsibly generative AI
systems can prepare first dras of
facility agreements, legal opinions,
certificates of title, completion
checklists, and ancillary security
documents. While lawyer oversight
remains essential, various legal AI
tools can accelerate the production of
standard documentation and create
initial dras based on transactionspecific instructions. Lawyers can then
refine and tailor the output to reflect
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The Intermediary | August 2026
the particular commercial and legal
requirements of the transaction.
Law firms accumulate vast amounts
of expertise through previous
transactions, precedent documents,
and internal guidance notes. AI
systems can help organise and retrieve
this information, enabling lawyers
to access relevant know-how more
efficiently. When advising on a
transaction, a lawyer may be able to
identify similar deals completed by the
firm and draw upon existing solutions
to legal and commercial issues.
Increasingly, clients expect legal
advisers to provide faster responses,
greater transparency on costs,
and more efficient transaction
management. AI can assist by
generating status updates, monitoring
transaction progress, producing
management reports, and responding
to routine client queries.
For lenders, AI offers opportunities
to improve risk assessment and
portfolio management. Analytical
tools can examine large datasets
relating to property values, market
trends, borrower behaviour, and
covenant compliance.
Lawyers advising lenders can
use these insights to identify legal
and commercial risks at an earlier
stage and support beer-informed
lending decisions. AI-generated
analysis may also assist in monitoring
security packages and flagging
potential issues before they become
material problems.
The challenges
Accuracy remains an obvious key
concern. Generative AI systems can of
course produce incorrect information
or ‘hallucinations’, where fabricated
content is presented as fact. For this
reason, lawyers must always carefully
review AI-generated outputs and
continue to exercise professional
judgment. The responsibility for legal
advice remains with the lawyer, not
the technology.
ELIZABETH LEE
is partner, real estate finance
at Birketts LLP
Confidentiality and data protection
are also significant considerations.
Real estate finance transactions
frequently involve sensitive
commercial information. Law firms
must ensure that AI tools are used
in a manner that complies with
professional obligations, client
confidentiality requirements, and data
protection legislation. Appropriate
governance, security controls, and
user training are therefore essential.
Naturally, there are also ethical
and regulatory issues to consider.
Lawyers must be transparent about
how AI is used and ensure that clients
receive competent and reliable advice.
Professional regulators increasingly
expect firms to have policies governing
the use of AI and to understand both
its capabilities and limitations.
Potential for growth
While challenges relating to accuracy,
confidentiality, and regulation
remain, AI has the potential to
significantly enhance the efficiency
and effectiveness of legal services.
Lawyers who embrace these
technologies responsibly will be beer
positioned to meet client expectations
and thrive in an increasingly
competitive legal market.
Looking ahead, AI is unlikely to
replace real estate finance lawyers.
Instead, it is more likely to augment
their capabilities. The most successful
lawyers will combine legal expertise,
commercial understanding, and
interpersonal skills with the effective
use of AI-powered tools. Negotiation,
client relationship management,
strategic judgment, and complex
problem-solving remain areas where
human expertise is indispensable. ●
