The use of chatbots in property management has grown rapidly over the past several years. These tools now play a central role in resident communication—answering inquiries 24/7, collecting maintenance requests, and streamlining operational workflows across thousands of units.

Owners see chatbots as a way to scale support without increasing headcount. Managers rely on them to reduce repetitive tasks. Vendors market them as essential infrastructure.

But a critical question often goes unaddressed: When a chatbot provides incorrect or harmful advice—who is liable?

A Defining Legal Case: AI Output as Actionable Harm

In May 2025, a U.S. federal judge ruled that a lawsuit against Google and Character.AI could proceed after a chatbot allegedly encouraged a teenager to take on a harmful action. The defendants argued that the chatbot’s outputs were protected under the First Amendment. The court disagreed, establishing a clear legal precedent: companies can be held accountable for the actions and consequences of their AI systems.

In the context of property management, this precedent raises substantial concerns. Consider the following scenarios:

• A resident reports what they believe is a minor leak. The chatbot advises them to monitor it. Days later, the ceiling collapses due to a burst pipe.
• A tenant asks whether their rent will auto-pay. The chatbot confirms. It does not, and the tenant receives a late fee.
• A maintenance request is triaged incorrectly by the bot, delaying response to an issue with health or safety implications.

In each case, the chatbot’s direction—or failure to escalate—creates a liability exposure for the organization using it.

The Core Risk: Bots Advise Based on Limited and Often Inaccurate Input

It is important to understand that chatbots make decisions based entirely on the information they receive. In property management, the individual providing that information is almost always the resident—the party least qualified to describe the nature or severity of a maintenance issue.

Bots may receive vague, incomplete, or misleading messages such as:

• “There’s a weird smell in the kitchen.”
• “The power in my bedroom just went out.”
• “I think I saw mold.”

If the chatbot responds with advice—rather than simply acknowledging receipt or creating a ticket—the company is now in the position of having given direction based on potentially flawed input. That direction can have consequences, including financial loss, property damage, or legal liability.

Who Holds the Liability?

In nearly all cases, the company deploying the chatbot holds the liability for what it says.

Property Managers

If the chatbot is used as part of day-to-day resident operations, your management firm assumes responsibility for its actions.

Owners

For owner-managed portfolios using chatbot tools directly—on websites, resident portals, or messaging apps—the liability lands squarely with the ownership entity.

Technology Vendors

Unless a vendor contract includes a robust indemnity clause (which is uncommon), the vendor does not carry legal liability for chatbot advice. However, they may be included in litigation and reputational fallout if their tool is found to be a source of harm.

Even if the chatbot includes a disclaimer, courts increasingly interpret AI systems as acting on behalf of the business. If a resident relies on its advice and suffers a loss, the business is likely to be held accountable.

DIY

For teams building their own chatbot—whether in-house or with a low-code platform—the same legal risks apply. Once a bot begins interacting with residents, it effectively becomes a front-line employee. If it gives advice, it needs training. If it makes decisions, it needs oversight. Before deploying anything, define strict boundaries, escalation rules, and response templates. A chatbot that isn’t properly scoped, logged, and audited isn’t just a tech project—it’s a liability engine in waiting.

The IrisCX Perspective: Use Bots Strategically, Not Blindly

At IrisCX, we strongly believe that chatbots have a critical role in modern property operations, it is the first line of defense in our ‘Three lines of defense’ intake solution.

Our own product, Ask Iris, is a maintenance triage assistant built to improve efficiency and decision-making for operators and residents alike.

We believe bots should help residents understand:

• Urgency – Does the issue require immediate action?
• Impact – Could the issue spread, escalate, or worsen?
• Policy – Will this trigger a service charge or need for external vendor support?

However, we also believe that for bots to be effective and safe, operators must know exactly what advice is being given, under what conditions, and with what limitations.

AI systems cannot be left unsupervised. They are not a substitute for professional judgment. They must be deployed with structured workflows, escalation protocols, and clear role boundaries.

Five Practices for Safe Chatbot Deployment

To reduce risk and improve outcomes, property managers and owners should follow these best practices:

1. Define the Bot’s Responsibilities Clearly

Limit chatbot functionality to:

• Answering routine FAQs
• Collecting maintenance details
• Providing general account or status updates

Do not allow bots to:

• Approve or deny repairs
• Alter rent terms or fees
• Interpret lease policies
• Diagnose complicated maintenance issues (e.g., electrical faults, HVAC component failures, water intrusion, or anything requiring expert assessment)

2. Implement Topic Escalation Rules

Set up immediate escalation when certain topics are mentioned, including:

• Mold
• Gas
• Injuries or falls
• Flooding or leaks
• Legal issues or complaints

In such cases, the bot should direct the resident to call the office or emergency services, and immediately notify the management team.

3. Enforce Human Handoff

Limit the number of interactions a bot can have on unresolved or ambiguous topics. When appropriate, escalate to a human representative via:

• Scheduled call
• Email follow-up
• Emergency contact routing

4. Audit Conversations Regularly

Managers should review chatbot logs weekly or monthly to ensure:

• Accurate responses
• Proper escalation behavior
• No patterns of confusion or complaint
• Make adjustments to scripts and workflows as needed to reduce repeated miscommunication or delay.

5. Use Disclaimers Strategically, Not as Legal Shields

Disclaimers such as “This chatbot provides general property information and is not a substitute for direct communication with management” are useful—but not legally bulletproof. They should be present, visible, and clearly written, but not relied on as the only line of defense.

For Vendors: Responsibility Doesn’t End at Delivery

If you are building or selling chatbot technology in the property management space, it is your duty to help customers deploy it responsibly. That includes:

• Providing default guardrails and escalation logic
• Training clients on appropriate use cases
• Communicating limitations clearly in all documentation and onboarding

Failing to do so does not eliminate legal risk—it simply shifts it downstream. If your tool is used irresponsibly, you will be pulled into the conversation, if not the courtroom.

Know What Your Bot Is Saying

AI-powered tools can enhance operations, reduce response times, and improve the resident experience. But without structured limits and human oversight, they can also create new liability, confusion, and reputational risk.

Any chatbot that provides direction—whether about a maintenance issue, rent policy, or lease compliance—is effectively speaking on behalf of the property operator.

It must be managed accordingly.

Next Steps

If you’re considering deploying a chatbot or want to evaluate your current one, IrisCX can help. We offer strategic implementation services and a purpose-built maintenance triage solution that delivers smart automation with the right legal and operational guardrails in place.

To learn more, visit www.iriscx.com or contact our team.

Reference:

Reuters. (2025, May 21). Google, AI firm must face lawsuit filed by a mother over suicide of son, US court says. Retrieved from https://www.reuters.com/sustainability/boards-policy-regulation/google-ai-firm-must-face-lawsuit-filed-by-mother-over-suicide-son-us-court-says-2025-05-21/(Reuters, Reuters)