California AI Real Estate Photo Law: AB 723 and § 10140.8

What AB 723 is, precisely

Bill

AB 723 (Assemblymember Gail Pellerin)

Session

2025–2026 Regular Session

Chaptered as

Chapter 497, Statutes of 2025

Approved by the Governor

2025-10-10

Codified at

California Business and Professions Code § 10140.8

Operative

2026-01-01

Official title

Real estate: digitally altered images: disclosure

Sits within

Division 4 of the Business and Professions Code — the Real Estate Law, administered by the California Department of Real Estate

AB 723 adds one section and nothing else. It creates no agency, no registry, no fund, no express private right of action, and — this matters for the penalty question below — no penalty clause of its own.

What the statute says

Quoted rather than paraphrased. Most disagreement about this law is really disagreement about a paraphrase of it.

Who has to comply

The distinction that most coverage of this statute blurs: who performs an alteration and who owes the statutory duty are different questions.

• Licensed real estate broker or salesperson

  Covered directly.

  Subdivision (a)(1) names “a real estate broker or salesperson” as the person who must include the disclosure when the advertisement is theirs.

• A person acting on the licensee’s behalf

  Covered by the same sentence as the licensee.

  Subdivision (a)(1) reads “a real estate broker or salesperson, or person acting on their behalf.” The duty attaches to whoever publishes the advertisement in that capacity, so an assistant, marketing coordinator, or agency publishing on the licensee’s behalf is inside the statutory text.

• Real estate photographer or editing vendor

  Covered when acting on a broker’s or salesperson’s behalf in publishing the advertisement — not merely by having produced the edit.

  The duty in subdivision (a)(1) runs to the person who “includes a digitally altered image in an advertisement or other promotional material.” A photographer who delivers files to an agent has not, on the statute’s own words, included anything in an advertisement. A photographer who publishes or places the marketing material for the listing is acting on the licensee’s behalf and is inside the text. The definition in subdivision (b)(1) separately reaches images “created by or at the direction of” the licensee or someone acting on their behalf, which is what brings vendor-produced edits into scope for the licensee.

• Virtual staging company or AI software platform

  Not named by the statute. A vendor that merely supplies a tool is not the person including an image in an advertisement.

  § 10140.8 imposes its duty on licensees and those acting on their behalf. It does not create platform liability, a vendor registration scheme, or a duty running from a software provider to a buyer. Separate law — the FTC Act, California unfair-competition law, the California AI Transparency Act for large providers — may apply to a vendor on its own terms, but not through § 10140.8.

• Unlicensed seller advertising their own property

  Not reached by § 10140.8, which is part of the Real Estate Law and speaks to brokers, salespersons, and those acting on their behalf.

  The section sits in Division 4 of the Business and Professions Code and names licensees. General false-advertising and misrepresentation law still applies to anyone.

What the law covers, and where it stops

• Still photographs in a listing

  Covered.

  Subdivision (b)(1) defines a digitally altered “image”; a listing photograph edited to add, remove, or change elements is the core case.

• Any advertisement or promotional material, on any channel

  Covered. The statute is written by reference to the material, not the platform, so it does not stop at the MLS.

  Subdivision (a)(1) says “an advertisement or other promotional material for the sale of real property” without naming a medium. A flyer, an email blast, a social post, and a listing website all fall within that phrase on its own terms. Note what this is not: the statute contains no clause reading on social media specifically, so the correct statement is that it is channel-agnostic, not that it “explicitly covers Instagram.”

• Floor plans

  Named in the definition as an element whose alteration can make an image covered.

  Subdivision (b)(1) lists “floor plans” among the elements that, when added, removed, or changed, make an image a digitally altered image.

• Video and 3D tours

  Not expressly addressed. The statute speaks to an “image”; it does not define video, and it does not exclude it either.

  Treating a generated or heavily altered video walkthrough as outside all disclosure obligation would be an aggressive reading — general misrepresentation law and MLS rules still apply, and a frame of a video is an image. RELTO does not assert a conclusion here; confirm with your broker and MLS.

• Rentals and leases

  Not covered by § 10140.8 on its text, which reaches advertising “for the sale of real property.”

  The phrase “for the sale of real property” is a real limit in the statute. Rental marketing is governed by other law — advertising, fair housing, and misrepresentation rules all still apply — but not by this section. AB 2025 was signed on September 27, 2026 as Chapter 572, and takes effect January 1, 2027.

For an edit-by-edit breakdown of which changes fall inside the statutory definition, see what counts as a digitally altered image.

What the disclosure has to do

Six obligations, all from the statute itself. Every one is labelled so you can see it is law rather than an MLS rule or a vendor’s recommendation.

1. StatuteBus. & Prof. Code § 10140.8(a)(1)

   State that the image has been altered

   The advertisement must carry “a statement disclosing that the image has been altered.” The statute prescribes no magic words, so “Digitally altered,” “Virtually staged,” and “AI altered” all satisfy the requirement on its face, as long as a consumer would understand them. Your MLS may narrow the acceptable wording; the statute does not.

2. StatuteBus. & Prof. Code § 10140.8(a)

   Make the statement reasonably conspicuous

   “Reasonably conspicuous” is the standard. A caption in the same visual field as the photo meets it; disclosure text buried at the end of a long remarks field, or in a footer a scroll away from the image, is the risk case.

3. StatuteBus. & Prof. Code § 10140.8(a)

   Place the statement on or adjacent to the image

   Placement is specified: “on or adjacent to the image.” This is why an on-image watermark and a per-photo caption both work and a single site-wide disclaimer does not.

4. StatuteBus. & Prof. Code § 10140.8(a)

   Say where the unaltered images can be accessed

   The statement must “include language indicating that the unaltered images can be accessed on the linked internet website, URL, or QR code.” A bare “Virtually staged” label satisfies the first half of the duty and not this one — the disclosure has to point somewhere.

5. StatuteBus. & Prof. Code § 10140.8(a)(1)

   Provide a link, URL, or QR code to the original unaltered image

   The destination must be a publicly accessible internet website, URL, or QR code that “includes, and clearly identifies, the original, unaltered image.” Publicly accessible is the operative constraint: a login-gated gallery or a link that only works for the agent’s own clients does not meet the text. “Clearly identifies” means a viewer can tell which original corresponds to which altered image.

6. StatuteBus. & Prof. Code § 10140.8(a)(2)

   On a website you control, include the unaltered version in the posting — or link to it

   Where the material is posted on a website the licensee or their agent controls, the unaltered version must be included in the posting — with the same link-out available as a compliance alternative. The qualifier “over which … has control” is doing real work: it is why this paragraph is usually satisfied on a brokerage or agent site and why a syndication destination the agent does not operate is a different question.

Does it follow the listing to Zillow?

The statute does not say. § 10140.8(a)(2) — the paragraph that requires originals inside the posting — applies only to a website the licensee or their agent controls, and a syndication destination is generally not one.

Two things are true at once and are worth separating. The disclosure duty in subdivision (a)(1) attaches to the advertisement, and a syndicated listing is still the licensee’s advertisement, which argues for the disclosure travelling with it. The in-posting originals duty in subdivision (a)(2) is expressly limited to a website the licensee controls, which argues the opposite for that paragraph. Nothing in the section allocates responsibility for what a third-party portal chooses to strip or render. The practical consequence is that an on-image disclosure survives syndication where a caption field often does not, which is an operational reason to prefer it — not a statutory command. Some California MLSs have started to address downstream displays through their own data-distribution rules; those are MLS rules, and they bind through your MLS agreement rather than through § 10140.8.

What happens if you get it wrong

Five different bodies, five different triggers. They are commonly collapsed into “it’s a misdemeanor,” which is not what the statute says.

• StatuteBus. & Prof. Code § 10185

  Criminal exposure under the Real Estate Law

  What triggers it: A willful violation of, or knowing participation in a violation of, Division 4 of the Business and Professions Code.

  § 10140.8 creates no penalty of its own. It sits inside Division 4, and § 10185 makes any person who willfully violates or knowingly participates in a violation of that division guilty of a misdemeanor, punishable by a fine, by up to six months in county jail, or by both. Three things follow that the shorthand “it’s a misdemeanor” loses. Willfulness or knowing participation must be established — a missed caption is not, by itself, a crime. Charging is a prosecutor’s decision, not the DRE’s. And because § 10185 reaches “any person,” it is not limited to licensees, though the underlying duty in § 10140.8 is. AB 723’s own no-reimbursement clause invokes the state-mandated-program exception for an act that creates a new crime, which is how the Legislature accounted for this consequence.

• RegulatorBus. & Prof. Code §§ 10176, 10177

  DRE license discipline

  What triggers it: Conduct by a licensee that meets one of the statutory disciplinary grounds — substantial misrepresentation, willful disregard of the Real Estate Law, negligence or incompetence, or a broker’s failure to supervise.

  This is the realistic enforcement path and it is administrative, not criminal. § 10176 reaches substantial misrepresentation in a licensed capacity. § 10177 reaches, among other things, willful disregard or violation of the Real Estate Law, negligence or incompetence in performing a licensed act, and a broker’s failure to exercise reasonable supervision. A § 10140.8 failure can support discipline without any criminal case existing.

• MLS ruleYour MLS’s rules and regulations

  MLS enforcement

  What triggers it: A rule violation under the MLS agreement you signed.

  Separate from state law and usually the first thing that actually happens. CRMLS, for example, handles a Rule 11.5.2 violation with a warning first and a $250 fine if it is not corrected in time. Fine schedules vary by MLS; do not carry one board’s number to another.

• StatuteGeneral California misrepresentation and unfair-competition law

  Civil claims by a buyer

  What triggers it: A buyer who relied on the marketing to their detriment, under ordinary fraud, negligent-misrepresentation, or unfair-competition theories.

  § 10140.8 contains no express private right of action — nothing in the section says a buyer may sue under it, and California does not imply one absent legislative intent. Existing law already supplies the theories, so the exposure here is real but it is not new and does not depend on AB 723.

• REALTOR® ethicsNAR Code of Ethics, Article 12 and Standard of Practice 12-10

  REALTOR® ethics complaint

  What triggers it: Membership in a REALTOR® association, plus advertising that is misleading.

  Article 12 requires a true picture in advertising. SOP 12-10 prohibits, among other things, manipulating listing content in a way that produces a deceptive or misleading result, and otherwise misleading consumers, “including use of misleading images.” Note that the Code does not contain a rule specifically mandating a virtual-staging disclosure label — the obligation is the general one not to mislead. Ethics enforcement runs through the local association and reaches members only.

What the California DRE says about AI

A licensee advisory, not a regulation. It does not create new duties; it states how the Department reads existing ones when a licensee uses AI.

• AI use is permitted, and the existing rulebook is the rulebook

  The Department does not restrict AI in real estate practice. Its position is that a licensee using AI must do so consistently with the Business and Professions Code, DRE regulations, and fair housing, fair lending, and consumer protection law already in force.

• The licensee owns the output

  If an AI tool produces a misleading listing description, an inaccurate valuation, or improper communication with a consumer, responsibility under current law rests with the licensee and their responsible broker — not the technology provider. For a virtually staged photo this is the operative point: the vendor’s compliance features do not transfer the duty.

• Broker supervision extends to the tools

  A responsible broker’s supervisory obligation covers the software used to conduct activity in the office, and supervising advertising is already a duty under the DRE regulations. A brokerage-wide AI imaging policy is a supervision artifact, not a nicety.

• AI is treated like an unlicensed assistant

  The Department draws the analogy directly: directing an AI tool to perform an act requiring a license is the same problem as having an unlicensed assistant perform it.

What your MLS adds on top

These are MLS rules, not California law. They bind you through the MLS agreement you signed. An MLS can require more than the statute — CRMLS does — and cannot excuse less.

• CRMLS (California Regional MLS)CRMLS Rule 11.5.2 · effective 2026-01-01
• San Diego MLS (SDMLS)published AB 723 guidance · effective 2026-01-01
• MetroList ServicesMetroList Rules § 11.6.1 · effective 2026-02-02
• Bay East Association of REALTORS® / bridgeMLSpublished AB 723 guidance
• San Francisco Association of REALTORS®published AB 723 guidance

Questions California agents actually ask