New California Disclosure Law For Digitally Altered Images — AB -723

New California Disclosure Law For Digitally Altered Images — AB -723

In this 3-minute video, Saul Klein, CEO SDMLS, points out that AB -723 was signed by the Governor October 10, 2025 with a  very short time period for responsible parties to understand the new law by its effective date of January 1, 2026.

So, what are the compliance responsibilities of brokers, agents, MLSs, portals, and downstream providers (vendors). As of today, the California Department of Real Estate (DRE) has not issued clarifying regulations.

We’ll examine the language of the law itself to interpret as best we can.

Starting with the Legislative Counsel’s Digest:

“This bill would require a real estate broker or salesperson, or person acting on their behalf, who includes a digitally altered image, as defined, in an advertisement or other promotional material for the sale of real property to include a disclosure, as specified. If the advertisement or promotional material is posted on an internet website, the bill would require the same image without digital alteration to be included, as specified. By imposing new requirements on real estate licensees, the violation of which is a crime, this bill would impose a state-mandated local program.”

• Note use of the heavy language “the violation of which is a crime.”
• We’ll take time below to closely examine the definition of what is, and what is not, a “digitally altered image.”
• Applies to an advertisement or other promotional material for the sale of real property (no mention of rentals).
• Who are “persons acting on behalf of brokers or salespeople?” –- are they MLSs, IDX/VOW participants, portals, and downstream providers (vendors)?

SECTION 1. Section 10140.8 is added to the Business and Professions Code, to read:

10140.8. (a) (1) A real estate broker or salesperson, or person acting on their behalf, who includes a digitally altered image in an advertisement or other promotional material for the sale of real property shall include in the advertisement or promotional material a statement disclosing that the image has been altered and a link to a publicly accessible internet website, URL, or QR code that includes, and clearly identifies, the original, unaltered image. The statement shall be reasonably conspicuous and located on or adjacent to the image and shall include language indicating that the unaltered images can be accessed on the linked internet website, URL, or QR code.

• The advertisement or promotional material must include a statement disclosing that the image has been altered and a link to a publicly accessible internet website, URL, or QR code that includes, and clearly identifies, the original, unaltered image.
• The law is intended to promote transparency and truth in real estate marketing in an era where AI and virtual staging tools can easily generate convincing images that may mislead buyers if not properly disclosed.
• A “digitally altered image” is one that has been changed using photo editing software or AI to add, remove, or change material elements of the property

10140.8. (a) (2) If an advertisement or promotional material described in paragraph (1) is posted on an internet website over which the real estate broker or salesperson, or person acting on their behalf, has control, they shall include the unaltered version of the images from which the digitally altered images were created in the posting. A person subject to this paragraph may comply with this requirement by including a link to a publicly accessible internet website that includes, and clearly identifies, the original, unaltered image. If the real estate broker or salesperson, or person acting on their behalf, complies with this requirement by including a link to the unaltered images, the statement required by paragraph (1) shall include language indicating the unaltered images can be accessed on the linked internet website, URL, or QR code.

• If the altered image appears on a website controlled by the broker/salesperson, they must include the unaltered original image in the posting. If they instead provide a link or QR code, the disclosure must explain how to view the original.
• Saul mentions that the MLS may require that the listing broker include a notice that the listing contains a digitally enhanced image so that the MLS can attach a compliant notice before distributing the listing for display by authorized providers.
• What happens when there is no disclosure compliance by a downstream provider?
• MLS cannot guarantee that the downstream provider will make the required disclosure in the display of the listing.

10140.8. (b) (1)   For purposes of this section, “digitally altered image” means an image, created by or at the direction of the real estate broker or salesperson, or person acting on their behalf, that has been altered through the use of photo editing software or artificial intelligence to add, remove, or change elements in the image, including, but not limited to, fixtures, furniture, appliances, flooring, walls, paint color, hardscape, landscape, facade, floor plans, and elements outside of, or visible from, the property, including, but not limited to, streetlights, utility poles, views through windows, and neighboring properties.

• Here’s where misinterpretations will be hotly debated and will lead to clarifying regulations that go beyond virtual staging.
• Are floor plans sometimes digitally enhanced? What about nighttime views showing a full moon rather than original daytime rain clouds or snow? What about adding trees, hedges, fences, and “handscapes” (non-living elements and features such as concrete pavers, outdoor kitchens, decking, retaining walls, and more.)
• Digitally swapping in a more appealing backyard view triggers the disclosure requirement.

10140.8.(b) (2) “Digitally altered image” does not include an image where only lighting, sharpening, white balance, color correction, angle, straightening, cropping, exposure, or other common photo editing adjustments are made that do not change the representation of the real property.

• Key exception hinges on the phrase “common photo editing adjustments are made that do not change the representation of the real property.”

CONCLUSIONS

• Brokers should evaluate the risks and educate agents on a written office policy on AI & image use
• Complete agent training
• Have marketing review listing prior to publication; keep records for DRE audit and litigation defense – retain originals.
• Develop disclosure language:“This image has been digitally altered for illustrative purposes. To view the original, unaltered image, visit: [URL] or scan the QR code.”
• Disclosure does not cure fraud if images are misleading

RELATED READING:

https://www.wavgroup.com/2025/11/19/californias-new-photo-disclosure-law-and-what-it-means-for-mlss-and-brokerages/

California’s New Photo Disclosure Law and What It Means for MLSs and Brokerages

https://www.jeffturner.info/what-i-learned-altering-a-perfect-photo/

What I Learned Altering A Perfect Photo

https://thedataadvocate.com/when-ai-says-turn-yourself-in-a-real-estate-brokers-cautionary-tale-by-summer-goralik/

When AI says ‘Turn Yourself In’: A real estate broker’s cautionary tale by Summer Goralik

More articles on Artificial Intelligence (AI) : https://thedataadvocate.com/artificial-intelligence/