Real estate contracts have come a long way, evolving into better, more secure versions. And in the not-too-distant future, you may be saying goodbye to the fancy pen and reams of paper and saying hello to smart contracts in real estate. Though smart contracts are not yet mainstream, the technologies on which they’re built are improving rapidly and shouldn’t be ignored.
The simple definition of smart contracts is that they are self-executing digital programs stored on a blockchain that automatically run when predefined terms—written in code—are met. Smart contracts are decentralized, meaning they are not executed by any third party or central authority. And once activated, smart contracts cannot be changed, which adds a layer of protection against manipulation and fraud. Smart contracts are built on blockchain, so there is no need for manual verification, and they provide unalterable audit trails.
Arguably, the need for smart contracts is growing: A 2025 report on contract management found that 71% of companies are unable to determine where 10% of their contracts are located. That same report indicated that “automating contract processes halves negotiation cycles and reduces inaccurate payments by 75–90%.”
The benefits of smart contracts in real estate are numerous, such as:
- Enhancing security and reducing human error;
- Increasing accuracy and transparency;
- Reducing costs;
- Bringing live tracking and reporting for better data analysis in decision-making;
- Improving compliance management.
It’s not surprising that experts project that the contract management software market will top $12 billion this year.
Adding AI to Real Estate Smart Contracts
Of course, artificial intelligence—along with everything else—has found its way into enhancing smart contract capabilities. AI in smart contracts means that contracts can learn from past agreements, identify patterns and use data adjusted in real time. AI can also detect contract anomalies and respond to external data. AI makes smart contracts more flexible, efficient and responsive.
Though AI-enabled smart contracts are still finding their way into the real estate space, the use cases are becoming clear. Buying and selling real estate often involves multiple parties and shuffling loads of paperwork can make transactions cumbersome.
When smart contract technology is perfected and fully adopted in real estate, transactions could look like this: Once contract terms are agreed upon, every part of the transaction will execute automatically—payments, legal updates, title transfers and more. Smart contracts will also be used as escrow to hold and distribute payments according to specifically defined conditions. And when payment is received, a smart contract will transfer ownership of a property automatically. Smart contracts will boost efficiency and cost effectiveness by automating multiple steps in a real estate transaction.
In commercial real estate, smart contracts are proving beneficial, too. For example, renting and leasing terms can be clearly defined and upheld using smart contracts. Deposits, rent payments, refunds and late fees can be scheduled, collected and paid automatically. Lease renewals, rent changes and compliance checks can also be managed automatically using smart contracts. Mortgage lending can be streamlined using smart contracts, which eliminate the need for lengthy applications processes, paperwork and third-party participation. Approvals and checks can happen automatically when preset terms are met. Payments and due dates can be clearly defined in smart contract terms allowing payments to be automatically disbursed and collected. And with the ability to analyze large data sets, AI improves accuracy by ensuring that all conditions of a smart contract are met before any actions are taken.
Smart contracts can automatically detect problems and trigger maintenance requests as needed. Tenant screening can also be improved using smart contracts to analyze rental applications, credit reports and rental histories, which automate and improve tenant screening processes.
AI-enabled smart contracts are secure in ways that far surpass manual risk assessment and threat response. AI can quickly scan contracts and instantly flag anomalies. When AI identifies suspicious behavior, it can freeze a transaction and log the episode in the permanent transaction ledger, thus reducing human error in contracts and increasing response time to potential security threats.
The Future of Smart Contracts Is More Autonomous
Contracts built on blockchain and enhanced with AI will continue to get smarter—and more autonomous.
Decentralized autonomous organizations (DAOs) will have the ability to create contracts that verify compliance or credit backgrounds while securing sensitive data. Tokenized compliance models will be able to build regulatory rules directly into financial transactions. In fact, Gartner forecasts that a significant portion of “new agreements in financial services will be executed via AI-augmented smart contracts within the next few years.” Learning and understanding how technology enables smart, secure, autonomous contracts will become increasingly critical for real estate professionals in the next few years.
No Rewards Are Without Risk
AI-enabled smart contracts are powerful and poised to transform the real estate industry, but they’re not all the way there yet—and they do come with some risks. While AI-enabled contracts built on code shift much of the risk from humans to algorithms, manual errors are reduced, but the risks of model performance and data quality increase. Because AI models learn from data, vetted data sets and data monitoring are critical safeguards. Data corruption can pose multiple risks.
Smart contracts run on code, which means bugs in code also pose a major risk. Continuous audits, data input validation and testing standards cannot be overlooked. Many AI models are black boxes, so a lack of transparency can become risky. Explainable AI processes and governance can help. It’s also important to maintain clear audit trails and manual overrides to ensure visibility into AI and blockchain systems.
In this early stage of AI-enabled smart contracts, there are still drawbacks to consider. Real-time contracts need real-world data, but blockchain systems don’t yet have the capability to sync with real-world systems—for example, natural disaster insurance requires accurate weather data. If parties want to change terms on unchangeable smart contracts, they’ll find that things can get complicated.
After all, to guard against manipulation, blockchain contracts cannot be changed, which is a roadblock if both parties wish to amend contract terms. In such cases, new contracts have to be created, which diminishes the efficiencies that smart contracts offer.
As such, not all legal agreements can be automated. Smart contracts excel at meeting and executing straightforward legal conditions. Legal conditions, however, can often be subjective and open to interpretation. In these cases, smart contracts cannot be used without third-party involvement. And smart contracts built on code require the ability to read code, meaning that auditing smart contracts requires programming knowledge.
Understanding smart contract risks and drawbacks is as important as understanding the benefits they bring to fully assess how smart contracts might work for you.
The Future of Contracts in Your Business
Real estate transactions are built on contracts, and, until now, manual processes that involve multiple parties. All that will eventually change—transform, really—with smart contracts. The advantages will be undeniable, though there are real risks and drawbacks to consider.
Though smart contracts—and the technologies on which they’re built—are not yet fully developed, and applications are in the early stages, you may find it’s worth investigating, asking questions, and learning as much as you can about blockchain technology. Learn the ways AI can enhance it and how these powerful technologies can drive your business and deliver efficient, automated, secure, cost-saving contracts. When smart contracts are fully deployed in the real estate domain, this could translate into faster deals with fewer opportunities for errors and greater trust than ever before. Working smarter—not harder—is a maxim to live by. Why not require your contracts to do the same?
Author
Sharon Love-Bates
Sharon Love-Bates is Director, Emerging Technology within the Strategic Business, Innovation & Technology group at the National Association of REALTORS®.
References
Bansal, D.; “How AI Is Revolutionizing Smart Contracts in Real Estate for Commercial Markets,” Damco, 17 September 2025.
Fidelity, “Smart Contracts Explained,” Fidelity Viewpoints.
Kristo, A.; “How AI Smart Contracts Are Changing the Way We Trade,” Traders Union, 15 October 2025.
Roots, S.; “Seventeen Smart Contract Use Cases,” Changelly, 1 July 2025.
