Compliance · Updated April 2026 · 7 min read

California AB 723: What Realtors Must Disclose for AI-Staged Listings in 2026

California AB 723 took effect January 1, 2026. Here is exactly what real estate agents must disclose for AI-altered listing photos, the wording that satisfies the law, and the fines for getting it wrong.

Short answer: if you use any AI tool to alter a photo on a California real estate listing — virtual staging, decluttering, sky replacement, or anything beyond standard color correction — you are required by law to disclose it on the listing as of January 1, 2026. Caption-only disclosure is not sufficient. The disclosure must be visible on the image itself.

This guide walks through exactly what AB 723 says, the wording that keeps you compliant, the difference between "enhancement" and "alteration," what counts as a violation, and what the fines look like in practice.

What AB 723 actually says

Assembly Bill 723, signed into California law in late 2024 and effective January 1, 2026, amends California Civil Code §1102 and the Business and Professions Code §10176 to require disclosure of any "digitally altered or AI-generated" image used in a real estate listing.

The relevant operative language:

"A licensee shall disclose, in a clear and conspicuous manner, any image or visual representation used in connection with a real estate listing that has been digitally altered or generated by artificial intelligence in a way that materially affects the appearance of the property."

Three words in that sentence carry weight: clear, conspicuous, and materially.

Clear = the disclosure must be unambiguous. "Some images modified" is not clear. "This image has been virtually staged" is.
Conspicuous = visible without effort. Buried in the property description footnote is not conspicuous. On the image, in the listing thumbnail, or as a prominent caption is.
Materially = changes that affect a buyer's perception of the property. Color correction is fine. Adding furniture to an empty room, removing real furniture, replacing the sky, or removing wires is "material."

What you must disclose (and what you don't)

Disclosure required:

Virtual staging (adding digitally rendered furniture/decor to a real space)
Object removal beyond standard editing (removing a parked car, a satellite dish, power lines)
Sky replacement
Window-view replacement (showing a different view than what's actually visible)
AI-generated images of rooms not yet built or not photographed
"Decluttering" via AI (removing toys, personal items, cables) — yes, even this counts under AB 723
Color/material changes to walls, floors, or fixtures that don't reflect reality

Disclosure NOT required:

Standard color correction and white balance
Exposure adjustments
Cropping
Lens distortion correction
HDR composites of the actual space
Image stitching (panoramas of the actual space)

The line is material change to what a buyer would see if they walked through the door today.

The wording that satisfies AB 723

The California Department of Real Estate has not mandated specific wording. However, the language adopted by SDMLS, Bay East MLS, CRMLS, and major California brokerages — and which courts have so far accepted — is:

"This image has been virtually staged. Furniture and decor shown are digitally rendered and are not included with the property."

For non-staging alterations:

"This image has been digitally altered. The actual condition of the property may differ."

A specific format that has been treated as gold-standard compliance:

An on-image label (typically a "Virtually Staged" or "Digitally Altered" badge in a corner of the image, large enough to read at thumbnail size)
Caption text with the specific disclosure language
The unaltered original also included in the listing photo set

Most California MLSes now reject caption-only disclosure as insufficient.

What counts as a violation in practice

Three failure modes are getting fined or referred to the Department of Real Estate in 2026:

No disclosure at all. Listing photos that have been virtually staged with no marker, no caption, no anything.
Caption-only disclosure on a featured photo. The thumbnail in MLS search results gets cropped — caption is gone — and the buyer thinks the staging is real until they tour.
Misleading "enhancement" claims. Calling a wall-color change a "minor enhancement" when it materially changes the apparent finish quality of the room.

Penalties

Penalties stack across regulators:

MLS sanctions: $100–$500 fines per offense at most California MLSes; some apply listing removal as the first response to a complaint, with the fine attached.
Department of Real Estate: complaints can trigger investigation and license discipline up to revocation. AB 723 is now a specifically cited statute in DRE complaint forms.
Civil exposure: California Business and Professions Code §17500 (false advertising) gives a buyer who relied on an undisclosed AI image a private right of action. Damages tend to be modest (statutory + attorney fees) but the brand damage is significant.

The combined effect: a single bad listing rarely ruins a career, but a pattern of three or more flagged listings starts to compound quickly.

How AB 723 interacts with NAR and MLS rules

AB 723 is California-specific, but it does not exist in a vacuum:

NAR's 2026 Code of Ethics (Articles 2 and 12) requires "clear and conspicuous" disclosure of any digital manipulation or virtual staging — language that applies nationwide regardless of state law.
California MLSes (CRMLS, SDMLS, Bay East, et al.) have updated their rules to require on-image labels for AI-altered images, citing AB 723 as the authority.
Brokerage policy is increasingly stricter than the law. Many California brokerages now mandate on-image labels for all virtual staging regardless of the AB 723 trigger.

If you list outside California, you're not exempt from disclosure — you're just exempt from this specific California statute. NAR's 2026 Code applies regardless.

A practical compliance workflow

If you list any property in California with AI-altered photos, your workflow should be:

Order virtual staging or AI enhancement from a vendor that bakes the on-image disclosure label into the deliverable rather than expecting you to add it later. (Most don't.)
Confirm the deliverable includes the standard caption text in image metadata.
Always upload the unaltered original alongside the staged version.
In the MLS listing description, add a single clear sentence: "Some listing images have been virtually staged. Originals included."
Keep records of the originals and the staged outputs for at least 3 years (the typical statute of limitations on §17500 claims).

If you can't tell from a vendor whether the deliverable is AB 723-compliant by default, ask before you order. The right answer is "yes, every staged image we deliver has the on-image label baked in." Anything less and you're carrying the compliance risk yourself.

FAQ

Does AB 723 apply to me if I list in California but I'm licensed elsewhere? Yes. The statute applies to listings of California property regardless of the licensee's home state.

What if my MLS already has a disclosure rule — do I need to do anything different? You need to comply with both. Where the rules differ, follow the stricter. AB 723 will generally be at or above your MLS's bar, but check.

Is sky replacement considered "material"? California regulators have treated sky replacement as material when it changes the apparent quality of the day shown — e.g., overcast → blue sky for a beachfront listing. Standard practice in 2026 is to disclose all sky replacements regardless of the original sky condition.

What about photo editing my real estate photographer does? If they only do color/exposure work, no disclosure needed. If they remove items, replace skies, or virtually stage, the disclosure obligation runs to the listing agent — you, not the photographer.

How is this enforced? Currently mostly through complaint-driven enforcement. A buyer or competing agent reports a listing to the MLS or DRE. The agency follows up. Random audits are rare but growing.

Bottom line

AB 723 is one of the strictest AI-disclosure laws on the books for real estate as of 2026. The compliance bar isn't high if you build it into your listing workflow from the start: on-image label, caption, original alongside, single sentence in the description. If your virtual staging vendor isn't doing the on-image label by default, switch.

DoorAppeal bakes AB 723-compliant disclosure into every staged image we deliver — the on-image label, the caption text, and the unaltered original. If you're listing in California and want compliance handled at the deliverable level, see our pricing or browse sample listings.