Proptech: Building and managing a smarter future in a post-COVID-19 world

Andrew Steele, Monique Azzopardi and Gabby Greenslade
21 Jul 2022 Time to read: 2 MIN

Proptech promises significant benefits to property owners and tenants, but the integration of property and technology is not without the need to understand and manage some legal risks.

The use of technologies as part of property design and management is escalating and will be a key part of the post-COVID 19 world.

The retail sector is one sector that has led the integration and use of technology in the property industry, and has lessons for other sectors looking to adopt proptech, such as the health, aged care, entertainment, education and hotel industries, as well as commercial offices and workplaces.

Investing in, and leveraging, proptech offers several potential benefits for both the private and public sectors, including:

  • improved environment, social and governance outcomes (for example, meeting sustainability targets);
  • developing smarter buildings;
  • improving property performance by using data and analytics more effectively;
  • managing risks and making more informed choices in relation to property management and maintenance;
  • managing and combatting the COVID-19 pandemic (for example, managing viral loads within buildings); and
  • cost savings.

However, the integration of property and technology comes with unique risks and challenges from a legal perspective which need to be carefully assessed, navigated, and managed.

Those risks and challenges include:

  • Cyber-security: Key infrastructure, buildings and other assets may be a target for hackers and other criminal actors, so those risks must be mitigated and prevented.
  • Data management and privacy: Artificial intelligence and other technologies used in a property and technology context rely on, and can potentially generate, vast amounts of data, including personal information about visitors’ attendance and movements within buildings and biometrics (such as a person’s fingerprints and facial features). Any use or monetisation of such data must be done so in a transparent and legally compliant manner.
  • Surveillance and tracking: Any surveillance or tracking from the use of technologies in a property context must be in accordance with all applicable surveillance device legislation.
  • Intellectual property and ownership: A key asset in a technology transaction is intellectual property, but failure to secure all the necessary intellectual property rights (including once the contract comes to an end) will threaten your use of it.
  • Liability and risk management: Where technology is put in charge of property, it can sometimes be more difficult to establish causation and prove liability; the solution is to focus on the contractual, insurance and other risk management mechanisms to best manage and allocate risk in a proptech context.
  • Technology performance: It is crucial that the technology performs effectively and in accordance with contract specifications and requirements. Service levels and warranty periods need to be carefully considered at the outset. Technology also needs to be regularly tested.
  • Contract development and management: If contracts are not properly tailored for proptech, you could end up with inappropriate terms, mismanaged contractual risk and disputes.

While all of these issues are consistent across sectors, they will sometimes play out differently, or be more important, in some. Over the coming weeks, we will be exploring each of these issues, and will tease out how best to legally navigate and manage them, in more detail.

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Disclaimer
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.