We have had a couple of clients ask whether they can use AI Large Language Models (LLMs) such as ChatGPT or Claude for legal review, such as looking at status certificates. As a machine learning engineer who has worked for years with natural language processing, I advise against it.

A language model is ultimately what is known as a ‘next token predictor’, at the time of writing producing realistic and highly intelligible writing, but without great reasoning capabilities. It is more along the lines of “I am not a lawyer, I just play one on TV“. The answers a language model gives are highly dependent on the data it was trained on, and if some types of questions and answers are common, it will likely produce those answers. When an answer is clear, it appears like magic, but when nuance is key the answers it gives can be very misleading if relied upon as legal advice.

A good example is whether a mutual release is necessary in a real estate transaction in Ontario for a buyer to receive their deposit back. In this scenario suppose that a buyer made an offer conditional on inspection, the inspection is not to the buyer’s satisfaction, and the buyer does not give notice the condition is satisfied. Here is the answer from AI, complete with pleasing unicode emojis:

”Yes — you almost always need a mutual release signed by both buyer and seller to get your deposit back in Ontario, even if the deal is conditionally terminated (e.g., after a failed inspection).”

🧾 Why?

In Ontario real estate law:

• The deposit is held in trust (typically by the listing brokerage).

• The brokerage cannot release the deposit without written direction from both parties — usually in the form of an OREA Mutual Release.

➡️ The seller still needs to sign the mutual release so the deposit can be returned to you.

🚫 What If They Refuse?
If the seller refuses to sign, your deposit stays in trust until:

1. The parties reach an agreement, or

2. One party applies to court or real estate arbitration to settle the dispute.

The problem is that this sort of answer might make a listing brokerage holding a deposit think they can demand a mutual release, which isn’t true. A trust just means that something is legally owned by one person to the benefit of someone else. The deposit in a real estate purchase is held in a trust account, but the beneficiary is uncertain. This means that the trust is non-deterministic: it may be for the seller, it may be for the buyer, depending on the situation and agreement. Funds from a trust may be released to a beneficiary once the trust becomes deterministic and the funds are requested by the beneficiary.

The true answer is that as long as the seller gives a direction to the trust holder that the money is not theirs, the only remaining beneficiary is the buyer and the funds may be released. A buyer may deliberately refuse to sign a mutual release, not wanting to release the seller or their brokerage from liability if they believe they caused them damages. In practice, too many brokerages believe a mutual release is necessary and refuse to release funds even when having a direction from the seller. That sort of action would be a breach of trust. 

It may be the case that in the future technology will improve to the point of outperforming every human lawyer, but at the time of this writing it is not the case.