Records Retention for the California Real Estate Broker
Today, we revisit and article from a couple years ago and discuss the California real estate broker’s requirement to maintain records.
As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.
Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to estate planning, please contact me to setup a date and time.
Records Retention for the California Real Estate Broker
By: D. Keith B. Dunnagan, Esq.
Although at times cumbersome, retention of all records is an essential duty of real estate agents and brokers. In fact, not only is it a duty of agents and brokers, it is also a legal requirement. Under California Business & Professions Code §10148, “A licensed real estate broker shall retain for three years copies of all listings, deposit receipts, canceled checks, trust records, and other documents executed by him or her or obtained by him or her in connection with any transactions for which a real estate broker license is required.”
To break this law down, a real estate broker needs to keep all documents that pertain to any real estate transaction. An important note is that this law includes emails. As the digital age has expanded, brokers and agents have begun to rely and conduct business more and more on digital mediums, especially emails. It is required that emails are kept for three years. If a broker or agent does not keep their records, including emails, the Department of Real Estate has grounds to suspend or revoke licenses. However, a clarification to the law made effective January 1, 2015 is text messages, instant messages, and tweets are not included in documents that need to be kept, unless they are designed to be retained or to create a permanent record.
Another important aspect to consider is that a buyer has three to four years, depending on the claim, from the date of discovery to bring an action against a seller for an undisclosed defect or some other contract breach. This discovery rule has been extended to include claims against real estate agents as well. Although agents are required by law to retain records for three years, often times communications are needed to protect against claims after this minimum. Communications that include representation or agreement may trigger agent liability long after escrow has closed.
Because claims may be brought after the three years, it is highly recommended to keep records of all documents. An efficient method of keeping these records is to scan files before destroying the hard copies. The California Association of Realtors offers free, unlimited scanned document storage and retrieval through zipVault. By scanning these documents, realtors and brokers protect themselves from any possible liability that can brought up in the future.
Without saving these documents, brokers and realtors open themselves up to potential liability issues. Those documents record conversations, agreements, and other critical aspects of the transactions; those details are often distorted by memory as time passes if they are not written down. For example, a seller and agent may be sued for failure to disclose an alleged defect. Without maintenance of records, the fact that the buyer was fully aware of the defect and had waived repairs may go unknown. This failure of maintaining records can have potentially large financial consequences.
To summarize, the required minimum by law is to maintain and retain all records for three years. This includes any emails. However, despite this minimum, it is highly recommended to maintain those records past the three years. These records do not need to be retained in physical form but they need to be accurate copies of the originals. Scanned copies meet this standard.
The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their regulatory obligations. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
Today, we revisit and article from a couple years ago and discuss the California real estate broker’s requirement to maintain records.
As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at kbdunnagan@bpelaw.com.
Also, remember that we do legal presentations for business and community organizations. If your group would like to schedule a presentation related to estate planning, please contact me to setup a date and time.
Records Retention for the California Real Estate Broker
By: D. Keith B. Dunnagan, Esq.
Although at times cumbersome, retention of all records is an essential duty of real estate agents and brokers. In fact, not only is it a duty of agents and brokers, it is also a legal requirement. Under California Business & Professions Code §10148, “A licensed real estate broker shall retain for three years copies of all listings, deposit receipts, canceled checks, trust records, and other documents executed by him or her or obtained by him or her in connection with any transactions for which a real estate broker license is required.”
To break this law down, a real estate broker needs to keep all documents that pertain to any real estate transaction. An important note is that this law includes emails. As the digital age has expanded, brokers and agents have begun to rely and conduct business more and more on digital mediums, especially emails. It is required that emails are kept for three years. If a broker or agent does not keep their records, including emails, the Department of Real Estate has grounds to suspend or revoke licenses. However, a clarification to the law made effective January 1, 2015 is text messages, instant messages, and tweets are not included in documents that need to be kept, unless they are designed to be retained or to create a permanent record.
Another important aspect to consider is that a buyer has three to four years, depending on the claim, from the date of discovery to bring an action against a seller for an undisclosed defect or some other contract breach. This discovery rule has been extended to include claims against real estate agents as well. Although agents are required by law to retain records for three years, often times communications are needed to protect against claims after this minimum. Communications that include representation or agreement may trigger agent liability long after escrow has closed.
Because claims may be brought after the three years, it is highly recommended to keep records of all documents. An efficient method of keeping these records is to scan files before destroying the hard copies. The California Association of Realtors offers free, unlimited scanned document storage and retrieval through zipVault. By scanning these documents, realtors and brokers protect themselves from any possible liability that can brought up in the future.
Without saving these documents, brokers and realtors open themselves up to potential liability issues. Those documents record conversations, agreements, and other critical aspects of the transactions; those details are often distorted by memory as time passes if they are not written down. For example, a seller and agent may be sued for failure to disclose an alleged defect. Without maintenance of records, the fact that the buyer was fully aware of the defect and had waived repairs may go unknown. This failure of maintaining records can have potentially large financial consequences.
To summarize, the required minimum by law is to maintain and retain all records for three years. This includes any emails. However, despite this minimum, it is highly recommended to maintain those records past the three years. These records do not need to be retained in physical form but they need to be accurate copies of the originals. Scanned copies meet this standard.
The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their regulatory obligations. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.