Many of the “core documents” to a real estate transaction have retention requirements codified in regulations:
Agency Disclosure: 254 CMR 3.00 requires brokers to retain the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure, as well as Consent to Dual Agency Disclosures and Designated Agency Disclosures for a period of three (3) years from the date of the notice.
Escrow records: 254 CMR 3.10(b) requires brokers to maintain records of all funds held in their escrow accounts. Such records should include the date the money was received, the source of the funds, the date the funds were deposited, check number, the date of withdrawal, and “other pertinent information concerning the transaction … and to whom the money belongs.” Copies of checks deposited into and withdrawn from the escrow account should be maintained for three (3) years from the date of issuance.
Lead Paint: 24 CFR § 35.175 requires brokers to retain the Lead Paint Form for three (3) years. HUD recommends maintaining lead paint notification and disclosure forms, as well as inspection, remediation and, maintenance records indefinitely due to the liability associated with lead paint.
Rental Documents: 254 CMR 7.00 (2) requires the following items to be retained for a period of three (3) years: the Tenant Fee Disclosure, from the date on which the notice was provided; “all rental listings and written documents that demonstrate the availability of an apartment at the time it is advertised for rental” from the date on which the apartment was rented; and “a copy of any check, money order and written cash receipt for any fees, deposits or payments made by a prospective tenant or actual tenant” from the date of issuance.
Regardless of the specific retention requirements noted above, it is a good idea to keep all transaction documents for seven (7) years. This includes, but is not limited to: listing agreements, buyer representation agreements, purchase contracts, and communications with the client(s) and other broker(s). The statute of limitations for most contract actions is six (6) years, so it is important to retain documents for at least this long to protect your interests in any potential lawsuit. Certain documents, such as corporate records, partnership agreements, audit reports, general ledgers, tax returns and deeds should be kept permanently. In most cases, it is acceptable to store these documents electronically, as long as you are safely and securely backing up all of your data. Brokerages should work with an attorney and/or accountant to develop and maintain a record retention policy for their office(s).
Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; and Jonathan Schreiber, Legislative & Regulatory Counsel, Massachusetts Association of REALTORS®