As Times Change, Real Estate Law Changes With Them
Real estate professionals are under a lot of pressure to uphold strict standards of behavior, as well as keeping thorough records of their transactions. Laws regarding professional standards of conduct can be confusing and difficult to follow at times, but they exist to protect both brokers and clients. Due to the ever-changing ways in which we communicate via evolving technology, the law must also evolve to reflect new ways of conducting business in modern society. Recently there have been updates in the law which will become effective January 1, 2015, regarding appropriate record keeping by real estate brokers.
Under current law, a broker must retain three years’ worth of records such as:
- trust records
- deposit slips
- canceled checks
- all other documents executed or obtained in connection with any transaction for which a real estate license is required
As of January 1, messages of an “ephemeral nature”, such as instant messages, texts, tweets and so forth, will be excluded from this requirement. Brokers don’t need to worry about retaining these types of communications, with one exception: The law states that if the messages are designed to be retained or create a permanent record, then copies must be kept by the broker. Since the wording on this exception can be confusing, brokers who need clarification should contact a real estate attorney to ensure they are complying with the law.
The new law does NOT specifically exclude emails from record-keeping requirements, and the BRE has made it clear that those are considered to be permanent messages and must be retained in the broker file. Since more and more brokers are conducting a large portion of their transactions online these days, emails sent and received with regard to a real estate transaction must be included in the three-year record retention requirement. This requirement not only complies with the new law, but it also provides a much more complete record of a transaction than mere memory does should a claim later be filed related to a transaction.
A broker who is found by the Bureau of Real Estate to be lacking in proper record-keeping protocol can be cited and subject to formal legal action. When the law changes, we must all change with it. So prior to January 1, real estate agents and brokers would be wise to take a few moments, review their office procedures, and make sure they are keeping adequate records as required by law. For more information on new requirements, contact a real estate attorney for advice.