Q. My file cabinets are overflowing! For how long must my office retain documents?
A. There are several laws and regulations that require certain transaction documents to be retained for a specific amount of time. They are as follows:
Client Funds: State Regulation CMR 254 CMR 3.00 (10)(b) requires every broker to keep “a record of funds deposited into his/her escrow accounts, which records shall clearly indicate the date and from whom the broker received the money, date deposited along with the source of the money and check number, date of withdrawal with the name of the person receiving such withdrawal, and other pertinent information concerning the transaction and shall clearly show for whose account the money is deposited and to whom the money belongs. Every broker shall also keep a coy of each check deposited into and withdrawn from the escrow account for a period of three years from the date of issuance.”
Agency Disclosure: State Regulation CMR 254 CMR 3.00 requires brokers to retain the Massachusetts Mandatory Licensee-Consumer Relationship Disclosure, as well as the Consent to Dual Agency and Designated Agency disclosures for a period of three years from the date of the notice.
Rentals: State Regulation CMR 254 CMR 7.00 (2) requires the following items to be retained for a period of three 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.
Lead Paint: Federal Regulation 24 CFR Paragraph 35.175 requires brokers to retain the Lead Paint Form for three years. Additionally, HUD recommends that, “given the liability issues associated with lead-based paint,” the following forms should be kept indefinitely: Receipt of Lead Hazard Informational Pamphlet; copies of the Lead Hazard Evaluation and Reduction Notices; Evaluation, Lead Hazard Reduction and Clearance Reports; and ongoing Maintenance Records.
Regardless of the specific retention requirements noted above, it is a good idea to keep all transaction documents for seven years. The statute of limitations for most contract actions is six years, so you want to make sure you retain documents long enough to be able to defend yourself, if necessary. Certain documents, such as corporate records, partnership agreements, audit reports, general ledgers, tax returns and deeds should be kept permanently. It is a good idea to work with an attorney and/or accountant to develop and maintain a record retention policy. 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.
The information and services provided through the Massachusetts Association of REALTORS is intended for informational purposes and does not constitute legal advise, nor does it establish an attorney-client relationship. The MAR, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service. The MAR will not be legally responsible for any potential misrepresentations or errors made by providing this service. For more information regarding these topics authorized callers should contact the MAR Legal hotline at 800-370-5342 or email at email@example.com.