April 22, 2022
If you were asked to produce documents related to the sale of a property from three years ago, what would you do? Would you frantically scan your email inbox trying to find the old files? Or, would you go to your old-fashioned filing cabinet to try to pull it out? As a real estate agent, it is important for you to maintain a strong real estate recordkeeping system. There are both federal and local guidelines you might have to follow for real estate compliance purposes, and the timeline can vary from document to document. Learn more about real estate record retention requirements below.
It isn't enough to simply have the documents. You also need to be able to find them quickly and easily. A few tips to follow include:
You should have a naming system for each type of document. What are the real estate record retention requirements to follow?
Because there are so many documents to keep track of, it is critical to follow standard guidelines. The National Association of Realtors has a few guidelines for real estate agents to follow. They include:
There are a few documents that you should keep forever. They include your annual financial statements, all of your income tax returns for yourself and the practice, any deeds and closing statements, and your records related to your payroll system.
There are other records that you should keep for at least seven years. They include your accounts payable and receivable, your bank statements, any investments you have, your employee cost and expense reports, your purchase orders, and your inventory count statements.
You should also keep your accounting correspondence for at least four years. You should keep your insurance policies for at least four years after the policy expires as well.
You also need to maintain copies of your employment records. You should keep any documents related to your recruiting methods for at least one year, which includes documents submitted to employment agencies, interview records, training documents, and advertisements.
If you have a benefits plan you give your employees, you need to keep documents related to the plan for the duration of the plan. You also need to keep your I-9 forms for the duration of the employment of their individual plus one year, if any of your employees have their wages garnished, you need to keep all documents related to the garnishment for at least three years.
Finally, you need to keep all documents related to your payroll records for the duration of the employee's time with you plus ten years after that employee's employment ends, regardless of how it ends.
You also need to make sure that you take good care of your legal documents. Rules and regulations change in real estate all the time, and you need to have good records of everything you work on.
You need to make sure you keep your contracts for not only the life of the contract but also for ten years after they expire. While the exact guideline can vary depending on the type of contract, it is always better to just keep them all.
You also need to keep all of your license applications, and licenses themselves, for one year after the license expires. If you have any documents related to warranties on the properties you help to buy and sell, you need to keep them for two years beyond the term of the warranty.
Finally, if you have documents related to trademarks and copyrights, you need to keep them permanently. If you have correspondence with a lawyer or other legal adviser, make sure you keep them permanently as well.
Federal and local laws can vary. The IRS might come looking for your tax documents after three years, but your local jurisdiction might come looking for them after seven years.
The biggest determining factor is the statute of limitations of certain legal issues related to the documents you keep. Once the statute of limitations has expired, you should be able to get rid of the document. On the other hand, the statute of limitations can vary with the type of claim, and there might be some debate as to when the statute begins. Does it begin when the transaction is finished or when the issue is discovered? That is why it is always important to keep your documents well after the supposed statute has expired.
Ultimately, if you want to make sure your records are kept properly, you need to use the right program to help you. At Shaker, we have a product that can help you keep your records properly. You can find documents quickly with our organization system, you can protect them with the right security, and you don't have to worry about losing or misplacing them. Request a demo of our product today to learn more about how we can help you!
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