Ask Texas REALTOR®

Q   How long should one retain real estate files (listings, sales, leases, property management, etc.)?

A   "Generally, we suggest that Texas REALTORS® store files about five to seven years after the file closes," says Ron Walker, TAR director of legal affairs. "The ‘closing of the file’ is typically the closing date for sales, the date the security deposit is refunded for leases, and the date the final accounting is sent to the property owner for management services. This suggestion is based on the fact that most legal theories under which a REALTOR® may be sued or otherwise involved in a lawsuit have two- or four-year statutes of limitations. The time under which the limitations period begins, however, varies depending on the legal theory alleged and the facts under the case (for example, when did the plaintiff know or should have known of the harm). The difficulty determining when the limitations period begins is one of the primary reasons we suggest a period of at least five years. With regard to disciplinary action before TREC, Section 15(d) of the Real Estate License Act limits TREC’s investigations resulting from consumer complaints to four years after the date of the incident. By rule, TREC requires a broker who maintains a trust account (for example, an escrow account or property-management account) to maintain documentary records of all withdrawals and deposits from the account for four years. If a broker is involved in a transaction that the broker determines to be ‘high risk’ (a transaction that the broker has reason to believe may involve litigation), the broker may want to consider storing the file a bit longer than other files. Based on the foregoing and reported experience from Texas brokers, five to seven years seems reasonable for most transaction files."

Have a question about finances, licensing, technology, marketing, or other real estate issues? Ask Texas REALTOR® by sending e-mail to texasrealtor@texasrealtors.com or fax to 512/370-2390. Not all questions can be answered.

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