17-Jan-2008

Section 62-13-312(6) of the TN Real Estate Brokers' Act requires firms to keep records relating to any real estate transaction for three (3) years after the transaction is concluded.
Because the statute of limitations for the various types of lawsuits that can be filed against a brokerage firm, managing broker, and/or licensee may not run until well after the three year retention period has expired, it is recommended that firms keep such records for a minimum of five years. Please note that your errors and omissions or other professional liability insurance policies may require or recommend that records be kept for a longer period of time.
According to the Tennessee Real Estate Commission, firms must retain the following records: listings; offers and counter-offers (regardless of whether these become contracts); contracts; closing statements; agency agreements; agency disclosure documents; property disclosure forms; correspondence (including faxes and emails); notes; and any other relevant information.
What constitutes "any other relevant information"? Does this mean you should keep every scrap of paper you put in a particular file? No. You must think of it this way. If your firm is sued or has a TREC complaint filed against it regarding a particular transaction, would the document or record help establish how your firm handled the transaction? If the answer is yes or maybe, you should keep the document or record.
One final bit of advice regarding record keeping: given that a lot of E & O lawsuits involve "he said / she said" scenarios concerning if or when certain information was communicated, it is extremely important that fax and email receipt confirmations be retained.