In the fast-paced, highly regulated world of real estate, brokers and agents are tasked with more than just facilitating transactions between buyers and sellers. One crucial responsibility that often gets overlooked is the need to document and preserve all forms of communication—whether they’re emails, text messages, phone call records, or other forms of correspondence. The Department of Real Estate (DRE) regulation 2729 and California Business and Professions Code Section 10148(a) require most forms of communication between brokers and clients be maintained for a minimum of three years.
The rationale behind this requirement is that written communications can contain critical information regarding negotiations, disclosures, and instructions that affect the terms of a sale or purchase. Should any disputes arise, these records may serve as evidence that proper procedures were followed, disclosures were made, and any potential misunderstandings were clarified. Failure to maintain such records can result in penalties, or, in extreme cases, the revocation of a broker’s license. If a lawsuit is filed, these communications are critical in enabling a broker or agent to present a proper defense against the claims being made against them.
Business and Professions Code Section 10148(a) creates an exception for text messages. Under that section, text or direct messages do not have to be saved or maintained for three years. However, as text messages are frequently a preferred method of communication, best practices dictate that text and direct messages should also be saved and maintained as would be letters and emails.
Real estate transactions are often complex, involve multiple parties, with significant financial stakes. In the event of a dispute or legal challenge—whether related to contract terms, disclosure issues, or commission claims—having a complete and detailed communication trail can serve as critical evidence. For instance, text messages or emails could clarify the timing of key events, the substance of negotiations, or the delivery of important disclosures. If a buyer claims that they were not informed of certain conditions, the broker can quickly refer to saved communications to demonstrate compliance. This level of documentation can be the difference between a swift resolution and a lengthy, costly legal battle.
The relationship between brokers, clients, and other professionals (e.g., inspectors, lenders, contractors) is based on trust. Clear, documented communication helps ensure that everyone is on the same page throughout the transaction process. For example, brokers may often deal with multiple offers, counteroffers, and amendments to contracts. Keeping records of every email or text message regarding these negotiations not only helps maintain an organized process but also shows a commitment to transparency. Should questions arise about the nature of these negotiations, a well-documented communication trail provides clear evidence of the broker’s professional conduct.
Similarly, when clients see that their broker is meticulous about maintaining records of all communications, it fosters trust and reassures them that their interests are being protected. Moreover, organized communication records can also improve client service. For example, if a client has a question about a previous conversation or decision, a broker can easily retrieve the relevant email or text message to provide a prompt and accurate response. This level of attention to detail enhances the broker’s professionalism and reinforces their reputation in the industry.
In today’s digital age, the nature of communication has evolved. While phone calls and in-person meetings still play a role, much of the real estate business now takes place via text messages, emails, and direct messages via digital platforms. However, the ease and informality of digital communication can sometimes lead brokers to overlook their obligation to document these exchanges. Text messages sent on the go, for example, may be forgotten or lost if not properly saved. Yet, they may contain crucial information regarding negotiations, contract terms, or even disclosures. This makes it essential for brokers to implement reliable systems for archiving all forms of communication, including texts, instant messages, and social media interactions.
Brokers should also be aware of the technology available to help with this process. There are numerous software solutions designed specifically for the real estate industry that automatically archive communications, including emails and text messages. By integrating these technologies into their daily operations, brokers can streamline the documentation process and ensure they meet the minimum DRE requirements as well as industry standards.
In summary, to ensure compliance with DRE guidelines and to safeguard themselves from potential legal issues, California real estate brokers should consider implementing the following practices:
- Establish Clear Communication Policies – Set expectations with clients and team members about the importance of maintaining thorough records. Inform clients that all communication related to the transaction will be saved and documented.
- Use Archiving Software – Invest in tools that automatically save and organize communications. Many platforms can track and store emails, text messages, and other digital correspondence securely.
- Create a Record-Keeping System – Organize records in a systematic way that makes them easy to search and retrieve. Create folders or databases for each transaction, and make sure to back up these records regularly.
- Keep Communications Professional – Always maintain a professional tone in written communications. Avoid informal or ambiguous language, especially in text messages, which may be used as evidence in disputes.
- Regularly Audit Records – Perform periodic audits to ensure that all required records are being maintained in accordance with DRE guidelines. This can prevent future compliance issues.
- Have And Follow a Written Policy For Disposing of Documents – The California Civil Code requires that private consumer records be disposed of in accordance with a written procedure. Records cannot be destroyed in a haphazard manner or whenever it is convenient for the broker or agent. Although the minimum retention period is three years, a broker or agent should save records for as long as is practically possible. Some statutes that require a claim to be brought within a certain period of time do not begin until the injury is discovered. That can result in a lawsuit being properly filed beyond three years after close of escrow.
Contributing Attorney
Mark Carlson Attorney
Carlson Law Group
Mr. Carlson formed Carlson Law Group, Inc. in January 2005. He currently represents scores of real estate professionals in a wide range of matters in California. Mr. Carlson also represents individuals in the purchase, sale and lease of residential, commercial and industrial properties. Additionally, he has assisted several clients in building permit, zoning and other land use matters. Mr. Carlson’s practice focuses mainly on litigated matters, and he has handled over a dozen jury trials to verdict as well as several court trials. His trial experience includes two trials that each lasted over five weeks. Throughout his career, Mr. Carlson has strived to provide superior legal services while at the same time containing costs for his clients.
