Not long ago we discussed the fact that an agent's emails, as well as other forms of electronic communications, are likely not to be treated as confidential or privileged in a legal proceeding. (see: EMails Are Likely Not To Be Confidential or Privileged) They are likely to be subject to discovery. An article in the current issue of the Real Estate Bulletin published by the California Bureau of Real Estate (BRE) takes this a step further. It states that brokers have an affirmative obligation to maintain electronic communications (EC) that are related to transactions.
The Bureau's take on this is straightforward. The real estate law (at California Business and Professions Code §10148) states that "...a licensed real estate broker shall retain for three years copies of all listings, deposit receipts, canceled checks, trust records, and other documents executed by him or her or obtained by him or her in connection with any transactions for which a real estate broker license is required..." [emphasis added]
The Bulletin article goes on to note that "… courts have found that electronically generated writings are 'documents' and are discoverable under the same rules that pertain to written materials. Thus it is the [Bureau's] position that failing to maintain EC's [electronic communications] that are created as part of licensed activity is in violation of the record keeping provisions."
To ensure compliance, the Bulletin concludes that, "...every California real estate broker should have written office policies and procedures setting forth how EC that are created, sent or received in connection with an act for which a license is required will be maintained and made available for inspection."
It is also noted that maintaining records of EC's is simply good risk management practice. "...EC often holds the key to proving whether a license disclosed a material fact or provided a required disclosure, and retaining and maintaining these important communications may reduce a broker's need to defend against unwarranted allegations." This is no different than the advice that brokerage attorneys have given their clients for years: "Make notes of phone conversations and keep them in your files."
Of course it's one thing to say that an email or a text message is recoverable, and it's another to say that you can find it. Agents should get in the habit of keeping electronic folders for transactions and of dumping all transaction-related EC's into those folders. Brokers, then, will do well to ask that copies of those folders - in whatever form - be turned in along with all the usual documents.