Both the law and good risk management practices require that real estate brokerages maintain records of contracts, documents, inspections, reports, requests, demands, etc. that are generated during the course of a real estate transaction. While there may be a core list of items that just about every company requires, organizations will differ with respect to various particulars.
Not long ago the California Bureau of Real Estate introduced a generally unwelcome concept into the mix. As we have noted before (Record Keeping In The Digital Age Is Not Just A Technological Issue), the Bureau put forward an interpretation that the law (Business and Professions Code §10148) which requires retention of all documents obtained by an agent "in connection with" a real estate transaction includes all electronic documents. Not just emails; but texts, tweets, and probably even posts.
This interpretation did not sit well with members of the California Association of REALTORS®(CAR). If implemented, it would have required a good deal more time and effort to compile a compliant file. Hence, the CAR Board of Directors authorized a motion that CAR "sponsor legislation to prohibit short-lived communication like tweets or text messages from being considered ‘transactional documents' that must be retained in a broker's file."
That legislative effort has been successful. Assembly Bill 2136 (Daly) passed both houses and was signed into law by the Governor on July 9, 2014. AB 2136 amends both Business and Professions Code §10148 and also Civil Code §1624 (Statute of Frauds, which controls which contracts must be in writing). It adds to §10148 that "this subdivision shall not be construed to require a licensed real estate broker to retain electronic messages of an ephemeral nature…"(as described in §1624).
This piece of legislation had no registered opposition. It sailed through both houses without a single ‘no' vote in either committee or on the floor. Tellingly, the authors of the legislative bill analyses found it necessary to explain that ephemeral means "short-lived", and/or they put the word in scare quotes throughout their analyses. One just has to wonder how many legislators who voted for this bill know what "ephemeral" means. But I digress.
The legislation unfortunately focuses on the form of a communication rather than its content. Moreover, the legislation's sponsors, as did the analysts, seem to take for granted that text messages are unlikely ever to be the vehicles of serious conversations about serious topics.
Yes, it is unreasonable to say that all text messages should be retained. But, it is equally unreasonable to suggest that none of them should be.
For many years it has been (and still is) considered a good risk management practice to keep logs of telephone conversations. Nowadays, for a sizeable portion of the population, text messages have replaced phone conversations. Thus the advice of a CAR legal department (recently up-dated) Q&A is apt.
Q 4. Are there reasons a licensee might want to maintain "ephemeral" text or instant messages?
A. Yes. While not mandatory, a broker could decide that maintaining such communications could be useful to the transaction record. Similar to keeping a phone log of communications with a client, a broker may wish to keep a log of all texts to show the client was regularly communicated with regarding the transaction and to keep a record generally of the agent's communications with other agents and third parties.
Be that as it may, it is nonetheless good news that there is not a requirement to keep all electronic communications. Moreover, it was a thoughtful gesture of the Real Estate Commissioner, Wayne Bell, to let it be known that, even though the law is not effective until January 1, 2015, as of now,the Bureau will not be requiring the retention of the ephemeral records referred to in the bill.