Tech Corner: Are Your Digital Transaction Files Complete?
Transaction details often scatter across email inboxes, text messages, and document management systems. While these tools make it easier to conduct business, they can also make it difficult to retain complete records.
Under 21 NCAC 58A .0108, Retention of Records, brokers must retain records of all sales, rental, and other transactions conducted in their brokerage capacity, whether the transaction is pending, completed, or terminated. These requirements apply to digital records just as they do to paper documents.
What Could Be Missing from Your Digital Files?
A transaction folder may appear complete because it contains a signed contract and closing documents. However, Rule 58A .0108(b) identifies a broader range of records that must be retained, including offers to purchase, disclosure documents, trust or escrow records, closing statements, and advertising used to market a property. The Rule also specifies including supporting documentation for broker price opinions and comparative market analyses, square-footage calculations, and any other records pertaining to real estate transactions.
Three Steps to Strengthen Your Digital Recordkeeping
1. Audit the entire transaction, not just the closing documents.
Before archiving a file, review the transaction from beginning to end. Check to ensure all offers, agreements, disclosures, supporting documentation, advertising, and other transaction-related records are in the file.
2. Create a consistent filing process.
Records should have clear file names so that they can be easily located without relying on an individual broker’s memory. Further, establish a process for saving relevant transaction communications and documents from email, messaging tools, electronic signature platforms, and other systems used in the transaction.
3. Confirm access and retrieve the records.
A document is not useful for compliance purposes if the brokerage cannot retrieve or open it when needed. Brokers should periodically check that files are complete, legible, accessible to the appropriate personnel, and available for reproduction.
Know the Retention Requirements
Under 21 NCAC 58A .0108(a), brokers must retain transaction records for three years after all funds held in connection with the transaction have been disbursed or the transaction has concluded, whichever occurs later. If the agency agreement is terminated before the transaction is concluded, the Rule states the broker must retain the records for three years after the termination of the agency agreement or the disbursement of all funds held by or paid to the broker in connection with the transaction, whichever occurs later.
Additionally, Rule 58A .0108(c) requires records to be made available for inspection and reproduction by the Commission or its authorized representatives without prior notice and subsection (d), indicates that agency agreements, disclosures, contracts, etc., and other transaction related documents must be provided to the affiliated firm or sole proprietorship within three days of receipt.