A common Legal Hotline question we receive from brokers as they are doing some wintertime housekeeping, is how long do we have to keep all this “stuff?” Fortunately, Section 1450.755 of our Rules under the Real Estate License Act provides guidance on this matter.

This section discusses the retention of various documents that are handled in a brokerage including “escrow records, transaction records, employment agreements and records reflecting the payment of compensation.” The documents listed in this section are not all inclusive – any relevant transaction documents should be retained; this would even include information or notes contained on the outside of a physical file. Keep in mind that electronic correspondence (emails, text messages, etc.) should also be included when establishing a recordkeeping system in your brokerage.

The general rule is to retain those records for at least the past five years. Please note that Section 1450.755 a) 4) states that employment or independent contractor agreements “shall be maintained for 5 years after the sponsored licensee is no longer associated with the sponsoring broker.”

Also, keep in mind that other statutes of limitations might apply. For example, written contracts typically have a ten-year statute of limitations in which lawsuits can be filed. In addition, tax codes have different time limits, some of which are seven years. Finally, while the federal rule requirement to maintain records related to lead-based paint disclosures is three years, the Illinois Real Estate License Act requires that property disclosures be kept for five years. So here, the cautious approach would be to hold those for five years unless your company attorney advises otherwise.

Office policy and franchise agreements should be consulted to confirm if any additional recordkeeping duties or policies are outlined. Illinois REALTORS® provides a Sample Office Policy Manual on its website that contains a chapter dedicated to Record Retention and Destruction Policy with suggested timelines for recordkeeping. Finally, it would be wise to consult with your accountant and attorney to see if they recommend longer retention periods than are required by the Rules.

About the writer: Victoria Munson is the Illinois REALTORS® Legal Hotline Attorney.