BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
New Law Regarding Keeping Texts, Tweets and Other Electronic Communications
In the Spring, 2013 Real Estate Bulletin, CalBRE issued a policy statement that agents and brokers were required to keep ALL electronic communications (“EC”s) with their clients, including e-mails, texts, instant messages, tweets, etc. This has created much confusion in the brokerage community.
BACKGROUND:
A. THE LAW: Business and Professions (B&P) Code Section 10148 reads, in part:
“. . .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)….”
B. CalBRE POLICY STATEMENT: CalBRE took the position in 2013 that, “like other documents and writings obtained or executed by a licensee in connection with a transaction for which a license is required, EC associated with licensed acts must be maintained by the broker as part of the transaction file.” CalBRE Real Estate Bulletin, Spring 2013
NEW LEGISLATION EFFECTIVE JANUARY 1, 2015:
To help clarify the issues and remove the difficulty in complying with this policy, CAR sponsored legislation (AB 2136) which was signed by the Governor and which amends both Business and Professions Code §10148 (regarding broker record retention requirements) and Civil Code §1624 (the Statute of Frauds – specifying which documents must be in writing to be enforceable).
B&P §10148 now has this added language:
“[t]his subdivision shall not be construed to require a licensed real estate broker to retain electronic messages of an ephemeral nature, as described in subdivision (d) of Section 1624 of the Civil Code.”
Civil Code §1624 now has a provision which states:
“an electronic message of an ephemeral nature that is not designed to be retained or create a permanent record, including, but not limited to a text or instant message . . . is insufficient to constitute a contract to convey real property. . .”
These “electronic messages of an ephemeral” nature are defined to include, texts, instant messages, etc., that “are not designed to be retained or to create a permanent record…”
Civil Code §1624(d)
For more information, see the CAR Legal Memorandum entitled “CalBRE Record Retention Requirements at:
http://www.car.org/legal/broker-practice-folder/calbRRRR/?redirectFrom=login
PRACTICE TIPS:
CalBRE Considerations:
1. The new law relates only to “electronic messages of an ephemeral nature” such as texts, instant messages, tweets, and the like. These no longer will be required by CalBRE to be in broker files.
2. You must still treat e-mails just as any other written documents which are subject to broker retention and supervision. Thus, e-mails still should be routinely added to the broker file since these are not covered by the new law.
3. CalBRE has stated that, although the new law does not go into effect until January 1, 2015, they will follow this law starting immediately in their review and investigation of broker files.
4. Regarding all transaction documents (hard copies, e-mails and faxes), it is the position of CalBRE that just filing or uploading documents at the close of escrow, or other termination of the transaction or listing, is not sufficient compliance so as to allow the broker, or their designated file review person, to properly supervise the file, the agent and their activities as is required by Commissioner’s Regulation 2725. All required documents should be routinely placed into the broker file during the course of the listing or transaction.
Risk Management Considerations:
5. While texts, instant messages and tweets now are not required by CalBRE to be kept in the broker file, good risk management dictates that you do so if any such communications with clients, other agents or service providers in your transaction has information, advice or recommendations which would demonstrate that you have fulfilled your duties to your client and to the other party to the transaction. If you have such EC’s, you should either:
A. Print those out and place them in the broker file; or
B. Confirm the information, advice or recommendations in an e-mail to that party, and place that e-mail into the broker file. .
If you routinely text or tweet with clients, make it a regular practice to follow one of the above methods to document your actions in the broker file.
6. If there is a claim, lawsuit or CalBRE investigation, it is essential that your defense attorney has access to this EC information in providing you and your brokerage a good defense.
7. Which EC's should be filed with the broker? For risk management purposes, you do not have to copy every EC to the broker file. For example, a routine change of an inspection date doesn’t need to be filed. But, a good rule of thumb is: “When in doubt, file the EC or its confirming e-mail with the broker's file.”
8. At the close of escrow, or other termination of the transaction or listing, do an EC file check to assure that all relevant EC’s are in the broker file before it is closed.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2014 07/25/14