The real estate industry has moved into a new millennium. New things pop up everyday changing the way we do business, such as internet marketing, social media, and cloud based transactions. Yet, certain things have not changed: the most common violations found in DRE Audits. I decided to write a series of articles to call your attention to these common deficiencies and to provide you with procedures that you can follow to ensure compliance with these laws and regulations.

Retention of Records

Office RecordsBusiness and Professions Code Section 10148(a) states that a real estate broker shall retain for three years copies of all listings, deposit slips, 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 license is required. This section requires that, after notice, the books, accounts, and records shall be made available for examination, inspection, and copying by the commissioner or his or her designated representative during regular business hours; and shall, upon the appearance of sufficient cause, be subject to audit without further notice, except that the audit shall not be harassing in nature.

A broker who fails to keep transaction files, canceled checks, deposit slips or other records prepared or obtained for a period of three years may be cited for violation of this section. Some brokers cited for violation of this section have simply failed to provide records after reasonable attempts by the Department to examine them. Other brokers cited have lost control of or destroyed records that should have been maintained. Formal legal action can result from a broker’s failure to provide records. You should review the record retention policies for your office to make sure you are in compliance with this code section.

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