In New Jersey, real estate agents and brokers are required to maintain records of communications and documents related to real estate transactions, including text messages if they contain material information. These requirements are enforced by the New Jersey Real Estate Commission (NJREC) under the New Jersey Administrative Code (N.J.A.C.) and related statutes.
1. Record Retention Requirements in New Jersey
Retention Period:
Under N.J.A.C. 11:5-5.4, brokers must retain all records and documents related to real estate transactions for a minimum of six years from the date of the transaction's closure or from the expiration of the listing agreement.
Records to Be Retained:
Required records include:
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Contracts, offers, counteroffers, and listing agreements
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Transaction-related disclosures
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Correspondence, including electronic communications (emails and text messages) if they are material to the transaction
2. Inclusion of Text Messages
Material Communications:
Text messages that are considered part of the transaction record include:
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Negotiations, offers, or counteroffers
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Discussions regarding terms, fees, or conditions
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Client instructions or approvals
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Amendments, disclosures, or other transaction-related agreements
These messages must be retained as part of the overall transaction documentation.
Electronic Record Definition:
The NJREC recognizes electronic communications as part of the "books and records" that brokers must maintain, as long as they are related to licensed activities.
3. Methods for Archiving Text Messages
Acceptable Archiving Practices:
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Manual Archiving: Text messages can be exported, saved digitally, or printed and stored with other transaction files.
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Automated Tools: Brokers can use compliance software designed to capture and archive text messages for efficient record retention.
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Centralized Recordkeeping: Records, including text messages, must be securely stored and accessible for inspection by the NJREC during the required retention period.
4. Oversight and Inspections
Audit Authority:
The NJREC has the authority to audit or inspect a brokerage's transaction records, including electronic communications, to ensure compliance.
Broker Responsibility:
Brokers are ultimately responsible for ensuring that all required records, including text messages, are retained for the statutory retention period.
5. Consequences of Non-Compliance
Regulatory Penalties:
Failure to retain required records, including text messages, may result in:
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Fines
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Disciplinary actions, such as suspension or revocation of licenses
Legal Risks:
Incomplete records could lead to legal disputes, claims of misrepresentation, or regulatory violations, increasing liability for brokers and agents.
6. Best Practices for Compliance
Establish a Policy:
Create a brokerage-wide policy requiring all agents to retain material text messages related to transactions.
Use Technology:
Leverage mobile device management or archiving software to automatically capture and store text messages for the required retention period.
Educate Agents:
Train agents to identify and retain transaction-related communications, including text messages.
Perform Regular Audits:
Conduct routine checks to ensure compliance with the brokerage’s retention policy and identify gaps in recordkeeping.
Summary
In New Jersey, real estate brokers are required to retain all transaction-related records, including material text messages, for a minimum of six years under N.J.A.C. 11:5-5.4. Brokers and agents should treat text messages that pertain to offers, terms, disclosures, and negotiations as part of the official transaction record. Implementing clear policies, using automated archiving solutions, and conducting regular audits can help ensure compliance with New Jersey's record-keeping requirements and minimize risks.
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