In New York State, real estate agents and brokerages are required to retain transaction-related records, which may include text messages if they contain material information about the transaction. These requirements are governed by both New York State laws and regulations enforced by the New York Department of State (NYDOS), Division of Licensing Services.

1. Record Retention Requirements in New York

• Retention Period:

  • Under 19 NYCRR § 175.23, real estate brokers must maintain records related to real estate transactions for a minimum of three years.

• Records to Be Retained:

  • The regulation specifies that records include:

    • Listing agreements

    • Offers, counteroffers, and purchase agreements

    • Disclosures, correspondence, and other documentation material to the transaction

  • This includes electronic communications (e.g., emails, text messages) if they are material to the transaction.

2. Text Message Retention

• Material Communications:

  • Text messages that discuss:

    • Negotiations, offers, or counteroffers

    • Client instructions or approvals

    • Terms, conditions, or amendments to agreements

    • Disclosures or other transaction-related matters

  • Must be retained as part of the transaction file.

• Definition of "Records":

  • New York law recognizes electronic communications as part of the transaction record, provided they pertain to the business or transaction.

3. Methods for Archiving Text Messages

• Manual Archiving:

  • Agents can export relevant text messages and store them electronically or in printed form with the transaction file.

• Automated Solutions:

  • Many brokerages adopt software that automatically captures and archives text messages to ensure compliance.

• Centralized Storage:

  • Brokers are responsible for ensuring all communications, including text messages, are securely stored and easily retrievable during the retention period.

4. Enforcement and Oversight

• Audits and Inspections:

  • The NYDOS has the authority to inspect transaction records, including electronic communications, to ensure compliance with record-keeping requirements.

• Broker Responsibility:

  • Brokers are accountable for maintaining proper records for all agents under their supervision.

5. Consequences of Non-Compliance

• Regulatory Penalties:

  • Failure to retain required records, including text messages, can result in:

    • Fines or penalties

    • Suspension or revocation of a broker’s or agent’s license

• Legal Risks:

  • Missing text messages may leave agents and brokers vulnerable to claims of misrepresentation, non-disclosure, or failure to act in the client’s best interest.

6. Best Practices for Compliance

1. Create a Policy:

   • Establish clear guidelines requiring agents to retain all transaction-related text messages and other communications.

2. Leverage Technology:

   • Use archiving software or tools that integrate with mobile devices to capture and store text messages automatically.

3. Educate Agents:

   • Train agents on the importance of record retention and how to identify which communications must be archived.

4. Regular Audits:

   • Conduct routine checks to ensure compliance with retention policies and to identify any gaps in record-keeping.

Summary

In New York State, real estate brokers are required to retain transaction-related records, including material text messages, for three years. Text messages that impact the terms, conditions, or negotiations of a transaction must be archived as part of the transaction file. To comply with these requirements and mitigate risks, brokers should implement clear policies, use reliable archiving solutions, and educate agents on proper record retention practices.

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Sample: Text Archive for Real Estate