That said, your property management company should definitely have a formal and written document retention policy. A: The retention period of records depends on why they are retained. In general, records should be kept for as long as possible, but for at least four years. There is no single, simple rule that sets the minimum retention period for records. Retention periods for records should be established on a case-by-case basis after the completion of a cost-benefit analysis. The cost of keeping records must be weighed against the likelihood that they will be necessary. Think about why records are kept. Are you legally obliged to keep them? Do you have a business need for them? Focusing on the issues that concern you most is an important part of cost-benefit analysis. If the documents are required for tax reasons (to create a foundation for real estate or otherwise), you must keep the documents at least as long as you own the property, plus an additional period of time, preferably six years or more. While the IRS typically has to take steps to collect taxes within three years of the date of the tax return or two years from the date of tax payment, the IRS and FTB have six years to take legal action if the taxpayer`s income is undervalued by more than 25%. There is no statute of limitations if a taxpayer files a false or fraudulent tax return or does not file a tax return at all.
It is understood that leases are legally binding documents and should be read in their entirety. However, you will find that many tenants do not become familiar with the details of their lease. The signed documents confirm that the tenant has accepted the conditions presented to him. Whether or not they have understood the document is the responsibility of the tenant and is the sole responsibility of the tenant. Objectively, however, the documents will support your case. Deciding on the retention period of business records is a business decision that must be made taking into account applicable laws, the cost of keeping the records, and the likelihood that the document will be needed. However, in Florida, the limitation period for the performance of the terms of the contract is five years. (However, the limitation period for the performance of property insurance contracts extends from the date of the damage.) For oral contracts, the law in Florida is four years.
However, the National Federation of Independent Business suggests keeping all documents related to the transfer of real estate for at least 20 years. Another important file contains financial information about the purchase of the property. Keep mortgage documents, deeds and insurance policies on the property in a locked, fireproof safe. You should also keep application documents, tenant notices, and all correspondence regarding the approval or rejection of rental applications from all rental applicants, even if they have never lived in one of your rental properties – keeping the rental applicants` data will help you when an applicant files a discrimination complaint. As a general rule, keep records for at least four years, and if the cost of storing records is not excessive, you should keep them for a longer period of time. In addition, a real estate agent must keep records for four years of the funds requested or accepted for a purchase or loan transaction if the broker uses or benefits from funds (directly or indirectly) other than commissions, fees, costs and expenses. Allow the property manager to have an annual inspection of the property conducted by an external inspector Q: How long should an owner keep the company`s records? Homeowners may be known to pay fees related to the maintenance of the property, so make sure your signed management contract describes how you handle work order requests and what the process of using the owner`s funds for the maintenance of the approved property looks like. Property managers must keep excellent records of all correspondence, quotes, invoices, and payment records related to the maintenance of the property in case a landlord later challenges it.
Rentec Direct provides customers with an unlimited amount of secure online storage for all their important business documents, as well as built-in accounting, owner, real estate, tenant and seller functions that provide clear documentation of important data on these aspects of your rental management business. Documents can be uploaded to the program to be stored in the master file library or assigned directly to a corresponding client or property. Kimball, Tirey & St. John LLP is a full-service real estate law firm representing owners and managers of residential and commercial properties. This article is provided for general information purposes only. Although KTS provides its customers with information about changes to the law, our courtesy notices are not exhaustive and do not replace legislative services or membership in trade associations. Our legal advice is provided on selected topics and should not be used as a comprehensive report of any new changes to local, state, and federal laws that affect property owners and managers. Laws may have changed since the publication of this article.
Before acting, be sure to seek legal advice from our office. For contact information, please visit our website: www.kts-law.com. For previous legal notices, questions and answers and legal articles, please see the resources section of our website. If you had to take legal action to evict a tenant, or if a tenant is suing you, keep the documentation at every step of the way. Work with your lawyer to ensure that the appropriate records are kept for the required time and that the documents supporting your case are securely protected. If you have employees, you must keep confidential personal records and payroll tax records. Your accountant and tax advisor can help you ensure that you comply with the relevant laws and regulations. Keep in mind that there are certain things that are confidential and therefore, even if the information is revealed during the conversation, should not be stored as information relevant to you. You are required to always comply with federal fair housing laws and, as such, your tenant records must not contain any information about a tenant`s disability (except as quantifiable, as proof of income or as part of a request for reasonable accommodation) or about the services the tenant receives in connection with that disability.
This information is strictly confidential and should not be included anywhere in your records. Not a Rentc Direct user yet? You can access all the powerful features of the easy-to-use property management software today with a 2-week free trial – learn more! Keep records of income and expenses as if you were expecting an audit. Document your income with bank statements and keep separate records for each property you own. Keep records that prove your expenses and support any deductions you claim for repairs, maintenance, property taxes and property management fees (if you pay them), as well as other eligible deductions. Good case management for property owners and managers can save you a lot of time if you ever face an audit, litigation, fair housing claim, or if you simply need to find certain rental conditions. One factor to consider is the applicable time limits that may apply to document claims. There are many different time periods that could apply. The “limitation periods” most likely to apply are: AB 2136, with effect from 1. January 2015, provides that real estate agents are not required to retain email messages of “ephemeral nature” that are not intended to be kept or to create a permanent folder such as text messages and instant messages. The landlord will then provide the property manager with a copy of the statement page issued by the insurance company for the managed property within thirty days of signing the property management contract.
Be sure to get this documentation. See “what happens if property managers are not added to homeowners` insurance policies.” • Two years for an oral contract, for an alleged breach of a real estate agent`s inspection and disclosure obligation, or for personal injury • Three years for certain transactions and escrow records of real estate agents/agents, as well as for alleged claims for fraud • Four years for a written contract and for an alleged breach of fiduciary duty • Up to seven years for certain IRS purposes (although some have no restrictions) • Ten years years for latent construction defects (not immediately noticeable) • Electronic image storage is not erasable and does not allow any change. .