Also in this Issue:
-What Do You Do With All Those
Drafts
-Retention of Estate Planning Documents
-E-mail Retention
Real Estate Document Retention
By Jonathan Rivin rivin@ddrs.com
Everyone opens a file when they acquire a piece of property, and into it go the offer, all counter-offers, the purchase agreement, structural, environmental and other inspection reports, loan applications, preliminary title reports and copies of the title documents, leases, and everything else that passes through our hands that we think we might later need. At closing, we add to the file the deed, the deed of trust, the note, the title insurance policy and the property insurance policy. Similarly, when a transaction involving an owned property is entered, a new file is opened, containing design and construction contracts, permits, leases, easements and the like.
Should all of this material be kept? If so, does it need to be placed in a safe deposit box, or is the bottom drawer in your desk ok?
Clearly, it is not necessary to keep every piece of paper that ever crosses your desk. The following documents, however, are important, and should be kept in a safe place:
Deeds
Deeds of Trust
Notes
Inspection Reports
Title Insurance Policy
Leases
Easements
Architecture Contracts
Construction Contracts
Permits
The documents that are most important to keep in a safe are documents that are “negotiable” or contracts that might be enforced down the road. Thus, if you hold notes, these should be placed in a highly protected setting. Similarly, insurance policies, design and construction contracts, leases and permits should be kept locked up tight in a fire-safe location. Good practice dictates that this be away from the property, so that if you suffer a fire or flood or other catastrophe, the very documents you need to remedy the situation are not lost in the damaged property.
Ironically, your deed and your deed of trust, while thought to be sacrosanct, are less significant legally than some less imposing documents (although more significant emotionally), because the originals are incorporated into the public records and proof of them can be obtained relatively easily.
Retention of originals is not as important as you might imagine. Proving a contractual relationship is certainly aided by having the original contract, but having a copy is acceptable in most cases. Keep the originals of the key documents in one location and copies in another.
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