Posted by @ihwlaw
on March 28, 2011
A client just completed the purchase of a residential property and asked me what documents he should retain from the mountain of documents that accumulated during the transaction, such as disclosures, offers, counteroffers, emails, loan documents and the like. While there is no blanket rule for what documents you can dispose of, there are some general guidelines to consider before disposing of any legal documents. For example, generally you should keep all disclosures about the property in question, for at least two reasons. First, if there is a problem with the property that wasn’t disclosed and it later becomes an issue, a buyer may have recourse against a seller; conversely, a seller may be able to prove that a problem was disclosed and thereby avoid significant liability for a failure to disclose, particularly if the seller knew or should reasonably have known about the problem. Next, for buyers, if/when you should ever decide to sell the property, you may want to incorporate all prior disclosures into your new disclosures (to the extent applicable), either by hand-writing them into your new disclosures or by literally attaching the prior disclosures to your new disclosures. You should also keep all offers and counteroffers that were exchanged during the negotiation of the transaction, as well as all loan applications, agreements and other loan documents. If there is ever a contract dispute with between buyer and seller or with the lender, the negotiation history could be important and, in any event, these documents will support and clarify the final terms of your agreement. In short, when it comes to document retention following the purchase or sale of real estate, a good rule of thumb is to “retain, retain, retain.” This may not help you save a lot of space during Spring Cleaning, but it may save you a lot of legal headaches in the future. Always consult a lawyer before you dispose of any legal documents.