What is the record retention requirement for brokerages regarding a contract that was terminated due to the seller's house being swept away by a flood?

Brokerages are required to maintain records of terminated contracts for a specified duration, reflecting best practices in real estate and compliance with legal standards. In Arizona, the appropriate retention period for such records, including a contract that was terminated due to unusual circumstances like a flood, is five years. This duration ensures that brokerages maintain a comprehensive record of their dealings for potential audits or legal matters that may arise, even if the transaction did not result in a sale.

Keeping records for five years allows brokerages to reference these documents if any disputes or inquiries emerge related to the transaction. It also aligns with the state’s legal requirements, ensuring that the brokerage operates within the framework of established regulations. The knowledge of these record retention requirements is critical for real estate professionals, as compliance helps maintain the integrity and accountability of their practices.