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Records...HOW LONG IS LONG ENOUGH?

Copyright  2000-2011  Landlord.com

QUESTION: How long do I need to keep my rent landlord business records?

ANSWER: Forever.

The prudent landlord maintains files on each of his rental units, documenting the occupants, rent payment records, maintenance performed, the lease agreement, rejected applications and and everything else which pertains to this unit over its history. The question invariably arises as to how far back these records must be maintained and when they may safely be destroyed.

The records are kept in the fear of litigation. Without that fear, there would be no reason to keep them. A ledger card would suffice. For this reason, the typical advice is that they may be destroyed at the point of expiration of statutes of limitations on civil and criminal legal actions, typically three to five years, sometimes longer, but not usually. In reality, this is fallacious. Whoever doubts this statement should, at the next cocktail party he attends with a lawyer present, ask the attorney the following question: "What is meant by attorneys ‘pleading around’ the statute of limitations?" The answer may be surprising, but it will certainly be instructive.

If a landlord were to show me a statute of limitations of three years, I could draft a pleading which would permit filing of suit at four. If he showed me one which expired in five years, I could extend it to six. And so on.

In the case of minors, the statute of limitations usually does not even begin to run until they reach the age of majority, typically 18, but sometimes 21. Does this matter? Of course. Imagine that a five year old girl occupying the landlord’s building is sexually molested by a registered sex offender renting a unit in a building owned by someone else down the street. The girl tells no one, represses the memory, and she and her parents move out. Four years after that the landlord destroys all his records of the tenancy, including the rental agreement, relying on the four year statute of limitations on lawsuits based on written contracts and the one year statute of limitations on personal injury actions. Nine years after that the girl, at age 18 (majority), assisted by hypnotic retrogression, files suit, naming you for failure to make the necessary disclosure under Megan’s Law. Can she do it? Yes. Can the landlord produce a copy of the rental agreement showing the necessary Megan’s Law disclosure? No, he destroyed it relying on the statute of limitations.

The landlord is the business man. He is expected to maintain important records. The tenant is the defenseless consumer. As between landlord and tenant, if records are missing, the landlord loses.

Part of the impulse to destroy records, something which is a fairly recent fashion, is to emulate big companies. There may be sound reasons for General Motors to destroy records of $.39 transactions after the passage of a long period of time. There is no such justification for the small business man who does not produce the volume of records that the big companies do. Destruction of records is often a prestige point, as in, "I am so successful that I have to destroy all my records after three years, otherwise, there would be so many of them I would not know where to put them."

This is never a justification. A tenant file is part of an information retrieval system. It is not necessary to keep the extra four copies of the rental agreement the word processor printed out, the extra legal pads and McDonalds napkins which somehow found their way into the file can be eliminated. What is left are the operative documents, the rental agreement, the correspondence, the rent increase notices, everything which the parties acted upon. We guarantee that the sum total of these will rarely occupy more than one quarter of one inch of shelf space. This small amount of information should be retained so that it can be retrieved in perpetuity.

Surely, this much space can be found somewhere. Store them in manila envelopes labeled with names and dates and protected in bankers boxes. You might not care much that you did, but your heirs might later on.

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