As the year winds down, it's tempting for business brokers to go through their old files and throw them out to make room for new client's folders, but that would be foolish. In an increasingly litigious world, it's important that business brokers keep good records, and remember that even though a transaction may be closed, it could still one day be litigated. A broker should investigate their state's statute of limitations on fraud, misrepresentation, and other claims a buyer/seller may make. One should check with their own state, but often the statute of limitations begins, not at the close of escrow, but the time the alleged fraud is discovered.
I would suggest that a broker hold on to their contracts and disclosures a minimum of ten years if not indefinitely just to be on the safe side. If a broker gets called in to court after 3-4 years after a transaction has closed, and they can't provide disclosure forms the seller filled out, then they are going to be in a lot of trouble.
Not only are contracts and disclosure forms important to hold on to, but also pertinent email and text correspondence. Regarding email, I create a digital folder that I can archive all correspondence.
Let's face it, typically the same businesses sell over and over, regarding restaurants, every 2-3 years, and so keeping good records, allows a business broker to create a data base of those businesses and routinely prospect them, because many times past clients have no loyalty and will list with whose ever postcard they got last.
I would be curious to hear from others on this Discussion about how long they keep business records.