By Kirsten Craze
Good record keeping is the backbone to any successful real estate business. Industry insiders are quick to point out there are no excuses for an unprofessional paper trail - even if today’s filing cabinets are all digital.
It’s never been easier
“It’s not rocket science. To do a backup these days you can go and buy more than a terabyte of storage quite cheaply. When I got my first computer back in the early 1980s it only had about 4 megabytes capacity, we had four disks and we’d have to keep switching them. It would take ages, now it takes just minutes,” said strata management chapter chairperson Gary Adamson of Strata Management Services.
Michelle McLean, chairperson of the residential property management chapter and Leah Jay’s senior property and compliance manager, agreed that good record-keeping is vital.
“It’s of utmost importance given the litigious world we are now living in, and with technology there is no excuse for not having backups in place where the documents are electronically stored. There also has to be the security in place to ensure the system is not compromised,” she said.
A cautionary tale
“I remember about 15 years ago there was a Sydney agency that hadn’t run a backup for about three months, they had a fire and the office was destroyed. As a result, they lost their business,” Mr Adamson said.
He added that while the threat of losing your business over lost or destroyed data is a reality, he agreed with Ms McLean that there is also the risk of legal action.
“On the strata side of things, if you enter into a contract with an owner’s corporation on the basis you’ll retain and maintain their records and you breach that contract - it leaves you open for a damages claim. When you’re looking after more than a hundred buildings, and you’ve suddenly got a claim for all those buildings, then that’d be a fairly substantial amount,” he warned.
Play by the rules
Under the Property Stock and Business Agents Act 2002 (section 104) property professionals are required to keep records for three years. Individuals who contravene a provision of the section are guilty of an offence and could be disciplined by up to 50 penalty units.
While the Strata Scheme Management Act once required five years of records, that extended out to seven years in 2016.
“There are probably a lot of hard copy records still floating around, purely because it wouldn’t have been worthwhile to engage somebody for weeks at a time to scan them. Hard copies will still be around for a few years, and if they’re destroyed by fire then they’re gone,” Mr Adamson said.
Stay up to date
Ms McLean said many business owners can fall down when it comes to educating all staff on recording keeping procedures and the software used in the process.
“I feel the biggest issue is that agents don’t keep records of conversations or correctly file emails, where it is very easy with most trust accounting programs to store notes and have a document manager system,” she said.
“It is one thing to implement procedures, but then it is another to ensure staff are adequately trained on how to use these systems and follow procedures,” she added.
Become a record hoarder
“Document everything! Save emails, text messages and make notes of phone conversations. We’re all human and deal with so many people daily, it’s one thing to remember a situation, but hard to remember details of conversations that may prove detrimental,” Ms McLean explained.
She said all corners of the real estate industry have their unique processes.
“In property management there are so many situations where things can take a turn for the worse, even with the best laid plans, and essentially an agent needs to ensure they have represented the owner to the best of their ability. The only way to do this is to have the documentation and proof to back the agents actions up,” she said.
“As property management can have a high staff turnover, once a staff member has left essentially all the knowledge of the situation can go too, should it not be recorded correctly. Potentially, as a business owner, you are then leaving yourself wide open for a professional indemnity claim as you may be unable to prove you have acted in accordance with the Managing Agency Agreement,” she said.