For how long must transaction files related to real estate be retained?

The correct answer is that transaction files related to real estate must be retained for five years. This retention period aligns with regulations designed to protect all parties involved in real estate transactions. Retaining documents for five years provides adequate time for review in cases of disputes, audits, or regulatory inquiries. It is a standard practice to ensure that records are available for potential legal and financial reviews and maintains consistency with local laws governing real estate practices.

The other options do not correspond to the established timeframe, thereby making them unsuitable. Retaining files for seven years, while common in some business practices, can be excessive for real estate transactions unless specified by certain circumstances. Likewise, a three-year retention is usually too short and may not cover the necessary time frame for possible disputes or legal actions that might arise after a transaction. As for sales contracts requiring five years of retention, this statement is inherently included in the overall retention period for transaction files. Therefore, the five-year retention policy encapsulates sales contracts and other associated documents within real estate transactions.