Leasing License Practice Exam

For how many years must escrow records be maintained?

1. 2 years

2. 3 years

3. 5 years

4. 7 years

The correct answer is: 5 years

Escrow records are essential documents in real estate transactions, as they provide evidence of the handling of funds and the proper execution of contracts. The requirement to maintain these records for a specific duration is mandated to ensure transparency and accountability within the industry. The correct answer indicates that escrow records must be maintained for five years. This period allows for adequate time to address any possible disputes or inquiries that may arise after a transaction has occurred. Keeping these records for five years gives relevant parties the opportunity to review past transactions and provides a clear audit trail, which can be critical in the event of an investigation or legal proceedings. In contrast, maintaining records for a shorter duration, such as two or three years, might not provide sufficient time for resolving potential issues that can surface later. Holding the records for seven years, while sometimes appropriate for other types of documentation, exceeds the timeframe generally required for escrow records and may not align with the specific regulations governing real estate transactions. Thus, five years strikes a balance between ensuring accountability and adhering to regulatory guidelines.