At what point is it “safe” for a design professional or contractor to destroy records pertaining to a project?  Is 4 years or 7 years or 10 years after substantial completion long enough? What records should be maintained and in what form?  COVID-19 presents a novel twist on the answers to these questions.

How long is long enough?

It is best practice for a design professional or construction contractor to keep project records so long as professional or contractor can be sued for damages relating to that project.  In Texas, that is at least 10 years from the date of substantial completion.  The 10-year period derives from two repose statutes in Texas, one directed to design professionals and another directed to construction contractors.  Each allows a claim to be asserted for design, construction, or repair of an improvement to real property no later than 10 years after the date of substantial completion.

There are important exceptions to the 10-year rule.  One such example is when notice of claim for damages is received within the 10-year period.  In that case, the repose period is extended for two years from the date the demand is presented and the records should be maintained for the extra two-year period.  For instance, if 9 years, 364 days after substantial completion, a contractor receives a written demand for damages, the time period for that contractor to be sued is extended for another 2 years.  All the records pertaining to the project should be maintained for at least 12 years after substantial completion.

Another important exception pertains to installation and supply of materials that carry warranty periods longer than 10 years.  The statute of repose directed to construction contractors contains a carve out from the 10-year period for warranties or contract provisions that provide for longer effective periods.  Roof warranties are a prime example.  While material manufacturers may provide a 20 year no dollar limit warranty that covers both material and installation defects, the applicator agreement between the roofer and material manufacturer sometimes allocates risk back to roofer for installation defects for the entire warranty period.  In that case, the roofer should keep its project file for the full length of the 20-year warranty, not just for the 10-year repose period.

What records should be kept?

In general, it is best practice to maintain all relevant records pertaining to a project for the entire 10-year period or longer as discussed above.  In determining what constitutes a relevant record, it is helpful to broadly interpret the test a court would use to determine if a document is relevant, namely, if the document has any tendency to make a fact more or less probable than it would be without it and if the facts in the document are of consequence in determining the claim.  An expansive reading would entail keeping every record pertaining to the design and construction of the project.  After all, before a claim is asserted, it is unclear what records may be relevant and which may not.

There are, of course, exceptions.  In the era when almost all communications relating to a project are electronic and are stored digitally, there are numerous duplicates of records.  True duplicates may not add any relevant information and only serve to increase electronic file size and storage costs.  Extraneous information about employees’ personal lives and or downloaded cat memes or videos will likely never have relevance to a claim relating to the project.  But even this type of information may have some relevance and should be carefully reviewed before determining whether to retain it.

R U There?

COVID-19 imposes another layer of complexity on record retention.  With employees working remotely, not every member of the design or construction team may have cloud-based storage, a LAN that stores all information relating to a project, or consistent Wi-Fi signals.  Emails, texts and other electronic information may be stored on computer hard drives and mobile phones. Without further efforts, that information may never make it into the project file.  Best practices while employees are working remotely during the pandemic require understanding the limitations of electronic document storage, retrieval and recovery on each member in the design and construction team.  It also requires finding means and methods of obtaining those documents and incorporating them into the larger project file.

In determining whether your document retention policy is sufficiently robust, it is advisable to consult with legal counsel.  The attorneys in our Austin and Dallas offices are available to answer any questions you may have.

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