So you really, really, want that special home. Will you be the seller’s choice?
It’s tempting to gush over the home in a letter to the owner. That way, couldn’t you bond with the owner over your love for the home? And isn’t it helpful to create goodwill with the party you’re hoping to deal with?
Sure. But writing certain personal details in a “love letter” to a home seller, says the National Association of REALTORS®, could be risky. It could lead to activities that might be called out as discriminatory, NAR says.
Could a buyer’s words to a seller actually offend fair housing laws? Maybe so, says NAR — if a seller chooses one particular buyer while excluding others, possibly because of personal traits.
This is why Oregon recently banned buyer love letters. But the law was deemed unconstitutional. Buyer love letters, a federal court has said, are protected as free speech.
What Happened in Oregon
As a general matter, real estate agents have to pass messages between parties to a house sale. It’s part of their job.
And if there is more than one bidder, a buyer might figure the homeowner will be absolutely delighted by a written tribute to the beauty of the home, and all the ways the hopeful buyer could appreciate and enjoy living in it. That could be a hopeful bidder’s winning edge.
Some homeowners find these pleas annoying. Many sellers’ agents recommend ignoring them, and focusing on the particulars of the offer and contingencies. But some homeowners read the love letters, and really do make those hoped-for emotional connections.
So, here’s the issue. What if the hopeful buyer’s letter leads a seller to accept — or turn down — an offer because of particular social traits, like race, gender, sexual orientation, and so forth?
Last year, Oregon banned home buyer love letters. The point of the prohibition? To keep buyers, sellers, and their agents from helping home sellers pick buyers in ways that contradict federal fair housing laws. Under the Oregon ban, a seller’s agent could not accept messages from buyers beyond the “customary documents” used in any normal home purchase.
Oregon’s law was the first one like it in the country. It went into effect on Jan. 1, 2022.
As it turns out, not all real estate groups have agreed with NAR. Some didn’t want the state involved in the issue. They decided to challenge Oregon’s ban in court. It was late 2021, and an Oregon brokerage named Total Real Estate Group sued state officials. They asserted that the state ban on buyer love letters impinged upon speech rights, and could squelch useful communications.
Total Real Estate Group went further. It argued that love letters could even help people in minority groups, who might lack the resources for a large down payment or all-cash offer, but could persuade the owner that they love the homes and would be the worthiest buyers. “It gives them a chance to compete because they can explain why they love the house,” Total Real Estate Group’s lawyer argued.
The federal court concluded that the law, as written, has a free speech problem. The court’s decision did note evidence suggesting love letters increase the risk of unlawful discrimination. At the same time, the federal court noted that people could use other means (which didn’t clash with people’s freedom to communicate) to address discrimination in housing. For one example, the real estate industry could mandate explanations of fair housing laws in standard purchase documents.
Finding that a ban could chill too much protected speech, a federal district judge issued a consent decree. The consent decree essentially said the following. Because Oregon’s ban was found overbroad and therefore unconstitutional, Oregon’s real estate community has to allow love letters. Thus, Oregon’s law is now deemed unenforceable.
What’s Next for the Law of Love Letters?
So far, Oregon has been the only state to say its agents can’t pass these notes. And it’s also been the only state told to drop its ban. But it looks like the Oregon experience is changing the way people think about a seller’s duty to respect fair housing policy. In light of the debate, people across the United States are now wondering if home buyer love letters could set up federal Fair Housing Act risks.
And yes, it is possible for sellers to face penalties for fair-housing law violations, as the American Bar Association has explained. Generally, frustrated bidders are allowed to go to court if they believe they can show harmful discrimination. “The potential buyer could sue,” says the ABA, “for actual monetary losses as well as attorney’s fees, court costs, and even punitive damages.”
After the federal court decision in Total Real Estate Group v. Strode, we could say potential buyers have a lot of leeway in their communications with sellers. But this legal question is far from settled. Real estate professionals in California have acknowledged the unfairness potential connected with love letters. Other jurisdictions, such as Rhode Island and Washington State, are considering laws that restrict agents from passing love notes from buyers to sellers.
People wanting to ban love letters will learn how to write more narrowly tailored laws by examining the new case law in Oregon. Future bans could pass Constitutional muster. People working for bans might also look for evidence of the actual effects of love letters on various groups. (The challengers to the Oregon ban argued that love letters hadn’t actually been connected to unfair discrimination and harm.)
At the End of the Day…
Buyers and sellers should deal with each other by examining businesslike factors. These factors include price, appraisal and inspection reports, timing, and all the parts of the contractual agreement.
To put it bluntly, selling a home is a financial decision. A buyer who might have been rejected for more personal reasons might believe they were unfairly treated. If a fair-housing complaint could arise, why engage? That’s basically NAR’s point, and it’s worth some thought.
Free speech is a wonderful right. But a home sale is a transaction, not a romance.
Supporting References
Total Real Estate Group v. Strode, No. 3:21-cv-01677 (D. Or. Mar. 3, 2022).
Oregon State Legislature, 2021 Regular Session. H.B. 2550, Relating to the Duties of the Seller’s Agent in Real Estate Transactions.
Christina Hoffman for REALTOR® Magazine (published by the National Association of REALTORS®): Law and Ethics – First Amendment Argument Wins the Day (Oct. 26, 2022).
National Association of REALTORS®: Legal Case Summaries – Oregon Ban on Love Letters Deemed Unconstitutional (May 23, 2022).
Elaine S. Povich for Pew Trusts’ Stateline Update: Federal Judge Tosses Oregon Ban on Real Estate “Love Letters” (May 13, 2022).
April Ehrlich for Oregon Public Broadcasting on OPB.org: Judge Ends Oregon Ban on Real Estate “Love Letters” (May 12, 2022).
Pacific Legal Foundation: Real Estate Brokers Sue to End Oregon’s Unconstitutional Ban on “Love Letters” (Nov. 19, 2021).
Jessica Guynn for USA Today: Real Estate – Oregon Slapped With Lawsuit Over “Love Letters” Ban in Hot Real Estate Market (Nov. 19, 2021; updated Nov. 21, 2021).
Deeds.com: Oregon Sued After Banning Buyers’ Love Letters (Nov. 29, 2021).
And as linked.
Photo credits: Jonathan Meyer and Suzy Hazelwood, via Pexels.