Oregon Sued After Banning Buyers’ Love Letters

Image of a person holding a pencil ready to write on a blank paper tablet.

Free Speech Versus Fair Housing?

It’s a tough market out there for home buyers. So, hopeful home buyers are coming up with ways to stand out from the crowd. Some — many, these days — are writing “love letters” that flatter the sellers to persuade them to choose the letter writers as buyers.

Are these letters charming gestures that show diligence and smart thinking on the buyer’s part? Or do they cross a line? It all depends. But this year, Oregon said enough is enough. And it passed a bill to stop the buyers’ practice of writing to sellers in hopes of beating out their competition. The new law, House Bill 2550, is the first of its kind nationwide. Gov. Kate Brown has signed it. And it’s due to take effect on the first day of 2022.

But will it? Citing the right to free speech, a group has filed for a preliminary injunction to stop H.B. 2550.

Let’s take a look at what’s going on.

Making a Human Connection?

Person holding an open envelope and letter with a red paper heart attached to the letter.

Buyers’ heartfelt “love letters” to sellers could be seen as efforts to make a human connection, and become the perfect choice out of multiple potential buyers. Yet the National Association of REALTORS® points out that letters and photos (some buyers even make videos!) could appeal to a seller’s bias.

Questions have been raised across the country. The Housing Equality Center, just outside Philly in Montgomery County, Pennsylvania, reports an increase in complaints about love letters since the height of the seller’s market in late 2020.

Some Oregon real estate agents expressed concerns, too. They want to be off the hook when home buyer clients insist that the agents pass notes. A frequent concern is that the letters and photos often do reveal family status, national origin, background and identity in ways that could touch on fair-housing concerns and even draw legal liability. Accordingly, Oregon’s new law sets out to prevent sales to certain buyers based on “race, color, religion, sex, sexual orientation, national origin, marital status or familial status” — traits the Fair Housing Act lists as discriminatory.

While the new law forbids Oregon sellers’ agents from accepting personal documents from buyers, a buyer could write to the seller directly. But a real estate agent would be barred from passing the document to the seller.

Up until this new law, agents in general have had a professional duty to pass their clients’ communications along to the other party in a transaction.

Making a Federal Case of It

A federal filing submitted by the Pacific Legal Foundation, drafted at no charge on behalf of an Oregon real estate company, objects to H.B. 2550. Its filing says there’s no evidence to show anyone is actually facing discrimination because of buyers’ letters.

The lawsuit, Total Real Estate Group v. Strode, also claims Oregon is violating home buyers’ Constitutional right to free speech. The suit adds that the ban will have a negative effect on real estate agents’ abilities to bring buyers and sellers together. It claims that the law will get in the way of innocent, beneficial activities, including the transfer of useful information.

“Love letters are incredibly important for matching buyers and sellers,” said Attorney Daniel Ortner in a press release from the Pacific Legal Foundation.

Still, some agents are concerned about being caught in the middle. Their point is that they shouldn’t have to be doing something that real estate professionals are urged not to do. Passing love letters between the parties is probably not a great idea, says Attorney Hank Lerner, general counsel for the Pennsylvania Association of Realtors. Catherine Taylor, a lawyer with the Massachusetts Association of Realtors, puts the point bluntly to agents:

Do not engage in the passing or receiving of love letters. It could open you up to a fair-housing complaint.’’

Not All Sellers Love the Letters

A person preparing to write a letter to a real estate seller on paper.

In a competitive market, buyers will go to great lengths to get a seller’s attention, without thinking it could be the wrong kind of attention. Sure, some sellers have extraordinary sentimental attachments to the homes they leave. They could be swayed by a charming missive even when its writer is offering less than the highest bid.

Statistics bear this out. When the Redfin brokerage surveyed bidding war strategies, the company found that  writing a love letter increased home buyer success by 59%.

On the other hand, sellers can be taken aback or just plain weirded out by these letters. And in some markets the sheer volume of extra documents is becoming a nuisance.

Some agents announce in their listings that the sellers will not be reading personal letters from potential buyers. After all, a real estate sale is a transaction. The best offer from a business standpoint — a deal with no contingencies left to sort out, a bid that’s significantly higher than the others — should win the day. A buyer who is turned away for unbusinesslike reasons could, in certain cases, believe discrimination is in play. This could come back to bite an agent. Agents can be sanctioned and sellers fined for fair-housing law violations.

Learn more about the transformation of real estate law taking place throughout the United States as… A Quest for Racial Fairness Gains Ground.

What’s Next for the Law of Love Letters?

Oregon’s love letter case will be interesting to follow in 2022. The federal court could deem Oregon’s new law overbroad and unconstitutional. But that would prompt states to take harder looks at the actual impact of love letters on historically disadvantaged groups. No matter how the case unfolds, expect tweaks to real estate professional responsibility codes, in order to grant agents a clear prerogative to refuse to pass notes. And expect new materials to be produced for agents, sellers and buyers on their legal duties under the Fair Housing Act. 

In light of the Oregon debate, agents have a heightened awareness of the liability questions that love letters raise. Instead of encouraging these communications — no matter how well-meaning — real estate agents will be much more likely to talk with their sellers and buyers about the Fair Housing Act and the pitfalls of love letters.

“While no one enjoys losing out on their potential dream home,” Anthony Renaldo of Chartwell Law observes, “It is better to have loved and lost than to get sued for federal housing discrimination.”

Supporting References

Oregon State Legislature, 2021 Regular Session. H.B. 2550 Enrolled: Relating to the Duties of the Seller’s Agent in Real Estate Transactions.

Pacific Legal Foundation: Real Estate Brokers Sue to End Oregon’s Unconstitutional Ban on “Love Letters” (Nov. 19, 2021). The case was first reported in the media by Jessica Guynn of USA Today on Nov. 19, 2021.

Elaine S. Povich in Stateline Update by Pew Trusts: Oregon Homebuyer “Love Letter” Ban Challenged in Court (Nov. 23, 2021). 

Kara Baskin for the Boston Globe: Why Writing a Letter to Win a Home Can Be Creepy AND Backfire (May 26, 2021).

Michaelle Bond for the Philadelphia Inquirer: Home Buyers, Don’t Count on Sellers to Read the Letters You Write (Jun. 7, 2021).

Anthony Renaldo, via JDSupra.com: Including a Love Letter With a Real Estate Bid May Expose Brokers to Discrimination Laws (Jul. 29, 2021).

And as linked. Photo credits: Mohamed Hassan and Andrew Lloyd Gordon, via Pixabay; and Rinck Content Studio, via Unsplash.