'Love Letter' Legislation Leads to Lawsuit
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A real estate firm filed a lawsuit to contest a new law in Oregon that prohibits sellers from presenting their clients with letters from prospective homebuyers, a common practice in competitive markets.
A real estate firm in Oregon is challenging the constitutionality of a new state law that prohibits prospective homebuyers from sending personal notes to property owners, saying the policy infringes on people’s right to free speech.
“While the First Amendment protects speech generally, speech regarding something as significant as a home purchase warrants careful protection,” says the complaint, filed last month in federal court in Portland on behalf of the Bend-based Total Real Estate Group. “This is not simply speech about buying a widget or article of clothing from Walmart. The home has long held a special place in our culture and our law...speech related to this fundamental institution deserves the same solemn regard.”
So-called real estate “love letters,” where a potential buyer in a competitive market sends a note full of personal details meant to tug on a seller’s heartstrings, are a relatively common practice in home sales. But because the letters often disclose information to the seller that they might not otherwise know about the buyer—including race, ethnicity, religion, sexual orientation and gender—they could lead to discrimination, a violation of state and federal fair housing laws.
The state’s policy, signed into law by Gov. Kate Brown in August, was intended to guard against that possibility. Under the terms of the bill, real estate agents are required to “reject any communication other than customary documents” during transactions, a safeguard meant to “help a seller avoid selecting a buyer based on the buyer’s race, color, religion, sex, sexual orientation, national origin, marital status or familial status.”
Oregon State Rep. Mark Meek, a Democrat and the legislation’s lead sponsor, said in a radio interview in August that the idea for the bill came from his work both in real estate and on a task force to examine racial biases in real estate transactions.
“(As) a listing agent working for sellers, I’ve been on the receiving end of these letters and offers,” he said. “And in many cases, they include a picture of the family. And during that task force, I was thinking about maybe it’s the picture we don’t allow. But in the letter, it does refer to their background, familial status, religion, marital status and a lot of those things that should not be shared or even considered as part of the decision-making process.”
The law, which Meek said still allows buyers to communicate directly with sellers, is set to take effect in January.
The legislation did not garner major opposition from the state’s real estate industry. The Oregon Association of Realtors said on its website that it worked with lawmakers on crafting the bill “to ensure it would not be overly burdensome or difficult to comply with.” Kate Fulford, a Portland-based real estate agent, said in testimony supporting the bill that while it’s likely that “no one intends to violate fair housing,” personal details contained in such letters “can tweak the seller’s thinking.”
“Upon reflection, it seems that for a financial transaction it would be best to remove the opportunity to potentially violate a fair housing law,” she said.
But others said the law seemed unnecessary. Because discrimination is prohibited by both state and local laws, legislators debating the measure seemed to be mostly “spending more time reinventing the wheel,” Richard Wisner, an Oregon resident, said in written testimony to the Senate Committee on Housing and Development.
“This bill presupposes a lot,” he said. “Does anyone believe a seller would turn down money based on any of the mentioned points? … Does anyone believe this issue is rampant among the real estate industry?”
The extent of the problem seems unclear. The National Realtors Association told Realtor Magazine in July that it was “not aware of instances in which these letters have led to lawsuits or legal action elsewhere in the country.”
The lawsuit also made that point, saying that “this censorship is based on mere speculation that sellers might sometimes rely on information in these letters to discriminate based on a protected class...Guesswork is not adequate grounds for suppressing truthful speech.”
No other state has passed a law or introduced legislation to limit the use of letters in real estate transactions, though multiple organizations discourage the practice. The National Realtors Association, for example, encourages its members to “advise their clients about the risks of love letters, and at a minimum, stress the importance of avoiding including any information in the letter that could be used to illegally discriminate.” In July, Seth Task, the president of Ohio Realtors told a Cleveland news station that he no longer accepts the letters from buyers and encouraged other agents to adopt the same policy.
“If a decision is made based on the letter versus other letters, it’s clearly a fair housing issue,” he said.
Kate Elizabeth Queram is a senior correspondent for Route Fifty and is based in Washington, D.C.
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