A law passed in Oregon last summer banning so-called buyer “love letters” in real estate transactions was halted by a federal judge last week, though the narrow decision seemingly did not rule out a more targeted ban on the practice that would narrowly apply to fair housing and discrimination.
In a 29-page opinion District Judge Marco Hernandez focused on the specific text of the bill that went into effect at the start of this year, saying that it was overboard and “has the effect of significantly limiting truthful, nonmisleading speech.”
After Oregon governor Kate Brown signed the bill into law, a local real estate firm sued the state, arguing that banning love letters would lead to “many angry and dissatisfied clients” and prevent agents from finding creative ways to compete with higher offers.
Long a controversial practice in real estate, the use of personalized communications delivered with an offer on a home intended to make that offer more emotionally appealing in a competitive market can potentially run afoul of fair housing laws, as sellers could be accused of choosing a buyer based on protected characteristics like race, religion or national origin. The National Association of REALTORS® has recommended finding alternatives to make an offer stand out and avoiding love letters.
Hernandez called the goal of preventing these biased decisions “laudable,” but ruled that the text of the law—which was introduced by Mark Meeks, a real estate broker/owner who has also served as a state representative since 2017—was not specific in how it defined these communications.
“ shown that racial disparities in homeownership persist in Oregon. They have shown that most love letters contain protected characteristics, including a prospective buyer’s race or color. They presented evidence that conscious and unconscious bias are ongoing problems in American society and effect decision-making processes. “Hernandez wrote. “Plaintiff did not introduce any evidence that rebuts, or even casts doubt, on these findings.”
The law banned “communication other than customary documents in a real estate transaction, including photographs, provided by a buyer,” which Hernandez argues will unconstitutionally limit appropriate or innocuous communications from buyers to sellers.
“Even if targeted love letters alone, Plaintiff has shown that love letters contain significant amounts of speech beyond references to a buyer’s personal characteristics,” Hernandez wrote.
Hernandez discussed a handful of alternatives to this wholesale ban, including requiring agents to redact all references to protected characteristics before delivering a love letter or only banning photographs.
The Oregon legislature previously rejected a plan to require agents to review and redact love letters.
“Senate hearing testimony suggests legislators rejected this approach because they were concerned about censorship and liability for real estate agents,” Hernandez said.
Adam Davis, a RE/MAX agent in Portland, told RISMedia late last year that he is cautious even communicating with clients about local sports fandoms—not necessarily due to this bill, but because the issues are so complex and sensitive.
“I want to be careful with that, because it sounds like it can veer into fair housing issues,” he says.
Real estate educator and author Marki Lemons Ryhal, speaking to RISMedia last month, pointed out that higher-ranking or leadership positions in real estate are mostly likely to receive fair housing education, and everyday agents don’t always receive that more extensive training, with increased education another alternative Hernandez proposed to a love-letter ban. Federally protected characteristics also extend beyond race or religion and can be very nuanced, she adds, and some jurisdictions have stricter or more extensive fair housing laws.
“Our fair housing courses include federal, state, county and city fair housing rules,” she says. “I think that as real estate professionals, we’re going to need more education.”
Jesse Williams is RISMedia’s associate online editor. Email him you real estate news ideas to firstname.lastname@example.org.