BARRISTER'S BRIEFING: Love Letters Redux: Discrimination, First Amendment Rights and the Future

Brian Levine | March 15, 2022

Brian Levine, Esq., HGAR In-House Counsel/Director of Legal Services & Professional Standards Administrator

Back in November 2020 I authored an article regarding buyers sending personal letters, otherwise known as “love letters” to sellers. The purpose of that article was to highlight the potential discriminatory use of those letters. At that time, the Newsday article “Long Island Divided” and its investigation into discrimination was still fresh, and the National Association of Realtors and the New York State Association of Realtors were both discouraging the use of personal letters. Today, recent developments prompt me to again warn that the use of such letters can be dangerous to licensees and their clients.

New Oregon Law

In September 2021, Oregon Gov. Kate Brown signed into law a bill thats  intent was to curb discrimination in the sale of real estate by banning the use of personal letters. At its core was the historic concern of discrimination, whether conscious or unconscious, of protected classes (i.e., race, color, religion, national origin, etc.). At that time, one proponent and real estate licensee said, “…the practice of providing love letters perpetuates systemic issues of bias in real estate transactions.” He added that “love letters” could perpetuate “implicit biases that we’re not even aware of.”

As a result, the bill stated that:

In order 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 as prohibited by the Fair Housing Act (42 U.S.C. 3601 et seq.), a seller’s agent shall reject any communication other than customary documents in a real estate transaction, including photographs, provided by a buyer. (Or. Rev. Stat. § 696.805(7).)

While the statute did not prohibit the buyer and seller from directly communicating their thoughts, the statute prohibited agents from such communications. Further, while the statute did not define “customary documents” Oregon’s Real Estate Commissioner specifically stated that “love letters” were not “customary documents.”

The Lawsuit for Violation of First Amendment Free Speech Rights

As a result of this law being enacted, an Oregon real estate brokerage filed suit, asserting that the law was a violation of its, as well as its client’s, First Amendment rights to free speech. (Total Real Estate Grp. v. Strode, 3:21-cv-01677-HZ (D. Or. Mar. 3, 2022)).

Request for a Preliminary Injunction and the Judge’s Decision

As an initial matter, the plaintiffs wanted an immediate temporary stay on the enforcement of the law. Without going into the minutia, the judge went through the process of weighing all the factors related to the ability of the plaintiffs to bring the matter on behalf of real estate licensees and their clients, as well as the factors related to imposing restrictions on commercial free speech rights, and determined that the legislation was overly broad and not reasonably tailored to resolving the problem it sought to remedy and that the First Amendment rights of free speech outweighed the restrictions imposed. Further, the judge hinted at the possibility that the legislation was void as being too vague; however, he did not base his ruling on that factor.

As a result of that analysis, last week the court granted plaintiffs’ motion and temporarily stopped defendants (Oregon’s Real Estate Commissioner and the Attorney General for the State of Oregon’s Department of Justice) from enforcing the law. That preliminary injunction will remain in effect until the entry of a final judgment. According to plaintiffs’ counsel, that decision “preserves the opportunity of homebuyers to speak freely to sellers and make the case why their purchase offers should win out. Love letters communicate information that helps sellers select the best offer. The state cannot ban important speech because someone might misuse it.”

While the case is not over, the question is now whether the state will appeal the decision or if they will try to amend the law. If there is no appeal, plaintiffs will probably file a motion for Summary Judgment, which may put an end to the case.

Use of ‘Love Letters’ vs. Free Speech

While this case was a victory for free speech, the question remains whether the use of personal letters helps and whether brokerages should promote or discourage their use.

According to studies identified in the lawsuit, the use of personal letters can help a buyer’s offer get accepted. However, another study showed that nearly 93% of those personal letters provided some information that identified the buyer as a protected class. When a buyer provides protected class information and it is used against them, that’s discrimination. If there’s an agent helping to write or passing along that information, whether seller or buyer’s, then that agent is also part of that discrimination plan and they, along with their brokers, could be subject to a lawsuit and loss of licensure.

Since 2020, NAR and NYSAR have openly discouraged personal letters because of these inherent dangers of potential discrimination. They have advocated that Realtors not assist in writing, delivering, or receiving such letters. HGAR has also warned about the use of personal letters, as the misuse of this information can have a severe and far-reaching impact.

Fall Out and Fair Housing and Brokerages

The intentions of the State of Oregon were laudable: they were trying to redress fair housing discrimination. However, as the judge noted, the state “could have addressed the problem of housing discrimination without infringing on protected speech to such a degree.”

Whether Oregon amends its law remains to be seen. However, other states, such as Rhode Island, are now looking to draft similar laws.

So where does that leave Realtors? By following the guidance of NAR and NYSAR, a brokerage stands the best chance of insulating itself from claims of discrimination and fair housing violations. Short of that, a brokerage should establish detailed policies on the use of personal letters and how they are to be employed.

NAR’s Position on Love Letters

While “love letters” may seem harmless, they often reveal information about buyers, such as their race and national origin, which can pose fair housing risks. That information could be used, knowingly or because of unconscious bias, to unlawfully accept or reject an offer. NAR continues to stress that all parties in a real estate transaction should consider only pertinent criteria when making business decisions. Failing to do so could also leave Realtors in a compromised position. We also recommend our members explain potential pitfalls to their clients while stressing the importance of sticking to objective criteria in order to adhere to federal and state Fair Housing laws.

Brian Levine
Brian S. Levine, Esq. is In-House Counsel/Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.