Takeaways
- Real estate professionals should advise clients about the potential risks of buyer love letters and against using personal content to unlawfully discriminate.
- Buyer love letters may lead to fair housing violations if a seller uses information revealed in a love letter to enter into or deny a transaction based on a prohibited characteristic.
- Sellers should assess offers using objective criteria, such as price and timing.
On May 6, 2022, the parties to a federal lawsuit challenging Oregon’s “love letters” statute jointly submitted a consent decree with the court declaring the law a violation of the First Amendment of the United States Constitution and agreeing the Oregon Real Estate Agency will no longer enforce the love letters ban.
Enacted in September of 2021 with the specific purpose of avoiding sellers selecting buyers based on a prohibited bases in violation of fair housing laws, the statute requires sellers’ agents to reject any communications from buyers other than “customary documents” of a real estate transaction.
In November of 2021, a real estate firm sued the Oregon Real Estate Commissioner and Attorney General and moved for a preliminary injunction against the law’s enforcement. The suit alleged an unconstitutional restriction of the First Amendment freedom of speech rights of Plaintiff and its real estate agents and clients.
Issuing the preliminary injunction, the District Court found Plaintiff possessed direct Article III standing to challenge the statute and third-party standing on behalf of its agents’ clients. The court then analyzed whether the statute’s restrictions against buyer love letters impermissibly violated Plaintiff’s agents and clients’ First Amendment rights.
In finding that both the agents’ and their clients’ First Amendment protections were burdened, the court emphasized how the statute restricted buyers’ speech directly, restricted agents from drafting offer cover letters, restricted agents from assisting clients in drafting letters, and noted the closeness of the agent-client relationship. For all these reasons, the court found that the Plaintiff had direct standing and third-party standing to bring the claim on behalf of its clients.
The court then analyzed whether the statute impermissibly restricted commercial speech using the Supreme Court’s Central Hudson test for intermediate scrutiny. Defendants highlighted how love letters perpetuate systemic issues of implicit bias and racial disparities in homeownership.
While the court acknowledged there was evidence to support the claim that banning love letters may reduce unlawful discrimination, the court ultimately concluded that the love letters ban is not adequately tailored to achieving its anti-discriminatory purposes and therefore impermissibly violates the First Amendment. Referencing several viable alternatives to addressing housing discrimination and the “significant amount” of love letter content unrelated to personal characteristics, the court concluded the statute is over inclusive and restrictive of more non-problematic speech than necessary.
And while the settlement decree will end Oregon’s prohibition of love letters, legislators in other states have recently introduced similar statutes. A bill introduced to Rhode Island’s General Assembly is currently being held for study, and Washington’s State Legislature indicated plans to potentially re-introduce a stalled bill in the future.
Total Real Est. Group, LLC v. Strode, 2022 WL 633670 (D. Or. Mar. 3, 2022).