When the Dolensky family made the decision to sell their home of 20 years in the Atlanta suburb of Kennesaw, a home they had raised four children in, there was a sense of melancholy surrounding the experience. But changes brought on by the progression of life and work made it clear that it was time to move on.
To their delight, they received two “more or less equally strong offers” on their home. In the end, they decided to sell their beloved home to a newly married couple who expressed in a letter accompanying their offer, their desire to raise a family in a home and a school district that clearly had been good to the Dolensky’s now-adult children.
“It certainly wasn’t my parents’ main deciding factor,” the second oldest son, Tim, said. “But I know they were happy to know that it was going to people who were clearly as in love with it as they were when they moved in, in 1999.”
As local housing markets across the country have hit alarming highs over the past 18 months, buyers desperate to get into a house have tried anything and everything to win the deal. From waiving contingencies such as home inspections, to offering to pay for the seller’s moving expenses, and even pledging to name their first-born child after the sellers – buyers and their agents have been doing their best to get creative.
One tactic that has been popular for years, writing letters of introduction or “love letters” to the home seller to accompany the offer, however, has recently come into the spotlight and not in a good way.
Earlier this year, lawmakers in Oregon passed a bill (HB 2550) that banned sellers’ agents from passing “non- customary documents” on to their clients, which has largely been interpreted as a ban on love letters. The bill was sponsored by Democratic state representative Mark Meek, who is a real estate broker himself. Meek and others argued that the law was necessary “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.).”
Although this is the first law in the country to attempt to put a stop to the so-called love letters, the practice has been under fire for a few years now. In an October 2020 Fair Housing Corner blog post, the National Association of Realtors warned agents that, “While this may seem harmless, these letters can actually pose fair housing risks because they often contain personal information and reveal characteristics of the buyer, such as race, religion, or familial status, which could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer.”
In response to the passage of the law, last month, the Pacific Legal Foundation, a libertarian public interest law firm, filed a preliminary injunction against the new law on behalf of Bend, Oregon-based Total Real Estate Group. Total Real Estate Group is asking for a federal judge to block the law before it goes into effect on January 1, 2022.
The injunction claims that the ban violates the First Amendment rights of brokers, agents and their clients and that based on previous precedents set by commercial speech cases, such as Virginia State Bd of Pharmacy v. Virginian Citizens Consumer Council, Inc., and Central Hudson Gas and Electric Corp. v. Public Service Commission, the “law forbid, or at the very least substantially burdens, this valuable exchange of truthful and non-misleading information.”
Pacific Legal Foundation is no stranger to First Amendment cases. The organization has successfully argued many free speech cases for their clients, including in Minnesota Voters Alliance v. Mansky, in which the Supreme Court voted 7-2 in favor of PFL’s client MVA, finding the state’s restriction on clothing worn in polling places to be unconstitutional. While the organization has also had success arguing property rights cases, this will be their first case that combines free speech and real estate.
Although he disagrees with PFL and TREG’s reasoning, Allan Ryan, a Harvard University professor who teaches “The Constitution and the Media,” believes that the First Amendment claims against the law are strong.
“I don’t think the issue of whether or not it’s commercial speech will be the key here,” Ryan said. “What I think is the key, is that what you’ve got is a regulation that is both over inclusive and under inclusive. It is over inclusive because it bans all love letters that are transmitted to the seller by the seller’s agent even though the letter may have absolutely nothing in them that could lead to discrimination. It could say something like ‘This is an old house and I love historic homes.’ Nothing about that has anything to do with protected classes. It is under inclusive because all it does is focus on letters that are transmitted by the seller’s agent. There is no prohibition on a buyer writing a letter and dropping it through the mail slot of the home.”
In other words, Ryan feels that in order to withstand scrutiny, the law needs to be more narrowly tailored to fit the exact types of speech and means of communication that are in violation of the Fair Housing Act.
“If there were a law that said something like ‘No prospective buyer can urge that a sale be made to them based on a protected class status’, then I think you have two things there: there is a compelling interest on the part of the state based on fair housing legislation in place and you also have a narrowly tailored law,” Ryan said.
However, with the law as it currently stands, Ryan sees too many loopholes for sellers to garner information on the protected class status of the prospective buyers, either through communications transmitted directly to the seller from the buyer or the seller searching the buyer’s name online, for the law to really have an impact on individuals who truly wish to act discriminatorily.
Peter Wardhana, who is an agent in the San Francisco Bay area but is following this case closely as he believes that it may have implications on real estate legislation in his state, also acknowledges that the law leaves numerous loopholes open.
“A new challenge is that many home sellers have a Ring or other security camera at their home that enables them to visually see everyone who comes by,” Wardhana said. “So, eliminating the love letters alone will not necessarily keep a seller from observing who the prospective buyers are.”
Agents, such as Cannon Beach, Oregon-based RE/MAX agent Alaina Giguiere, do not see any issue with the law and believe that it will be effective in preventing issues of discrimination based on protected class status.
“I don’t love love-letters,” Giguiere said. “I find them to be distracting. They are not part of the real estate transactional documents and I think that they are very subjective and can be a bit manipulative. I feel that it is my job when I represent sellers, to help them get the highest value in the shortest amount of time with the least amount of stress and, quite frankly, those letters can put undue stress on a seller. They might want to help out the person pleading with them in their love letter, but they also want the most money for their house and sometimes those two things don’t line up. I hope the law goes forward and I’d be grateful to never have to deal with love letters again.”
Giguiere feels that by banning love letters, the state of Oregon is leveling the playing field for homebuyers.
“What happens if you get four offers and you get love letters from three and the fourth just sends in their offer?” she posits. “Is the offer without a love letter automatically disadvantaged? At the end of the day we need to focus on the terms and conditions of the actual offer and you need to sort of take the emotion out of it.”
While it is true that when stripped of all the excess, a home purchase is just another financial transaction, the emotional aspect of buying a home can’t be overlooked.
“It is not easy to take the emotion out of selling or buying a home,” Wardhana said. “Many sellers are emotionally tied to their homes because it is a place full of cherished memories. For many buyers, a new home is something that they have dreamed of as a place for a better life for them and their loved ones. These emotions can have an impact on how some people make their decisions.”
Still, the fair housing concerns the law brings up are incredibly relevant.
“I think the issues raised by this law are hard to uncover and I think that is one of the powerful pieces about having legislation like this, as it might help us solve issues that exist, but we currently don’t know how to uncover,” Allan Lazo, the executive director of the Fair Housing Council of Oregon, said. “Extreme inequities and disparities in homeownership along the lines of race still exist.”
In addition to the protected classes brought up in the Fair Housing Act, Oregon has its own set of law prohibiting discrimination based on marital status and source of income.
“It is great in Oregon that we have additional protections, but it is hard to know if they are effective in every single transaction when we know there is an issue, but we can’t necessarily uncover it,” Lazo said. “So in cases like this we need those additional protections and legislation. In general, the fair housing laws are good, but anytime you can more closely pinpoint a place where an issue might exist, I think is an appropriate place for us to bring additional legislation in.”
At the end of the day, however, it will be up to the courts to decide if the law’s block on free speech is more or less important than its implications for fair housing.
“It is the right to free speech against the right to equal treatment,” Lazo said. “I don’t know how you weigh those two things or where the lines would be drawn.”