Injunction might overturn plan to give diverse communities more opportunities for homeownership
A federal judge this month put an initial stop to Oregon’s first-of-its-kind ban on “love letters” in real estate transactions, a state law that took effect Jan. 1 and will likely see action at the federal appeals court or even the Supreme Court.
State lawmakers “could have addressed the problem of housing discrimination without infringing on protected speech to such a degree,” wrote U.S. District Judge Marco A. Hernandez in granting a preliminary injunction.
Complaining real estate agents’ suggestion to “do nothing” is not a legitimate alternative to a love-letter ban, when the evidence shows housing discrimination is an enduring societal problem, Hernadez wrote.
“Greater enforcement is also not particularly persuasive. The record shows that discrimination in housing has persisted despite the passage of local, state and federal prohibitions,” he wrote. “Requiring real estate agents to redact love letters is a more precise tool to address the government’s interest.”
Last year’s legislation sponsored by state Rep. Mark Meek, D-Gladstone/Oregon City, is credited with igniting a national debate among real estate agents about preventing Fair Housing Act violations during real-estate sales.
“It’s disappointing and very frustrating,” Meek said of the federal ruling. “The judge had asked some good questions of the attorney general, but I didn’t see them making a good case that this was unconstitutional.”
Total Real Estate Group, which took the state of Oregon to court, said a love-letter ban harmed their ability to match potential homebuyers with their dream homes. Letters can prompt sales below the top monetary offer, the Realtors said, creating opportunities for first-time homeowners and giving sellers peace of mind that their home ends up in caring hands.
Calling the decision “a major victory for free speech and economic opportunity,” Pacific Legal Foundation attorney Daniel Ortner said the federal ruling “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. Oregon’s overly broad speech restriction is clearly not justified,” Ortner said.
Meek’s bill sought to ban “love letters” from prospective buyers to home sellers, especially when those letters contain photographs of potential buyers that would reveal the buyers’ race, along with statements that could sway sellers to choose a particular buyer based on religion and sexual orientation.
Typical statements in such letters might say something like, “My wife and I would love to buy your house because it’s walking distance for our kids to school and the church we attend with their grandparents.” Meek’s own experience as a Realtor helped shape the bill, he said.
“We are dealing with implicit biases that cause sellers to gravitate to one type of buyer, which can lead to keeping one type of person generally owning homes in neighborhoods,” Meek said. “I’ve sat down with sellers in their living rooms and they’ve told me, ‘I couldn’t sell to them because my neighbors would hate me forever.’ Not only is that discrimination, but also that seller is about to have different neighbors.”
Meek said that the federal judge from the District of Oregon probably won’t have the last word, and he hopes that the state will get a more favorable hearing from the federal appeals court based in San Francisco.
“Our attorney general’s office has said that they were going to fight this to the hilt, and it’s potentially precedent-setting depending on which way this goes,” Meek said.
Meek said the bill underwent a thorough analysis for constitutionality prior to consideration by the Oregon Legislature.
“Our legislative counsel who helped me draft this bill made sure that it didn’t infringe on the U.S. Constitution or anybody’s free speech rights,” Meek said.
Prior to the bill’s passage Oregon real-estate agents often felt that they had a fiduciary duty to forward these so-called love letters. Meek’s bill didn’t ban the love letters exactly, which his legal counsel warned would have violated free-speech rights by preventing someone’s ability from writing or sending such a letter; the bill simply removed a Realtor’s obligation to forward letters that are potentially discriminatory to homeowners. Under the bill, a prospective homebuyer may still send a love letter directly to the homeowner.
Previously, Meek and other Realtors felt they had a fiduciary responsibility to their clients to share “love letters,” even though such letters might persuade a seller to choose a buyer at a lower price.
“A seller’s agent is no longer required to forward letters from potential buyers, who often included photos of their families, in an attempt to sway the seller’s decisions,” he said.
Meek’s main hope was that eliminating that practice will make homeownership more achievable for groups that have traditionally not had as much access to owning property.
According to late 2019 official statistics, 65% of white people in Oregon owned homes, compared with Black/African Americans at 32.2% and 40.8% for Hispanic/Latino groups.
Meek said he hopes the legislation will open up opportunities for people of color to purchase homes.
“I’ve heard from some Realtors saying, ‘Hey, you’re taking away one of our tools,’ but my response is that we’re not allowed to say in a real-estate listing, ‘This house is for sale right next to a church,’ or ‘Buy this property walking distance from a certain political party’s office,’ so potential buyers shouldn’t be able to so easily use these same types of biases to influence sellers.”
The legislation says, “In order to help a seller avoid selecting a buyer based on buyer’s race, color, religion, sex, sexual orientation, national origin, marital status or familial status as prohibited by the Fair Housing Act, a seller’s agent shall reject any communication other than customary documents in a real estate transaction, including photographs, provided by a buyer.”
The federal judge wrote that the “customary documents” aspect of the bill was too vague and would potentially include a cover letter from a real estate agent in making an offer, which often has some of the same information as love letters.