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August 2021

Oregon bans "love letters" in real estate transactions

August 5, 2021

Oregon lawmakers put the kibash on the use of "love letters" for real estate transactions, making the Beaver State the first in the nation to ban them.

 House hunters who hope to have their purchase offer favored by sellers can no longer include communications that convey their love of the home, how their family will care for it, how they'll spend the holidays, or other reasons to "pick them" that could trigger fair housing liabilities. The National Association of Realtors┬« (NAR) has discouraged the use of written tactics to tug at heartstrings -- commonly used in multiple offer situations -- since 2020.

While describing reasons why a seller should select them may seem harmless, NAR officials said 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 a blog titled "Love Letters of Liability Letters?," NAR warned the seemingly innocuous letters could subject real estate professionals and their clients to fair housing violations. The author of the blog outlined six best practices for minimizing liability.

 House Bill 2550, passed by the Oregon Legislature in June, specifically states:

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.

Following Oregon's ban, NAR released a statement reiterating that all parties in a real estate transaction should consider only legitimate, non-discriminatory criteria when making business decisions. NAR noted it was not aware of instances in which love letters have led to lawsuits or legal action but warned of the risks on not adhering to non-discriminatory criteria. Non-compliance "could leave REALTORS® in a compromised position. We also recommend that 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."

Mark Meek, principal broker/owner at Markram Properties, and a member of the Oregon House of Representatives, favored the measure. "It's time for us to come into compliance and bring an equal footing to all home buyers out there and help our BIPOC communities to experience the building of intergenerational wealth," he remarked.

The law becomes effective January 1, 2022. Oregon REALTORS®, an association with 18,000 members, plans to provide guidance and education "as it becomes clearer how this law will be interpreted and enforced."