Oregon’s first-in-the-nation ban on cover letters from prospective homebuyers is too broad, per last week’s ruling.
A federal judge has overturned Oregon’s ban on prospective homebuyer “love letters” — written materials attached to a homebuyer’s offer explaining why the seller should select them.
In 2021, Oregon became the first state in the union to ban the controversial letters by passing House Bill 2550. The bill banned the use of love letters 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.”
Rep. Mark Meek (D-Clackamas) told a state Senate committee in May that the practice may seem harmless, but too often results in sellers “making decisions based on the perception of who will ‘fit in’ to their neighborhood better.”
Gov. Kate Brown signed the bill into law into June.
But in November — a little than a month before the bill was to take effect — the state faced a legal challenge from the Pacific Legal Foundation, suing on behalf of the Bend-based Total Real Estate Group.
The firm claims 75% of its offers use some form of cover letter.
“Ultimately we believe love letters give an advantage to buyers and can be done without violating fair housing laws,” Chris Ambrose, general counsel and principal broker at Total Real Estate Group, tells Oregon Business. “Love letters include things like first time home buyers, whether or not it's a corporate entity, how close someone needs to live to a hospital, a desire to live permanently in the area, all things that don't dwell on fair housing issues.”
In last week’s decision on Total Real Estate Group v. Strode, Chief U.S. District Judge Marco Hernández wrote the goal of HB 2550 was “laudable” but the total ban on cover letters was too broad and "unquestionably interferes with speech." He recommended other legislation which could achieve similar outcomes, such as requiring real estate agents to redact information that could result in discrimination, like family photos.
Ambrose said fair housing laws and the protection of protected classes are “always on our minds” when engaging in transactions, but he was unsure whether or not Total Real Estate would support a ban on family photos.
The Oregon Association of Realtors issued a press release after HB 2500 passed in June, noting that the National Association of Realtors began recommending against the use of love letters since late 2020.
“Oregon is a national leader in Fair Housing and Oregon REALTORS® is proud of our work to end housing discrimination,” Jenny Pakula, CEO of the Oregon Association of Realtors told Oregon Business in a statement Tuesday. Pakula added that her organization will “continue working to advance Fair Housing.”
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