Window to the Law: Best Practices for Buyer Love Letters

Window to the Law: Best Practices for Buyer Love Letters

Aug 12, 2021
3:57
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Buyers competing in a hot real estate market might try to stand out from the crowd by sending a "love letter" to the seller. Real estate professionals can use these best practices to help both buyers and sellers avoid potential fair housing violations that love letters can trigger.

Window to the Law: Best Practices for Buyer Love Letters

Hi, I’m Charlie Lee, Senior Counsel and Director of Legal Affairs at NAR.

As buyers compete in a hot real estate market, they are searching for ways to stand out from the crowd. One method being used is to send a love letter to entice the seller into choosing their offer. While a love letter may seem innocent, they can raise fair housing concerns and risk exposing both the real estate broker and their clients to legal risks.

The Fair Housing Act makes discrimination illegal in the sale or rental of housing and prohibits making housing otherwise unavailable because of race, color, national origin, religion, sex, disability or familial status. Many states and local governments have their own fair housing laws which can include additional protected categories. The use of a love letter often presents fair housing issues because they often contain personal information about the buyer, such as their race and culture or traditions as a way of appealing to the seller’s emotions. Some buyers even go as far as sending sophisticated packages that include photographs and videos.

For example, a buyer might send a letter with a photo of their family around a Christmas tree. As a result, the buyer has revealed their religion which is a prohibited basis for a seller to base their decision to reject an offer. While it may not be the buyer’s intent for the seller to use this information to discriminate, that is essentially the position that a love letter can place the seller. When considering that the information cannot be easily forgotten or unseen, a love letter may ironically cause the seller to be fearful of selecting the buyer’s offer because of potential discrimination issues.

Therefore, real estate professional should advise their clients about the risks of love letters, and at a minimum, stress the importance of avoiding including any information in the letter that could be used to illegally discriminate. But, of course, even a photograph of the buyers could lead a seller to give preference to a buyer or reject them based on race or other background.

Fair housing is a high priority throughout the country, and states are closely monitoring the practice of love letters. In fact, just recently, Oregon enacted a law to take effect on January 1, 2022 that bans the use of buyer love letters.

Here are some best practices to consider when it comes to love letters:

  • At the outset of the relationship, speak to your client about the risks of buyer love letters and the potential fair housing issues they raise.
  • Remind your seller-clients that an offer should be assessed based only on objective criteria, such as price and timing.
  • If your seller-client insists they want to receive buyer love letters, advise them to consult legal counsel and to document their decision-making process in selecting an offer.
  • Avoid helping buyer-clients to draft or deliver love letters. Be sure to warn them against revealing any personal information that could raise fair housing issues. Counsel them to focus on the characteristics of the home or other objective information.
  • Lastly, help your buyer-clients find other ways to differentiate themselves to win the property. Beyond offering more money, the buyer may consider offering more flexibility with the closing date, additional earnest money or waiving other contingencies that may appeal to the seller.

Thank you for watching this episode of Window to the Law.

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