Bend real estate group’s lawsuit prompts federal judge to block Oregon’s new ‘love letter’ ban

(Update: adding video, details of judge's order, comments from Bend real estate group, attorney)

BEND, Ore. (KTVZ) -- A new state law banning the use of real estate ‘love letters’ by prospective home buyers seeking to stand out from the crowd has been put on hold by a federal judge, due to a lawsuit filed on behalf of Bend's Total Real Estate Group. 

House Bill 2550 was signed by Gov. Kate Brown last June, having unanimously passed the state House and Senate.

It’s believed to be the first such law in the country.

The conservative Pacific Legal Foundation filed the lawsuit in U.S. District Court late last year on behalf of the Bend-based Total Real Estate Group against Oregon Attorney General Ellen Rosenblum and Real Estate Commissioner Steve Strode, alleging that forbidding the letters violated First Amendment rights.

In real estate, "love letters" are a way for buyers to explain why they would be the best candidate for a listed house, without only offering a higher price.

Ethan Blevins, an attorney representing Total Real Estate Group, explained Monday how it can help home buyers. 

“This is a way for a buyer to kind of get an edge in a competitive market,” Blevins said. 

Last year, Oregon was the first state to pass a bill banning "love letters" citing they could be used to discriminate against potential buyers.

Total Real Estate Group in Bend filed a lawsuit, arguing the new law is unconstitutional, and that the reasoning is not sound.

“We’ve never seen an instance, and I don’t think the state has either, of sellers using that information to discriminate against a buyer,” Blevins said. 

In his court order issued last Friday, U.S. District Judge Marco A. Hernández said the law violates the First Amendment of the U.S. Constitution by restricting free speech too broadly, The Oregonian/OregonLive reported.

Chris Ambrose, the owner of Total Real Estate Group, said close to half of his buyers choose to write a letter, and it can make a difference. 

“Buyers and sellers are engaging in a transaction that in many cases is the biggest transaction of their lives,” Ambrose said. 

He and Blevins acknowledged there certainly is discrimination in real estate, but said banning the letters is not the best solution.

“There are less restrictive ways to go about fulfilling the state's interest in preventing discrimination, other than banning these love letters outright,” Blevins said 

They suggested allowing buyers to redact information or photographs from letters, improving the education on discrimination, and requiring disclosures acknowledging anti-bias laws.

But for now, they see the court ruling as a win for both the buyer and the seller.

“The love letters are one means, again not the be all-end all, but one means of enabling buyers to stand out,” Ambrose said. 

The judge’s injunction was a “major victory for free speech and economic opportunity,” said Daniel Ortner, an attorney with the Pacific Legal Foundation, which says it defends “Americans from government overreach and abuse.”

The ruling “preserves the opportunity of home-buyers to speak freely to sellers and make the case why their purchase offers should win out,” Ortner said in a statement.

The Oregon Real Estate Agency on its website said it will not enforce the law unless a further court order allows it to go into effect. Rosenblum’s office didn’t immediately respond to an email seeking comment.

Oregon State Rep. Mark Meek, a Democrat who is also a real estate agent, proposed the legislation. He has said he started to reconsider the practice of personal letters as he became more involved in work to combat housing discrimination.

The National Association of Realtors has said the letters raise fair housing concerns because they often contain personal information and could reveal a potential buyer’s race, religion or familial status. “That information could then be used, knowingly or through unconscious bias, as an unlawful basis for a seller’s decision to accept or reject an offer,” according to a post on the association’s website.

The lawsuit said lawmakers provided no proof that such discrimination was taking place and that state and federal laws already prohibit housing discrimination.

Hernández said Oregon’s goal was laudable, given its “long and abhorrent history of racial discrimination in property ownership and housing” that for decades explicitly blocked people of color from owning property.

But the bill was overly inclusive, the judge said, banning significant amounts of innocuous speech in love letters beyond references to a buyer’s personal characteristics.

Hernández said the state “could have addressed the problem of housing discrimination without infringing on protected speech to such a degree.”

The preliminary injunction will remain in effect until Hernández makes a final decision in the case.