In a hot real estate market, sellers often receive numerous offers for their property and at times a bidding war occurs. In this type of market, buyers sometimes attach what is known as a buyer “love letter” to their offer. These letters are used as a way to stand out and to make a personal connection with the seller. Unfortunately, the letter may include details about the buyer’s family, race, religion, or other characteristics that could lead to a violation of the fair housing laws. Specifically, the federal Fair Housing Act (“FHA”) and other state and local laws.   

Fair Housing Laws

Congress passed the FHA in 1968 to protect people from discrimination when engaging in housing related activities. These activities include, among others, renting or buying a home, obtaining a mortgage, and seeking housing assistance.[1] Some of the actions prohibited by the FHA include refusing to rent or sell housing, refusing to negotiate for housing, setting different terms and conditions, or falsely denying that housing is available for rent or for sale based upon race, color, national origin, religion, sex, familial status, and disability.[2] Both sellers and agents can be liable for violating the FHA if engaging in these actions.

Most states also have their own laws prohibiting housing discrimination. In Missouri, it is the Missouri Human Rights Act (“MHRA”) which prohibits similar types of discrimination as the FHA.[3]

It is important to be familiar with the various laws that apply to a geographic area. Some state and local laws are more restrictive than the FHA and prohibit more activities or protect more persons. Although an action may be exempt from the FHA, it could be prohibited by a state law, a local law, or even another federal law. For example, homes that are for sale by owner are exempt from the FHA, however, the Civil Rights Act of 1866 still prohibits discrimination based upon race.[4] Furthermore, it is important to be aware of recent changes in the law. In February 2021, the Biden administration added sexual orientation and gender identity to the list of protected classes under the FHA.[5]

Uptick in Buyer “Love Letters”

There has been a recent uptick in the use of buyer love letters. Although the practice is not new, it has become more sophisticated and unconventional in recent years.[6] Instead of simple handwritten or typed letters, buyers sometimes send photographs and videos.[7] In addition, template letters can be purchased online and one company offers a service to have a robot “handwrite” the letter for you.[8] One buyer in Bethesda, Maryland reportedly pledged in her letter to name her first-born child after the seller.[9]

The use of these letters has become such a common practice that organizations and even governments have begun to respond. On October 23, 2020, the National Association of Realtors (“NAR”) released guidance to its members warning them about the risks associated with these letters.[10] The popular real estate brokerage firm Redfin stopped tracking the effectiveness of letters at increasing a buyer’s odds of winning a bidding war because it thought that the metric might encourage use of the letters and raise fair housing concerns.[11] In June 2021, Oregon lawmakers passed House Bill 2550 which directs sellers’ agents to reject communications, including love letters, from the buyer.[12]

The Fair Housing Concerns 

Buyer love letters are not always a concern. A letter that discusses objective topics such as the beauty of the home, the landscaping, or the location are not necessarily at risk of violating the fair housing laws. However, in order to make a personal connection, buyers sometimes choose to include more intimate information about their personal lives. This information could reveal details about their race, national origin, religion, familial status, or disability which are protected classes under the FHA. Sellers or agents could purposely or inadvertently, through unconscious bias, use this information in their decision-making process which would violate the FHA. Some examples of statements that could be a violation if considered by the seller include:

• We love that the church is right down the street
• The backyard would be great for my kids to play in
• The large open floor-plan would be great for my mother and her wheelchair

Even seemingly harmless statements from buyers such as “my family and I would fit in well in this neighborhood” or “we are a normal family” could lead to a violation. These statement allow sellers to use their subjective perspective to interpret what they mean. Sellers or agents could unconsciously interpret “fitting in” and “normal” to mean someone with the same appearance or race as themselves and use that to make their decision.[13]  

Other examples of housing discrimination can be found on the United States Department of Housing and Urban Development website.[14]

How to Avoid Fair Housing Liability

On October 23, 2020, the NAR released guidance on buyer love letters in response to the active real estate market. In its guidance, the NAR gave a list of six recommendations to avoid legal liability under the fair housing laws.[15]

1. Educate your clients about the fair housing laws and the pitfalls of buyer love letters
2. Inform your clients that you will not deliver buyer love letters, and advise others that no buyer love letters will be accepted as part of the MLS listing.
3. Remind your clients that their decision to accept or reject an offer should be based on objective criteria only.
4. If your client insists on drafting a buyer love letter, do not help your client draft or deliver it.
5. Avoid reading any love letter drafted or received by your client.
6. Document all offers received and the seller’s objective reason for accepting an offer.

So far, it seems the issue of buyer love letters has not made it to the courts. However, a recent FHA refusal to sell case in federal court could be educational.[16] In Clinton-Brown v. Hardick, a couple, the Hardicks, refused to sell their Rhode Island home to another couple, the Browns. Working through their agents, both parties verbally agreed to a sale and the Browns sent a purchase agreement to the Hardicks. The purchase agreement contained the names of the Browns, one of which was Ebony. The next day, the Hardicks called their agent and asked if one of the Browns was “black” to which the Hardicks’ agent answered “yes.” In response, the Hardicks told their agent that they refused to sell their home to an African-American and that they would be backing out of the deal. The Hardicks’ agent informed the Hardicks that she could not continue discussions with them, immediately reported the conversation to her broker, withdrew the listing, and ceased all communication with the Hardicks. The Browns filed a lawsuit against the Hardicks which is currently pending.[17]

While the Hardick case does not involve a buyer love letter, it shows how harmless information can lead to a violation of the FHA and how agents can shield themselves from liability. In this case, a name on the purchase agreement was sole cause of the FHA violation. A love letter from a buyer, on the other hand, could contain far more personal information with many more opportunities for a violation. In addition, the NAR stated that the agent’s “decisive and prompt” actions were appropriate and it helped shield her from liability in the lawsuit.[18] 

It is worth noting that evidence of overt discrimination as in Hardick is not always necessary for filing an FHA lawsuit. Housing discrimination is oftentimes hard to find. Recognizing this, organizations use a practice known as testing to show discrimination. This practice sends trained people to pose as housing applicants. The testers are similarly situated economically and socially and only differ in a way that is protected by the FHA. For example, the only difference between the testers is their race. Showing that these people are treated differently by refusing to sell to one and not the other can be enough evidence to file a lawsuit.[19] Therefore, it is important that sellers and agents ensure they are using objective reasoning in reaching any decisions in housing related activities and not purposely or unconsciously discriminating.

Ultimately, sellers and agents need to be aware of the relevant federal, state, and local fair housing laws in their area. They need to understand the differences between them and what practices are prohibited by them as they may differ. The nature of buyer love letters and their honest intentions could unknowingly expose sellers and agents to legal liability for violations of those laws. Sellers and agents should weigh the pros and cons of buyer love letters when deciding whether to use them. If they decide to use them, they should exercise caution and follow the recommendations of the NAR. Alternatively, sellers and agents can avoid legal liability by refusing to engage in the buyer love letter practice altogether.