I'm expecting letters from multiple buyers wanting my home -- does reading them risk a lawsuit?

Watch out you don't leave yourself open to discrimination claims by disgruntled buyers under the federal Fair Housing Act.

Question

I'm selling my home in a hot market, and we're expecting multiple bids. I'm told that in our are (Massachusetts) buyers often submit letters with their bids, talking about themselves, their family, their hopes to raise their children in our beautiful home, and so on. It’s my home – can’t I sell it to whomever I wish? I keep reading that sellers need to watch out that they don't choose a buyer for discriminatory reasons. I don't consider myself a racist, and I would have no trouble selling to a gay couple, disabled person, and so on, but how worried should I be that if I review these letters and pass over someone who fits into a category of people who are commonly discriminated against, the rejected buyer will sue me? Would it be better if I refused to read the letters at all?

Answer

Selling a home can be an emotional process. Whether it’s your long-time home or your first, starter home, chances are you have a lot of memories attached to the place. It's understandable that you might want to know about the people who will be buying your house, and to choose an offeror who appeals to you in ways other than monetary.

However, the federal Fair Housing Act (42 U.S.C. 3601) prohibits discrimination in connection with the sale of a home based on race, color, national origin, religion, sex, disability, and familial status. In addition, the Massachusetts Fair Housing Law (M.G.L. c. 151B, Sec. 4) extends protections to sexual orientation, age, ancestry, marital status, veteran’s status, source of income and handicap.

That means that you cannot choose to sell nor refuse to sell your house to someone because of any of these protected classes.

You may, in fact, be a very open-minded person and willing to sell your home to any qualified buyer willing to pay the price you are asking. However, in a hot market with multiple offers, you are likely to encounter buyers wanting to include a letter with their offer telling you more about themselves, in order to help persuade you to choose their offer above the rest. Perhaps they saw something in your home that indicated that your ancestors came from the same country as theirs and so they tell you this in the letter.

While it all seems pretty harmless, chances are not all of the other offers you receive will be accompanied by a letter, or that the other letters will contain different information. This scenario can put you at risk for a Fair Housing violation.

For example, if a buyer whose offer was rejected discovers that he or she is of a different nationality than you but that the buyer whose offer was accepted has the same nationality – and that the successful buyer had included a letter with the offer, the rejected buyer could very well decide to file a Fair Housing complaint with the Department of Housing and Urban Development (HUD). That letter that seemed so innocent would likely be subpoenaed and become part of the evidence used against you.

If HUD determines that there was a violation of the Fair Housing Act, you could be fined $16,000 for each violation. In Massachusetts, the fine under state law is $10,000. These fines do not include any additional penalties assessed if a case is filed in court, such as added penalties for emotional distress or for attorney’s fees, not to mention the cost to hire your own attorney to represent you.

Ultimately, it may be best just to instruct your real estate agent not to accept any letters from buyers. Selling a home, in the end, should be a business decision. Focus on the net sale price, along with other pertinent business terms such as down payment amount, mortgage preapproval letter, and closing timeline to make your decision. That way, you will get the best deal on the sale of your house and eliminate the risk of any Fair Housing complaints.

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