The United States Supreme Court held in Reed v. Town of Gilbert that any local sign regulation generally must be content-neutral under the First Amendment of the United States Constitution. A municipality may regulate sign size, type and placement, but may not place restrictions based upon what the sign says. If someone has to read a sign to determine whether it complies with the local sign ordinance, then the ordinance likely is not content-neutral and may be unconstitutional. Such content-based regulation is subject to strict scrutiny. The government may have content-based regulations if necessary to serve important government interests. If the regulation is not narrowly tailored to meet such overriding interests, then the regulation is unconstitutional and cannot be enforced.

Many municipalities have sign ordinances that include different rules, specifications or exceptions for different types of signs used for different purposes. For example, signs for a garage sale, real estate, home occupation, construction, subdivision, development and so forth may be subject to varying restrictions. Such regulations may be called into question under the Reed case. The First Amendment prohibits laws that unnecessarily limit free speech, and many sign regulations based on the sign’s content are presumptively unconstitutional. 

Some commentators have observed that the recent Supreme Court case may cause municipalities eager to avoid any possible legal challenge under Reed to treat all directional signs the same by either allowing everyone to display such signs, or to throw out all sign exemptions and prohibit all directional signs, including signs advertising real estate for sale or for rent. That approach, however, may fail based on other First Amendment holdings protecting commercial free speech or other federal law considerations such as fair housing.

Reed v. Town of Gilbert

The Town of Gilbert, Arizona had a sign code that identified various categories of signs based on the type of information they contained and imposed different restrictions on the various categories. The sign code prohibited outdoor signs without a permit but exempted 23 categories of signs from the permit requirement, applying different criteria to the signs in each category. For example, political signs regarding candidates and elections could be up to 32 square feet in size, could remain in place for two months before and 15 days after an election, and generally were not unlimited in number. Ideological signs about issues generally could not be larger than 20 square feet but could stay in place indefinitely and were unlimited in number. Temporary signs regarding certain religious, charitable, community service, educational or similar non-profit events, like the signs announcing church services in the Reed case, were limited to six square feet in size, could be displayed no more than 12 hours before an event and were to be removed one hour after the event concluded.

In the Reed case, a church with no permanent building used temporary directional signs to advertise its church services. Church members would post 15-20 signs, mostly in the public right-of-way, early in the day on Saturday and remove them around midday on Sunday. The church was cited twice for violating the time limitations and for not stating the date of the event on the signage. The church sued in federal court, alleging the sign code abridged their freedom of speech in violation of the First and 14th amendments. The district court found for the town, concluding the categories were content-neutral and that there were objective reasons for the different categories. The Court of Appeals for the Ninth Circuit agreed.

The United States Supreme Court rejected the lower courts’ analyses and held that under the First Amendment, laws based on communicative content are presumptively unconstitutional and may be justified only if the government has narrowly tailored the law to serve compelling state interests. This is the strict scrutiny test, and it is difficult to overcome. 

The town had to prove that the sign code restrictions furthered a compelling interest and were narrowly tailored to achieve that interest. The only interests the town cited were aesthetic appeal and traffic safety. However, temporary directional signs for church services were no more of an eyesore than ideological or political signs, and limiting temporary directional signs did not effectively eliminate threats to traffic safety when multiple signs were allowed if the purpose of the sign was in a different category. The town failed to prove that its sign code was narrowly tailored to further these compelling government interests.

The Supreme Court observed that the town had content-neutral options available to resolve problems with safety and aesthetics. For example, the code may regulate size, building materials, lighting, moving parts and portability. The concurring opinion of justices Alito, Kennedy and Sotomayor indicated that municipalities are not powerless to enact and enforce reasonable sign regulations. A town may enact placement rules that distinguish between private versus public property, on-premises versus off-premises, commercial versus residential property, and between freestanding signs versus signs attached to buildings. Reasonable rules may distinguish between lit and unlit signs, and between signs with fixed messages and electronic signs with messages that change. Municipal sign rules may restrict the total number of signs allowed per mile of roadway and impose time restrictions on signs advertising a one-time event. 

Are your real estate signs under siege? 

Should the local municipality consider modification of its sign ordinances in a way that prohibits real estate signage, there are legal principles at play that suggest that the outlawing of real estate signs is not legally permissible.
Free flow of commercial information and the federal commitment to promote integrated housing were cited in Linmark Associates, Inc. v. Township of Willingboro, 431 U.S. 85 (1977), where the court held that an outright prohibition on “for sale” signs was unconstitutional. Aesthetic and public safety interests may justify size, placement, number and duration restrictions, but they do not trump free speech and fair housing interests so as to allow outright prohibition. 

Real estate signs create nondiscriminatory access to housing and are supportive of federal and state fair housing laws. While many may use electronic resources to locate properties, there are still many consumers who find homes through traditional means or who don’t have regular access to online resources. Physical signs can engage these consumers no matter their social and economic status. Protected classes and groups who might not have access to certain real estate marketing information cannot be discriminated against when a physical sign invites all comers in a geographic location into a home for sale or for rent.

The open house sign also is a neutral marketing platform, open to home sellers as well as licensed real estate professionals.

In addition, real estate signs such as open house signs are temporary, constantly changing and used for limited time frames with regard to properties scattered throughout a community. Thus there is less credence to the proposition that they fall in the category of offending the public’s aesthetic sensibilities.

Councilmen conversations

REALTORS^® may have to help local municipalities identify the language in the United States Supreme Court opinion that allows for exemptions from content-neutral signage ordinances. The Reed decision allows for exceptions if the government interest at play is sufficiently important to justify the exception.

Talking to local government officials before they decide they will modify their sign ordinances in a manner that eliminates provisions that are reasonably friendly to real estate signs is the most productive. Let them know that allowing real estate signs serves a legitimate government interest because, among other things, real estate signs help achieve fair housing goals in making sure everyone has nondiscriminatory access to housing. Mention that:

• Open house signs increase home sales and revenue collection for municipalities. 
• Open house signs, as well as “for rent” signs, improve access for all consumers to housing and support fair housing and nondiscrimination efforts. 
• Local government can continue narrowly tailored exemptions based on these interests.

Resources

Assistance: Brokers needing assistance with regulations prohibiting open house signs may contact NAR for assistance. Look for additional tools coming from the WRA for use in steering local government on the appropriate legal course when it comes to sign ordinances. 

Directional signs: “Directional sign” means a sign that identifies a business, service or product and provides direction thereto through written description, address, and/or graphic or pictorial illustration. 

Online resources:

• Reed v. Town of Gilbert, 135 S. Ct. 2218, 576 US __, 192 L. Ed. 2d 236: www.supremecourt.gov/opinions/14pdf/13-502_9olb.pdf. 
• “Could the Supreme Court Put an End to Open House Signs?” by Inman Select: www.inman.com/2015/12/04/could-the-supreme-court-put-an-end-to-open-house-signs.