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New Jersey Supreme Court rules HOA's political sign ban unconstitutional

The New Jersey Supreme Court recently struck down a homeowners association rule that prohibited the posting of political signs in a homeowner’s unit. (Full text here).  The court reasoned that the HOA’s complete ban of political signage violated the free speech clause of the New Jersey Constitution, which “affirmatively guarantees the right of free speech to all citizens.”

Defendant Wasim Khan lives in and owns a townhome in a common interest community managed by Mazadabrook Commons HOA. Kahn ran for a position on the local town council and posted two signs on his house advertising his candidacy: one in his window and the other on the inside of his door.  Mazdabrook informed Khan that his display of these signs was in violation of the CC&R’s, ordered him to remove them, and sent him a fine for the violation.  Mazdabrook’s regulations prohibited all signs except “For Sale” signs on residential property.

Upon move in, Mazdabrook homeowners receive a number of different documents.  The documents submitted for court review were the Public Offering Statement (POS), Declaration of Covenants and Restrictions (Declaration), and the Association’s Rules and Regulations.  The POS expressly prohibits the erection of signs, except for one “For Sale” or “For Rent” signs.  The Declaration and Rules and Regulations, however, do not prohibit the posting of all signs. Instead, the documents state that the board must give prior written approval prior to the sign’s placement.

New Jersey’s Constitution provides broader protection than the First Amendment of the U.S. Constitution, and the court stated that in order to trigger the protections of a state law, interpreting a broader constitutional right does not require a state action.  Therefore, the court applied New Jersey’s free speech protections, not the U.S. Constitution’s, to the issue.  The court stated that political speech lies “at the core” of New Jersey’s free speech protections, and therefore receives even greater scrutiny.

In analyzing whether an HOA’s restriction violates free speech rights, the New Jersey court used a three-prong test laid out in State v. Schmid, 84 N.J. 535, 563 (1980), appeal dismissed sub nom, Princeton Univ. Schmid, 455 U.S. 100, 102 S. Ct. 867, 70 L. ed. 2d 855 (1982).  When applied in the homeowners association setting, the test analyzes: 1) whether the primary use of the property is residential, 2) whether the association had not invited the public to use the property, and 3) whether fairness considerations weighed in favor of the restriction and against the defendant’s expressional activity.  However, the court stated that the first two factors do not weigh as heavily in this case because Khan was not a mere visitor, but an owner of the property.  Therefore, the court considered the third prong more heavily in its analysis.

The court found that an almost complete ban on residential signs, which includes political signs, is not a “minor restriction” to Khan.  Rather, it restricts his most basic rights as a political candidate and of the political process itself.  Conversely, the interference with the Association’s property is minimal—the signs were located in Khan’s window and door, where people passing by could view them and make their own analyses. While the HOA has the right to adopt reasonable time, place, and manner restrictions on the signs, the court said, it cannot impose a total ban on them.

Furthermore, the court determined that Khan did not waive his constitutional right to free speech because he purchased the home with full knowledge of the restrictions.  Because the alleged waiver of Khan’s free speech rights was not clear, he did not waive his rights by accepting the terms in the documents.  Instead, he was asked, in three different ways, to waive the right to post signs without board approval, but was not expressly told the rules that would govern the process of approval.  Therefore, this was not a knowing waiver of constitutional rights.

Recently, we analyzed a similar rule contained in HOA documents for a Nevada HOA.  Similar to Mazdabrook, the HOA documents also contained conflicting language about political signage, with the controlling rules banning all signs but “For Sale” and “For Rent” signs.  Another document stated that in order to post any other kind of sign, the homeowner would first need to get permission from the HOA’s design committee.

No caselaw on this particular issue exists in Nevada.  However, Nevada Revised Statutes 116.325 states that common interest communities may not prohibit unit occupants from displaying political signs, but can place reasonable restrictions on things such as size:

Right of units’ owners to exhibit political signs in certain areas; conditions and limitations on exercise of right.

1.  The executive board shall not and the governing documents must not prohibit a unit’s owner or an occupant of a unit from exhibiting one or more political signs within such physical portion of the common-interest community as that owner or occupant has a right to occupy and use exclusively, subject to the following conditions:

(a) All political signs exhibited must not be larger than 24 inches by 36 inches.

(b) If the unit is occupied by a tenant, the unit’s owner may not exhibit any political sign unless the tenant consents, in writing, to the exhibition of the political sign.

(c) All political signs exhibited are subject to any applicable provisions of law governing the posting of political signs.

 (d) A unit’s owner or an occupant of a unit may exhibit as many political signs as desired, but may not exhibit more than one political sign for each candidate, political party or ballot question.

2.  The provisions of this section establish the minimum rights of a unit’s owner or an occupant of a unit to exhibit political signs. The provisions of this section do not preempt any provisions of the governing documents that provide greater rights and do not require the governing documents or the executive board to impose any restrictions on the exhibition of political signs other than those established by other provisions of law.

3.  As used in this section, “political sign” means a sign that expresses support for or opposition to a candidate, political party or ballot question in any federal, state or local election or any election of an association.

Yet even in the absence of NRS 116.325, prior restraints on speech are generally considered unconstitutional, and such protections could be extended to homeowners.  The New Jersey Supreme Court did not need to address the state actor issue of HOAs because it relied entirely on the state constitution in its reasoning.  Obviously, homeowners associations are not considered to be state actors, and are generally not bound by Constitutional considerations.  However, as soon as a homeowners association attempts to enforce its CC&Rs, a state action is triggered, and the First Amendment will kick in.

The seminal case on the matter of HOAs infringing on homeowners’ fundamental rights is Shelley v. Kraemer, 334 U.S. 1 (1948).  In that case, the Supreme Court held that a state court’s enforcement of a racially restrictive covenant constituted sufficient action by the state to satisfy the Fourteenth Amendment’s “state action” requirement.  Racially restrictive covenants, like covenants that restrict free speech, infringe on a fundamental right. “Enforcement of private agreements by the judicial branch of government is state action for purposes of the Fourteenth Amendment, as the Highest Court in the land declared it to be in Shelley.” Gerber v. Longboat Harbour North Condominium, Inc., 724 F. Supp. 884, 887 (M.D. Fla. 1989), vacated in part on other grounds by 757 F. Supp. 1339 (M.D. Fla. 1991).

Of, course there is no state action inherent in the mere possibility of state court enforcement of an HOA rule. See Quail Creek Property Owners Association, Inc. v. Hunter, 538 So.2d 1288 (Fla. 2d DCA 1989) (unenforced rule prohibiting homeowners from posting signs did not trigger state action).  Therefore, if an HOA simply has the rule in its documents, no cause of action exists.  However, once an HOA crosses the line from prospective enforcement to actual enforcement with any actual legal penalties, the legal landscape changes.  See Gerber, 724 F. Supp. at 887, 724 F. Supp. 884, 887 (M.D. Fla. 1989, (holding unconstitutional a condominium rule prohibiting residents from flying the American flag except on specified holidays).  Therefore, a homeowner would not be able to make a claim against an HOA without enforcement of the rule.  This is exactly what happened in the New Jersey case—the HOA fined the defendant for posting his political signs, and the defendant was able to sue.

The New Jersey ruling applied specifically to political signs, and did not extend to other forms of home decoration.  The defendant in Mazdabrook was no stranger to litigation against the homeowners association—three years ago, he also filed a complaint against the homeowners association when he was fined for planting a climbing rose vine on his property.  In that case, the court determined that this restriction did not abridge free speech and ordered Khan to pay the HOA fines.

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