June 7, 2004
Dear MTAS Consultant:
The City has the following question: Can the city require realtor (and presumably property owners who sell property themselves) who sell real property inside the historical district to carry a message on the for sale signs posted on the property indicating that the property is in an historical district and that special zoning restrictions apply to the use of the property?
The answer is apparently yes.
I can find no case in the United States directly on this question. But in one case, City of St. Louis v. Green, 353 S.W.2d 606 (Mo. 1962), the Court upheld an ordinance of the city requiring signs posted on real property by any real estate agent to carry the message, “The Use Zoning District” of the property. The Court upheld the ordinance under two provisions of the city’s charter, one of which authorized the city to:
....license and regulate all acts, practices, conduct, business, occupations, callings, trades, uses of property and all other things whatsoever detrimental or liable to be detrimental to the health, morals, comfort, safety, convenience or welfare of the inhabitants of the city and all nuisances and causes thereof.
The other provision was similar, giving the city the authority “To do all things whatsoever expedient for promoting or maintaining the comfort, education, morals, peace, government, health, welfare, trade, commerce or manufactures of the city or its inhabitants.”
Surprisingly, the City has a charter provision specifically geared to the regulation of various businesses, including brokers. Section 5 (12) gives the board of mayor and aldermen the authority “To license, tax, and regulate auctioneers, grocers, merchants, retailers, brokers....”
The state has preempted the licensing and regulation of many aspects of brokers’ businesses in Tennessee Code Annotated, title 62, chapter 11, and other statutes regarding the sale of real estate. For that reason, Section 5(12) of the City Charter has a limited application. However, as far as I can determine, the state has not preempted the local regulation of the real estate business with respect to sign regulations. Indeed, most municipal sign regulations everywhere in the United States regulate real estate signage in some respect.
But the U.S. Supreme Court has held that commercial, as well as non-commercial, signs are speech within the meaning of the Free Speech Clause of the First Amendment to the U.S. Constitution. But it is difficulty to determine what test defines the extent to which that speech can be regulated by the government. The same Court has also held that “time, place and manner” restrictions on signs are legal, provided they are (1) content neutral, (2) narrowly tailored to achieve as substantial governmental interest, and (3) leave open alternative means of communication. [See Metromedia, Inc. v. City of San Diego, 453 U.S. 490 (1981); City of Cincinnati v. Discovery Network, 507 U.S. 410 (1993).] The lower federal, and the state courts, following those, and other cases, have regularly upheld such restrictions on both commercial and non-commercial signs. [See, for example, South-Suburban Housing Center v. Greater Suburban Board of Realtors, 935 F.2d 868 (7th Cir. 1991).]
But that test does not seem to fit signs that are purely commercial; the content neutrality prong of the test generally appears to apply only where commercial and non-commercial signs are not treated the same way in the regulation at issue. The sign regulation contemplated by the City contemplates only the regulation of a certain class of real estate signs, which reflect purely commercial speech.
A Sixth U.S. Circuit Court case sheds some light on that problem. In Cleveland Area Board of Realtor v. City of Euclid, 88 F.3d 382 (6th Cir. 996), the constitutionality of several sign ordinances were at issue. The U.S. District Court in that case determined that the “time, place and manner” test did not apply to some of the ordinances that regulated only real estate signs. It applied, instead the test contained in the U.S. Supreme Court case of Central Hudson Gas & Electrical Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980). The Sixth Circuit declined to apply that test because the ordinances involving only real estate signs had been absorbed by other ordinances. However, it did not reject that test.
In Hudson Gas & Electrical Corp., the Court declared that the government could suppress commercial messages that were deceptive, but that:
If the communication is neither misleading nor related to unlawful activity, the government’s power is more circumscribed. The state must assert a substantial interest to be achieved by restrictions on commercial speech. Moreover, the regulatory technique must be in proportion to that interest. The limitation on expression must be designed carefully to achieve the State’s goal. Compliance with this requirement may be measured by two criteria. First the restriction must directly advance the state interest involved; the regulation may not be sustained if it provides only ineffective or remote support for the government’s purpose. Second, if the governmental interest could be served as well by more limited restriction on commercial speech, the excessive regulations cannot survive. [At 564]
It appears to me that the Hudson test is the proper test for the regulation on real estate signs proposed by the City. It also appears to me that under that test City of St. Louis would be upheld as a legitimate restriction on real estate signs even today. In that case the Court determined that it was reasonable for the city’s police power to require real estate signs to indicate the zone in which the property advertised for sale was located because:
It certainly would be a great convenience for a person intending to purchase property if, when a location was viewed, the ‘For Sale’ sign would indicate the permissive use for which the property was zoned. Further, such an indication on signs would likely lessen the disputes between sellers and purchases as to representations made and to the zoning of the property.... [At 608]
That brings me to a point about which I have some concern: the “discrimination” against only real estate signs in historical districts. However, it seems to me that such discrimination would be justified on the ground that it is reasonable to put real estate signs that advertise property in historical districts in a separate classification. Generally, the restrictions on the use of property in historical zones are particularly strict, making what the Court said in City of St. Louis v. Green, above, even more pertinent to such property and the disputes that could arise between purchasers and sellers, not to mention between purchasers and the city.
Sidney D. Hemsley
Senior Law Consultant