I think this will turn out to be a person at the management company over-reaching on a condo rule to avoid paying for damage they caused.
I used to have place in Samoset and in general it was well run, but people from the managment company often put "ease of doing their job" ahead of any written rules. They would invent rules to suit the circumstances and claim misunderstanding later.
As repeorted, the condo rules do not prohibit flags and as I remember the place was awash in flags, not just Old Glory but decorative flags and especially college team flags.
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