A man was freed last week after serving a 12-hour jail term for illegally displaying a "For Sale" sign on his house on Long Island. He had been sentenced to five days.

Douglas Moran, 46, plans to move into New York City, where he is a housing inspector. Last January he put a "For Sale" sign in the window of his Freeport home, where he lives with his wife and two of their four children.

A village ordinance prohibits the display of "For Sale" or "Sold" sign. Ostensibly, it was aimed at protecting property values by enhancing the appearance of the village, but critics contend it was intended to prevent racial blockbusting or panic selling induced by unscrupulous real estate dealers.

Four years ago, Moran's wife, Patricia, 40, undersent a cancer operation and ran up medical bills totaling almost $4,000. But Moran was without health insurance.

He put his two-story, three-bedroom home on the market, asking $32,000 for it. When real estate brokers were unable to find him a buyer, Moran said, he posted the "For Sale" sign.

He receivered several summonses for violating the village ordinance and finally took the sign down last February. But by then he had been summoned into Freeport Village court, where he was sentenced last Feb. 16 to pay a fine of $250 or go to jail for five days.

"If I pay the fine, it means I'm saying I'm guilty, and I'm not guilty," Moran maintained, saying he preferred to go to jail.