According to an American friend of mine, it’s illegal to fly any national flag here without flying the Stars and Stripes bigger and higher (that’s what she was taught at school a couple of decades ago). I’ve tried to find this law on the internet, but can’t. However, I have found a website that says that while it might not be illegal, it is considered to be downright rude. And the Stars and Stripes needs not only to be bigger and higher, but also to the right of any other nationality’s flag (or to the left as you look at the flags from the street).
So while our neighbour’s flag may or may not be flying illegally, it’s wrong for more reasons that just missing its red diagonal cross.