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Sandhill Acres MHC, LC v. Sandhill Acres Home Owners Association

Supreme Court of Delaware

May 14, 2019

SANDHILL ACRES MHC, LC, Respondent Below, Appellant,
v.
SANDHILL ACRES HOME OWNERS ASSOCIATION, Petitioner Below, Appellee.

         Submitted: April 24, 2019

Page 726

          Court Below: Superior Court of the State of Delaware, Case No. S17A-08-001 ESB

         Upon appeal from the Superior Court. REVERSED and REMANDED.

         Nicole M. Faries, Esquire, BAIRD MANDALAS & BROCKSTEDT, LLC, Wilmington, Delaware, for Appellant, Sandhill Acres MHC, LC.

         Daniel S. Atlas, Esquire, Steven D. Adler, Esquire, and Brian S. Eng, Esquire, COMMUNITY LEGAL AID SOCIETY, INC., Wilmington and Dover, Delaware, for Appellee, Sandhill Acres Home Owners Association.

         Michael P. Morton, Esquire, and Robert J. Valihura, Jr., Esquire, MORTON, VALIHURA & ZERBATO, LLC, Greenville, Delaware, for Amicus Curiae First State Manufactured Housing Association.

         Before STRINE, Chief Justice; SEITZ and TRAYNOR, Justices.

          OPINION

         STRINE, Chief Justice:

         This appeal concerns a manufactured housing community owner’s attempt to raise the rent for its homeowner-tenants after installing a new water filtration system and commissioning a report on market rents for comparable manufactured housing communities. After the homeowners petitioned for an arbitration under the Rent Justification Act,[1] which places certain limitations on a community owner’s ability to raise its tenants’ rents, the arbitrator concluded that the rent increase was justified. On appeal, however, the Superior Court reversed on the grounds that the community owner did not establish that the installation of the water filtration system "was an increase in its costs" or that the expenditure caused "its original expected return [to] decline[ ]."[2] The community owner appeals from the Superior Court’s decision.

         Under the Rent Justification Act, a community owner need only show that there were no relevant health or safety violations and that "[t]he proposed rent increase is directly related to operating, maintaining or improving the manufactured home community" to open the door to a rent increase based on market rent.[3] Instead of adhering to this understanding of the statute, as explained in precedent, the Superior Court overruled the arbitrator’s order allowing the rent increase, finding that the community owner "would have had to offer evidence about its original costs and original expected return and how the expenditure ... altered that relationship."[4] Because that reasoning grafted onto the Act a requirement that the statute does not contain, we reverse the Superior Court’s judgment and remand the case for the entry of a judgment affirming the arbitrator’s order.

          I.

         In the world of mobile homes— often called "manufactured houses" because they are in fact not so easy to move— many ...


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