PRESS RELEASE FOR IMMEDIATE RELEASE
Contact: Olha Rybakoff, Deputy Attorney General
Director, Consumer Protection Unit
Phone: (302) 577-8513
Date: December 10, 2003
AUGUST 29TH RENT CAP RULING DELAYED IN PART
MHC Prevented from Filing Eviction Cases until April ‘04
(Wilmington, DE): Today, Judge T. Henley Graves granted in part the Attorney General’s Office – Consumer Protection Unit’s Motion for Stay of his earlier rent cap ruling. Graves’ August 29, 2003 ruling authorized the elimination of certain rent cap provisions affecting mobile home communities owned and operated by Manufactured Home Communities, Inc, MHC Financing Limited Partnership Two and MHC Operating Limited Partnership (hereinafter “MHC”). In today’s ruling, Graves:
· Preserved MHC’s ability to send default notices beginning in January, 2004 to tenants who have not paid the increased rent
· Delayed MHC’s ability to initiate eviction action in the Justice of the Peace Court until April, 2004
· Delayed MHC’s ability to take possession of any lots until the Supreme Court has ruled on the rent cap issue
Today’s decision affects as many as 700 manufactured home owners in the MHC
Communities in Sussex County – Aspen Meadows, Camelot Meadows, McNichol Place and Sweetbriar.
The current decision grew out of a two year effort by the Consumer Protection Unit to resolve problematic lease renewal provisions with MHC. During the Fall of 2001, MHC sent notices to some tenants distributing new renewal leases and offering new terms which the Consumer Protection Unit contended were in violation of the Delaware Mobile Home Lot and Leases Act. MHC also advised it intended to raise lot rent in excess of certain rent cap provisions contained in many of its leases. State law provides that unlike apartment leases, which can be terminated by the landlord at the end of the lease term, mobile home lot leases renew automatically every term, and cannot be unilaterally terminated or changed by the park owner.
After negotiations, the Attorney General’s Office - Consumer Protection Unit and MHC entered into a Consent Order in late April, 2002 in which MHC agreed to cease issuing the “new” renewal leases, and replace already issued renewal leases with a corrected form of lease. However, four months after entering into the Cease and Desist Consent Order, MHC filed a Declaratory Judgment Petition in Superior Court, asking the Court to rule that these disputed business practices, including its stated intention to eliminate its rent caps, were legal.
On August 29, 2003, Sussex County Superior Court Judge T. Henley Graves granted summary judgment to the State, struck down as unlawful seven new lease terms that MHC began using in its new leases and ruled that MHC was prohibited by law from modifying any existing mobile home leases. However, Judge Graves disagreed with the State’s position that rent increases were limited by a formula to only 5% per year and that the lease term with the 5% cap automatically renewed year to year. The State appealed Judge Graves’ ruling on the rent cap issue to the Delaware Supreme Court on November 3rd.
In a related case development, on October 3, 2003, Judge Graves entered a separate order finding MHC violated the April 2002 Consent Order, by continuing to distribute its “new” renewal leases to tenants, and assessed a penalty of $5,000 against MHC for violating the order.