Attorney General Beau Biden announced today that his office has secured a consent order requiring a Smyrna-area manufactured home community to refund monies it collected in violation of the law.
“We’re acting to ensure that residents of manufactured home communities are treated fairly and that community owners are held accountable to the promises they make and to their obligations under the law,” Biden said.
Earlier this year, as a result of multiple complaints received from residents of the Bon Ayre manufactured home community in Smyrna, the Attorney General’s Consumer Protection Unit opened an investigation into supplemental fees that were allegedly being charged by the community to its tenants. Investigators learned that Bon Ayre had previously claimed in advertising promotions that tenants would not be responsible for the payment of real estate taxes, and information sheets provided to prospective purchasers stated that “Real Estate or Land Taxes are paid by the owner of the land, and not by the home owners.” While Bon Ayre subsequently modified its information sheets, the investigation revealed that it allegedly continued to foster the belief that the community owner would be responsible for the payment of property taxes, not the tenants.
Contrary to the representations made in the promotional materials, Bon Ayre sent out invoices last December billing its tenants for real estate tax increases dating back to 2006. Some long-term tenants were directed to pay up to $291 each. Biden’s office concluded that the new charges billed to tenants to cover increased real estate taxes are considered “rent” under the law, and that imposing those charges violate Delaware’s Manufactured Home Owners and Community Owners Act because they are not specified in tenant leases. Moreover, Biden’s office concluded that these additional increases in rent violated the same law, which limits a landlord from increasing tenant’s lot rent more than once per year and requires that 60-day written notice be provided to tenants before doing so.
Bon Ayre denied that it had violated Delaware law, but agreed to the terms of the consent order, through which it is:
Required to remove language in all future leases which states that tenants are required to pay “Supplemental Community Fees” that represent the tenant’s share of increases in real estate taxes, environmental impact fees, and other new fees imposed on the community by any government agency, and is prohibited from enforcing this existing provision in current leases; Required to calculate maintenance fees at the end of the calendar year and only collect them from tenants in the following year after providing a required 60-day written notice; Required to refund to tenants within 60 days the share of increased property taxes they paid, and report to the Attorney General within 90 days that those refunds have been issued. 194 tenants are expected to receive refunds or as much as $291, depending on how long they resided in the community. Prohibited from using any increase in property taxes as justification to increase tenants’ rent under the State’s rent justification law if the company continues to promote and advertise “no real estate taxes” or claim that real estate or land taxes are paid by the owner of the land. Biden’s office secured the final settlement with Bon Ayre last week, and it was approved in a legally binding Court Order signed by Superior Court Judge M. Jane Brady on May 13. Read the order here: http://www.attorneygeneral.delaware.gov/fraud/cpu/documents/20140514135945.pdf