Title: Bon Ayre Land, LLC v. Bon Ayre Community Association
Citation: N/A
Docket Number: 25, 2016
State: Delaware
Issuer: Delaware Supreme Court
Date: October 10, 2016

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
BON AYRE LAND, LLC, 
§ 
 
 
 
§ 
No. 25, 2016 
 
Appellee Below-Appellant, 
§ 
 
 
  
§ 
Court Below: Superior Court 
 
v.  
§ 
of the State of Delaware 
 
 
§ 
 
BON AYRE COMMUNITY 
§ 
C.A. No. K15A-05-002 
ASSOCIATION, 
§ 
 
 
 
§ 
 
 
Appellant Below-Appellee. 
§ 
 
 
§ 
 
 
 
 
 
Submitted: September 14, 2016 
Decided: 
October 10, 2016 
 
Before STRINE, Chief Justice; HOLLAND, VALIHURA, VAUGHN, and 
SEITZ, Justices, constituting the Court en Banc.  
 
Upon appeal from the Superior Court.  AFFIRMED. 
 
L. Vincent Ramunno, Esquire (Argued), Ramunno & Ramunno, P.A., Wilmington, 
Delaware, for Appellant Bon Ayre Land, LLC. 
 
Brian S. Eng., Esquire (Argued), James G. McGiffin, Jr., Esquire, Community 
Legal Aid Society, Inc., Dover, Delaware, for Appellee, Bon Ayre Community 
Association.  
 
Jeffrey M. Weiner, Esquire, Law Offices of Jeffrey M. Weiner, P.A., Wilmington, 
Delaware, Amicus Curiae for the First State Manufactured Housing Association. 
 
STRINE, Chief Justice, for the Majority:
I. 
INTRODUCTION 
 
This is a case between the owner of a manufactured homes community, Bon 
Ayre Land, LLC (the ―Landowner‖), and an association that represents the affected 
homeowners, 
Bon 
Ayre 
Community 
Association 
(the 
―Homeowners‘ 
Association‖), about what Delaware law requires the Landowner to show to 
increase rent above inflation.  Their dispute arises under Chapter 70 of Title 25 of 
the Delaware Code, commonly known as the Rent Justification Act.1  The Act 
allows a manufactured home community landowner to increase rent by the rate of 
inflation without showing more.2  But, to raise rent by more than inflation, the Act 
sets out three conditions a landowner must satisfy.  Besides having a clean bill of 
health in terms of safety violations—the first condition3—the owner must show 
that ―[t]he proposed rent increase is directly related to operating, maintaining or 
improving the manufactured home community, and justified by 1 or more factors 
listed under subsection (c) of [§ 7042].‖4  Subsection (c) lists eight factors 
including capital improvements and property tax increases; the one at issue here is 
market rent: ―that rent which would result from market forces absent an unequal 
bargaining position between the community owner and the home owners.‖5   
                                                          
 
1 See 25 Del. C. §§ 7040–46. 
2 Id. § 7042(a). 
3 Id. § 7042(a)(1). 
4 Id. § 7042(a)(2) (emphasis added). 
5 Id. § 7042(c)(7). 
2 
 
Among its many arguments, the Landowner argues that the Superior Court 
erred in giving effect to the word ―and‖ in § 7042 of the Act and that the 
Landowner ought to be allowed to justify a rent increase based on market rent 
alone.  The Landowner admits that it failed to present any evidence of its proposed 
rent increases being ―directly related to operating, maintaining or improving‖ the 
community.6  But, the Landowner argues that the Act cannot be read sensibly as it 
is plainly written and that the term ―and‖ in § 7042(a)(2) should be read as ―or.‖  If 
adopted, the Landowner‘s reading would enable a landowner to increase rent 
solely by demonstrating the existence of any factor in § 7042(c), including the sole 
factor relied upon here, which is that market rents are higher than the actual rents 
charged in the community. 
In this decision, we affirm the well-reasoned decision of the Superior Court 
giving effect to the key word ―and‖ in § 7042.  The stated purpose of the Rent 
Justification Act is to ―accommodate the conflicting interests of protecting 
manufactured home owners, residents and tenants from unreasonable and 
burdensome space rental increases while simultaneously providing for the needs of 
manufactured home community owners to receive a just, reasonable and fair return 
on their property.‖7  To accomplish this purpose, the Act allows landowners to 
increase their rent by an inflation measure—CPI-U—without any opportunity for 
                                                          
 
6 Id. § 7042(a)(2). 
7 Id. § 7040. 
3 
 
homeowners to object.  But, the Act provides constraints on increases beyond the 
rate of inflation by requiring that a landowner meet the test in § 7042.  Contrary to 
the Landowner‘s argument, nothing is absurd about the use of ―and‖ in joining 
§ 7042‘s three conditions.  Rather, by requiring a showing that above-inflation rent 
increases were related to community expenses, the General Assembly has simply 
said that a landowner must show that its costs of operation have increased in a 
manner that has caused the landowner‘s ―just, reasonable and fair return on their 
property‖ to decline.8  Only once that showing has been made is a landowner 
eligible, using the factors set forth in § 7042(c), to obtain the right to raise rents in 
excess of the statutory inflation adjustment.  Consistent with proper principles of 
interpretation, the Superior Court gave effect to the clear language of the Act and 
gave it an interpretation that is consistent with the Act‘s stated purpose. 
Because the Landowner concededly made no showing that its proposed 
rental increase was ―directly related to operating, maintaining or improving‖ the 
community, the Superior Court properly reversed the arbitrator‘s ruling that the 
Landowner could raise rents in excess of CPI-U.  Thus, we affirm. 
In this decision, we also redress an issue that is likely to recur before 
arbitrators and the Superior Court under the dispute resolution section of the Rent 
Justification Act.  In deciding the case on alternative grounds, the Superior Court 
                                                          
 
8 Id. 
4 
 
held that a landowner may not obtain the benefit of § 7042(c)(7)‘s market rent 
factor except by producing evidence of actual rents charged in other rental 
communities.9  This ruling was erroneous because the Act does not impose this 
restriction and does not by its terms foreclose a landowner from relying on other 
evidence of prevailing market rent.  The ruling is also problematic because the Act 
does not provide for parties or the arbitrator to use compulsory process to obtain 
evidence from third parties.10  As a result, the Act does not give landowners (or 
homeowners for that matter) the tools to compel third parties to provide sensitive 
information, such as the actual rental agreements in place between landowners and 
homeowners in other communities.  As a general matter, the Act provides that the 
arbitrator is to use the Delaware Uniform Rules of Evidence ―as a guide,‖11 and, 
therefore, parties may support their position about market rental rates with any 
evidence meeting the traditional standards for relevance and reliability.  Thus, 
landowners may use any evidence in keeping with the Act‘s provisions for 
arbitration found in § 7043(d)–(g) to prove that their situation meets the 
justification. 
 
 
                                                          
 
9 Bon Ayre Cmty. Ass’n, Inc. v. Bon Ayre Land, LLC, No. K15A-05-002, 2016 WL 241864, at 
*10 (Del. Super. Ct. Jan. 12, 2016). 
10 See 25 Del. C. §§ 7043(d)–(i), 7044 (describing procedure for arbitration and appeal). 
11 Id. § 7043(d). 
5 
 
II. 
BACKGROUND12 
 
A. 
The Rent Justification Act 
 
This dispute arises under Subchapter III of the Delaware Manufactured 
Home Owners and Community Owners Act, which is officially titled ―Affordable 
Manufactured Housing‖ but has apparently come to be known more commonly as 
the ―Rent Justification Act.‖  Among other things, the Act governs rent increases in 
manufactured housing communities by requiring a landowner to comply with 
certain statutory requirements before raising the rent above the average annual 
increase in the Consumer Price Index For Urban Consumers in the Philadelphia- 
Wilmington-Atlantic City area—referred to as CPI-U—for the thirty-six months 
preceding the proposed increase, which in this case was 1.6%.13   
A landowner that wishes to raise the rent above the CPI-U must engage 
homeowners in a regimented process under § 7043 involving notice and a meeting 
with the homeowners.  Any homeowner who does not accept the proposed increase 
after the meeting has 30 days to ―petition the [Delaware Manufactured Home 
Relocation] Authority to appoint a qualified arbitrator to conduct nonbinding 
                                                          
 
12 These facts are taken from the record as provided by the parties on appeal unless otherwise 
noted. 
13 Exhibit B to Appellant‘s Opening Br. (Decision of the Arbitrator, Bon Ayre Cmty. Ass’n v. Bon 
Ayre Land, LLC, Petitions # 1-2015 & 2-2015, at 7 (Apr. 23, 2015)) [hereinafter Arbitrator’s 
Decision]. 
6 
 
arbitration proceedings.‖14  The central issue in this case is what a landowner must 
show the arbitrator to raise the rent above the CPI-U. 
B. 
The Parties 
 
The Landowner owns a housing community for 50-and-over residents called 
Bon Ayre.  The community is located in Smyrna, Delaware and consists of 194 
manufactured homes.  The Homeowners‘ Association is a non-profit corporation 
organized to represent the interests of the individuals who own the manufactured 
homes and lease the underlying plots of land from the Landowner.  In this case, the 
Homeowners‘ Association represents four sets of homeowners. 
C. 
The Current Dispute 
 
In December 2014 and January 2015, the Landowner notified four sets of 
homeowners that it wanted to raise their monthly rent in excess of CPI-U.  The 
Landowner met with the homeowners to explain the increase as required under 
§ 7043(b).  The Homeowners‘ Association challenged the proposed rent increase 
in part on the ground that it was not ―directly related to operating, maintaining, or 
improving the community,‖ which the Homeowners‘ Association argued was 
required under § 7042(a)(2).  An arbitrator heard the challenge. 
 
 
                                                          
 
14 25 Del. C. § 7043(c).   
7 
 
D. 
The Arbitration 
After hearing from both sides, the arbitrator issued a decision on April 23, 
2015, granting a rent increase above the CPI-U but not to the amount sought by the 
Landowner.  The arbitrator addressed the statutory interpretation issue in this case 
by finding that ―the only way to logically interpret . . . § 7042 is that if the rent 
increase is not being sought for capital improvements, ordinary wear and tear or 
changes in operating and maintenance expenses then it must be justified by market 
rent.‖15  In other words, the arbitrator read the word ―and‖ out of § 7042 and held 
that market rent alone may justify a rent increase above inflation, even if the 
Landowner presented no evidence of the increase being related to ―operating, 
maintaining or improving‖ the community.16  The Homeowners‘ Association 
appealed the arbitrator‘s decision to the Superior Court, as permitted under 
§ 7043(c) of the Act.17 
E. 
The Superior Court’s Decision 
 
The Superior Court disagreed with the arbitrator‘s interpretation of 
§ 7042(a)(2) and held that the language of the subsection established ―a compound 
condition‖ requiring both parts to be met.18  The Superior Court also disagreed 
with the arbitrator‘s finding that it is redundant to read the Rent Justification Act as 
                                                          
 
15 Arbitrator‘s Decision, supra note 13, at 9. 
16 25 Del. C. § 7042(a)(2). 
17 Id. § 7043(c). 
18 Bon Ayre Cmty. Ass’n, Inc. v. Bon Ayre Land, LLC, No. K15A-05-002, 2016 WL 241864, at 
*10 (Del. Super. Ct. Jan. 12, 2016). 
8 
 
requiring a proposed rent increase based on market rent to also be directly related 
to costs within the community.  The Superior Court read the Rent Justification Act 
as a whole, including the section giving landowners the unrestricted right to raise 
rent up to the rate of inflation.  That passage supported the Superior Court‘s view 
that the requirement that the landowner show a direct relationship between the 
proposed increase and operation, maintenance, or improvement of the community 
before seeking a higher increase was not only not unreasonable, but important to 
accomplish the Act‘s stated interest in preventing ―situations where a home owner 
is faced with an [‗]unreasonable[‘] or [‗]burdensome[‘] increase in rent even when 
there is no threat to a community owner‘s [‗]just, reasonable, and fair return on 
their investment.[‘]‖19  The Superior Court thus concluded that the Landowner 
failed to justify the proposed rent increase because it did not meet the requirement 
under § 7042(a)(2) of showing that the increase was ―directly related to operating, 
maintaining or improving the manufactured home community.‖20 
 
 
 
 
 
                                                          
 
19 Id. at *8 (quoting 25 Del C. § 7040). 
20 Id. (quoting 25 Del C. § 7042(a)(2)). 
9 
 
III. 
ANALYSIS 
 
The two issues we address in this opinion involve our review of the Superior 
Court‘s interpretation of the Rent Justification Act.  ―We review issues of statutory 
construction and interpretation de novo.‖21 
A.       The Superior Court Correctly Determined That The Act Required 
The Landowner to Show That The Increase Was Directly Related to 
Operating, Maintaining, or Improving The Community 
 
The outcome-determinative issue over which the parties disagree involves 
the proper interpretation of § 7042, specifically the section requiring that ―[t]he 
proposed rent increase is directly related to operating, maintaining or improving 
the manufactured home community, and justified by 1 or more factors listed under 
subsection (c) of this section.‖22  The Landowner argues that the ―and‖ in 
§ 7042(a)(2) should be read as ―or‖ because i) reading the ―and‖ as ―and‖ rather 
than ―or‖ illogically reads the market rent factor out of the Act entirely and ii) 
otherwise the Act would not fulfill its stated purpose of striking a balance between 
the interests of homeowners and landowners.  But, we agree with the 
                                                          
 
21 Taylor v. Diamond State Port Corp., 14 A.3d 536, 538 (Del. 2011).  ―The goal of statutory 
construction is to determine and give effect to legislative intent.‖  LeVan v. Indep. Mall, Inc., 940 
A.2d 929, 932 (Del. 2007) (internal quotation marks omitted) (quoting Eliason v. Englehart, 733 
A.2d 944, 946 (Del. 1999)).  ―The rules of statutory construction are well settled.  First, we must 
determine whether the statute under consideration is ambiguous.  It is ambiguous if it is 
susceptible of two reasonable interpretations.  If it is unambiguous, then we give the words in the 
statute their plain meaning.  If it is ambiguous, however, then we consider the statute as a whole, 
rather than in parts, and we read each section in light of all others to produce a harmonious 
whole.  We also ascribe a purpose to the General Assembly‘s use of statutory language, 
construing it against surplusage, if reasonably possible.‖ 14 A.3d at 538 (citations omitted). 
22 25 Del. C. § 7042(a)(2) (emphasis added). 
10 
 
Homeowners‘ Association and Superior Court, which embraced the Homeowners‘ 
Association‘s position that § 7042 requires all rent increases above CPI-U to be 
―directly related to operating, maintaining or improving the manufactured home 
community.‖  Because the Landowner failed to provide evidence that the rent 
increases were directly related to those factors, we affirm the Superior Court‘s 
decision. 
By its plain terms, § 7042 requires a landowner wishing to raise the rent 
above CPI-U to show both that ―[t]he proposed rent increase is directly related to 
operating, maintaining or improving the manufactured home community, and,‖ 
that the increase is ―justified by 1 or more [of the 8] factors listed under subsection 
(c) of this section.‖23  The Landowner admits that it made no actual effort to 
demonstrate that its rent increases were ―directly related to operating, maintaining 
or improving the manufactured home community,‖ but only produced evidence of 
market rents, which is one of the factors set forth in § 7042(c).  The market rent 
factor appears seventh in § 7042(c)‘s list of factors and is categorically distinct 
from the other factors in that it is not measured solely by tangible costs inside the 
community but rather by external ―market forces.‖  But, the language, purpose, and 
structure of the Rent Justification Act require more than just that factor for a 
landowner to raise rent above CPI-U. 
                                                          
 
23 Id. (emphasis added). 
11 
 
The Rent Justification Act is effectively a rent control statute.  Landowners are 
able to set whatever initial rent the market can bear when they attract new tenants.  
Homeowners are free to accept the rate, or they can choose a different community.  
But, mobile—manufactured—homes are not so mobile, and there can be material 
costs in moving one from one community to another, if the homes can be moved at 
all.24  Because of this, the Rent Justification Act tries to protect homeowners from 
excessive rent increases that exploit the difficulties for homeowners of moving 
their mobile homes somewhere else.  As the Rent Justification Act‘s Purpose 
section articulates, ―manufactured home owners make substantial and sizeable 
investments in their manufactured homes.  Once a manufactured home is situated 
on a manufactured housing community site, the difficulty and cost of moving the 
home gives the community owner disproportionate power in establishing rental 
rates.‖25  The Act protects homeowners by preserving the initial relationship 
between themselves and the landowners, which presumably takes into account the 
landowners‘ costs and expected profits, unless the landowner‘s circumstances 
change in specific ways.  To take into account ordinary inflation, the Act allows a 
                                                          
 
24 Exhibit C to Opening Br. Amicus First State Manufactured Housing Ass‘n at 63 (AARP 
PUBLIC POLICY INSTITUTE, MANUFACTURED HOUSING COMMUNITY TENANTS: SHIFTING THE 
BALANCE OF POWER (2004)) (―One of the defining characteristics of manufactured homes is that 
they are built on a permanent chassis attached to axles and wheels . . . .  For this reason, 
manufactured homes are often called ‗mobile homes,‘ but the term is misleading.  In fact, these 
homes are seldom moved once placed . . . .  There are several reasons for this . . . .  Second, 
moving a home is a very expensive proposition and can easily cost $5,000 to $10,000.‖). 
25 25 Del. C. § 7040. 
12 
 
landowner to raise rent by the average annual increase of CPI-U.26  To impose an 
increase beyond CPI-U, the landowner must prove more.  In particular, it must 
show that the increase is ―directly related to operating, maintaining or improving 
the manufactured home community.‖27  That is, the landowner must show that its 
original expected return has declined, because the cost side of its ledger has grown.  
If a landowner can show that its costs have gone up, that opens the door to a rent 
increase based on § 7042(c)‘s factors, including market rent.  If a landowner 
invests in its development, and therefore has ―improve[ed]‖ the community, it can 
also reap the reward from that investment through higher-than-inflation rent 
increases.28  But, unless the landowner has seen its costs increase for ―operating, 
maintaining or improving the manufactured home community,‖29 the Rent 
Justification Act preserves the initial relationship the landowner creates between its 
revenue and its costs.  The homeowner with her home semi-permanently planted in 
the community is protected from material increases in rent unrelated to the benefits 
and costs of living in the community, and the landowner receives the return it 
originally anticipated.  The Act‘s own Purpose section reflects this balance 
between protection for homeowners and landowners when it states that the Act 
seeks to ―accommodate the conflicting interests of protecting manufactured home 
                                                          
 
26 Id. § 7042(a). 
27 Id. § 7042(a)(2). 
28 Id.  
29 Id. 
13 
 
owners, residents and tenants from unreasonable and burdensome space rental 
increases while simultaneously providing for the need of manufactured home 
community owners to receive a just, reasonable and fair return on their property.‖30 
The Landowner‘s argument that giving the ―and‖ in § 7042 its obvious 
meaning renders the Rent Justification Act illogical is therefore without merit.  
Although ―or‖ includes the meaning ―and,‖ that does not work in reverse, and thus 
the Landowner would have us read out of the Act a common word that is 
universally understood and when doing so creates no contradiction with other 
language in the Act.  Although it is debatable whether it is ever a proper role for a 
court to take such a step,31 it is recognized that doing so when giving effect to the 
legislature‘s chosen words does not yield an absurd result is improper.32  When, as 
here, applying the Act as written renders a reasonable result consistent with the 
                                                          
 
30 Id. § 7040. 
31 In re Last Will and Testament of Palecki, 920 A.2d 413, 423–25 (Del. Ch. 2007). 
32 See Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 459–63 (2002) (noting that statutes are 
often delicately crafted in a process of legislative compromise and observing that the U.S. 
Supreme Court rarely uses absurd results as reasoning to ―override unambiguous legislation,‖ id. 
at 459); Public Citizen v. U.S. Dept. of Justice, 491 U.S. 440, 470–71 (1989) (Kennedy, J., 
concurring) (―When used in a proper manner, this narrow exception to our normal rule of 
statutory construction does not intrude upon the lawmaking powers of Congress, but rather 
demonstrates a respect for the coequal Legislative Branch, which we assume would not act in an 
absurd way. This exception remains a legitimate tool of the Judiciary, however, only as long as 
the Court acts with self-discipline by limiting the exception to situations where the result of 
applying the plain language would be, in a genuine sense, absurd, i.e., where it is quite 
impossible that Congress could have intended the result and where the alleged absurdity is so 
clear as to be obvious to most anyone.‖). 
14 
 
Act‘s own stated purpose, doing so would be unjustifiable.33  The Landowner, of 
course, may wish to have the ability to raise its homeowners‘ rents based solely on 
a market rent factor.  But there is nothing illogical about the General Assembly‘s 
determination that if a landowner is to raise rates for homeowners above the rate of 
inflation, a landowner must show some increase in the costs on its income 
statement.  This statutory requirement is a modest one, which only requires the 
landowner to produce evidence suggesting that the ―return‖ on its ―property‖ has 
declined.34  Once that burden is met, the Rent Justification Act allows the 
landowner to argue for an increase using all the factors set forth in § 7042(c), 
including market rent.  The Landowner here no doubt wishes that the Rent 
Justification Act did not exist at all.  But, in giving effect to the plain meaning of 
the word ―and,‖ we reflect the importance that the General Assembly‘s chosen 
words rightly have in our approach to statutory interpretation.35  The General 
                                                          
 
33 See Cordero v. Gulfstream Development Corp., 56 A.3d 1030, 1036–37 (Del. 2012) (refusing 
to apply absurdity doctrine because statute‘s plain language fit with purpose of statute even 
though facts of specific created an ―unfortunate‖ result); see also Home Ins. Co. v. Maldonado, 
515 A.2d 690, 693–94, 694 n.8 (Del. 1986) (describing this Court‘s prior refusal to invoke the 
absurdity doctrine when faced with a statute that, in this Court‘s judgment created an ―illogical 
and unfair result,‖ id. at 693, but was nonetheless ―unambiguous,‖ id. at 694).   
34  25 Del. C. § 7040. 
35 See Kelty v. State Farm Mut. Auto Ins. Co., 73 A.3d 926, 929 (Del. 2013) (―When interpreting 
a statute, we attempt to determine and give effect to the General Assembly‘s intent.‖ (citations 
omitted)); Clark v. State, 65 A.3d 571, 578 (Del. 2013) (―We presume that the General Assembly 
intentionally chose particular language . . . .‖); Coastal Barge Corp. v. Coastal Zone Indus. 
Control Bd., 492 A.2d 1242, 1246 (Del. 1985) (―To apply a statute, the fundamental rule is to 
ascertain and give effect to the intent of the legislature.  If the statute as a whole is unambiguous, 
there is no reasonable doubt as to the meaning of the words used and the Court‘s role is then 
limited to an application of the literal meaning of the words.‖ (citations omitted)); see also, e.g., 
15 
 
Assembly has determined that the Act should exist and that there should be 
protections for mobile-home owners against unlimited rent increases.  Reading 
§ 7042(a) as the Superior Court did faithfully respects the General Assembly‘s 
intent. 
B. 
The Act Does Not Require a Landowner to Prove Actual Rents 
 
We resolve a second interpretive issue related to the Rent Justification Act 
today.  Although the first issue was dispositive, this Court considers itself obliged 
to address a second issue, decided by the Superior Court, because the Superior 
Court‘s disposition of the issue, if adopted as precedent, would materially restrict 
arbitrators under the Rent Justification Act in the evidence they could hear in these 
cases in a manner that has the potential to raise material doubts about the 
constitutionality of the Rent Justification Act.36  At arbitration, the Landowner 
presented three types of evidence to demonstrate that its rents were below 
prevailing market rent: the amount the Landowner was charging a new homeowner 
                                                                                                                                                                                           
Ross v. Department of Correction, 697 A.2d 377, 378 (Del. 1997) (giving effect to the plain 
meaning of a statute and observing that there was ―no evidence that the General Assembly 
intended anything other than what the statute expressly provides‖); Balma v. Tidewater Oil Co., 
214 A.2d 506, 562 (Del. 1965) (―Where its language is clear and unambiguous, a statute must be 
held to mean that which it plainly states, and no room is felt for construction.‖). 
36 Although ―a court should avoid unnecessary decisions,‖ 21 C.J.S. COURTS § 179, Westlaw 
(database updated Sept. 2016), this Court may ―exercise discretion to express its opinion on a 
question not necessary to its decision,‖ 5 C.J.S. APPEAL & ERROR § 1013, Westlaw (database 
updated Sept. 2016).  Cf. Sandt v. Delaware Solid Waste Authority, 640 A.2d 1030, 1034 (Del. 
1994) (deciding an issue without determining if it had been properly presented below because 
―(1) the issue is outcome-determinative and may have significant implications for future cases; 
and (2) our consideration of the issue will promote judicial economy‖). 
16 
 
entering the community;37 advertised rents at comparable communities; and an 
expert report analyzing the comparables.38  The Superior Court‘s decision held that 
proving market rent with reference to comparable communities required evidence 
of actual rents as charged to new residents and so the Landowner‘s evidence of 
comparable rents was insufficient.39  The Superior Court based this interpretation 
on its view that the General Assembly narrowed the language of the Act in 2014 
when it changed the language defining market rent from ―relevant considerations 
include rents charged by comparable manufactured home communities in the 
applicant‘s competitive area‖ to ―relevant considerations include rents charged to 
recent new home owners entering the subject manufactured home community 
and/or by comparable manufactured home communities.‖40   
As the Landowner rightly notes, the Act does not provide the arbitrator or 
parties to the arbitration with the power to use compulsory process to obtain 
evidence from third parties.  Without those tools, landowners and homeowners 
would be unable to compel third parties to provide actual contracts.  Rather, the 
Act does provide certain arbitration rules, including that ―[t]he Delaware Uniform 
Rules of Evidence shall be used as a guide by the arbitrator for admissibility of the 
                                                          
 
37 Albeit based on only one completed sale and one pending sale in a two year period.  App. 
Appellee‘s Answering Br. at B-14. 
38 Id. 
39 Bon Ayre Cmty. Ass’n, Inc. v. Bon Ayre Land, LLC, 2016 WL 241864, at *10 (Del. Super. Ct. 
Jan. 12, 2016). 
40 Appellant‘s Opening Br. at 20. 
17 
 
evidence submitted at the arbitration hearing.‖41  The Act also provides, among 
other procedures, that ―[u]nless waived by all parties, testimony will be under oath 
or affirmation, administered by the arbitrator.‖42  Therefore, in proving what 
market rent is, and in demonstrating relevant considerations bearing on the issue, a 
landowner is able under the Act to introduce evidence relevant to that purpose, 
with relevance having its ordinary meaning of ―evidence having any tendency to 
make the existence of any fact that is of consequence to the determination of the 
action more probable or less probable than it would be without the evidence.‖43  
The Rent Justification Act does not limit what is relevant to showing market rent to 
actual lease terms, nor do the Delaware Rules of Evidence. 
At a minimum, the Superior Court‘s interpretation materially raises the 
threshold for evidence necessary to prove one of § 7042(c)‘s factors without a 
basis in the text of the Act.  To the extent this judicially created standard makes it 
essentially impossible for a landowner to prove the market rent factor, the Superior 
Court‘s interpretation also raises constitutional due process concerns by subjecting 
landowners to restrictions on their property rights without a fair way to prove a 
relevant statutory factor that could ease the restriction.  Because this judicially 
created evidentiary restriction is not only absent from the language of the Act itself 
                                                          
 
41 25 Del. C. § 7043(d). 
42 Id. § 7043(e)–(f). 
43 D.R.E. 401. 
18 
 
and unnecessary, but also renders the Rent Justification Act constitutionally 
problematic, we disagree with the Superior Court‘s interpretation. 
 
Although the General Assembly did change the considerations for 
determining market rent provided in the Act, the change did not narrow the 
permissible types of evidence.  First, the passage the Superior Court relies on in 
§ 7042(c) provides examples of evidence, rather than an exclusive list.  Saying that 
the change in language excludes certain evidence not directly mentioned in either 
definition is a step not required by the text of the Act and one we need not take.  
Second, the 2014 revision did not obviously make the evidentiary requirements 
more specific in the way the Superior Court suggests.  If anything, the 2014 
revision worked to highlight a type of rent that is relevant for demonstrating the 
current market level: rents in contemplation of arms-length transactions.  Because 
new homeowners have not yet made the investment in a specific home and are 
therefore unencumbered by switching and investment costs that could distort the 
value of a given location, a fair way to prove the relevant statutory factor and thus 
to ease the statutory restriction is the rents they find attractive.  But, even if the 
2014 amendment highlighted the recent new homeowner example, it did so as just 
one example of market rent.  The amendment does so by continuing to use ―market 
rent‖ as the primary statutory term and using the example of ―rents charged . . . by 
comparable manufactured home communities‖ as a ―relevant consideration[]‖ 
19 
 
bearing on what the primary term ―market rent‖ means.44  The Act makes clear that 
―relevant considerations‖ ―include‖ the example.45  To include is not to exclude 
other possibly relevant considerations. 
 
Also, as a practical matter, we are unsure of what evidentiary value actual 
rates charged have over advertised rates.  The rates that are advertised should be 
attractive to the consumers searching for a lot and therefore typical of the relevant 
market rate: the rate a consumer is going to voluntarily pay when in a roughly 
equal bargaining position to the landowner.  Thus, a requirement to prove actual 
rents would impose a great burden on bystanders without obvious benefit to the 
arbitration; without a more explicit legislative directive, we would be reluctant to 
require such a standard for evidence in arbitration proceedings held under the Act.  
Therefore, under the Rent Justification Act, landowners may use any evidence in 
keeping with the Act‘s provisions found in § 7043(d)–(g), including the Delaware 
Rules of Evidence, to prove their situation meets the justification.46
                                                          
 
44 25 Del. C. § 7042(c)(7). 
45 Id. 
46 The Landowner makes a broad-based challenge to the constitutionality of the Rent 
Justification Act.  Although traditional freedom of contract principles clearly do not favor the 
Rent Justification Act because it operates as a rent control statute, it has long been settled that 
rent control statutes do not necessarily violate any constitutional rights of a landowner.  See 
ARDEN H. RATHKOPF ET AL., RATHKOPF‘S THE LAW OF ZONING AND PLANNING § 81:18, Westlaw 
(database updated Sept. 2016) (―Courts generally have rejected constitutional challenges to rent 
control laws on either impairment of contract, substantive due process, equal protection, or 
taking claims.‖).  As the Superior Court properly found, the Act is not unconstitutionally vague 
and its terms are capable of being fairly enforced without violating the due process rights of 
landowners.  Bon Ayre Cmty. Ass’n, Inc. v. Bon Ayre Land, LLC, No. K15A-05-002, 2016 WL 
241864, at *10–*11 (Del. Super. Ct. Jan. 12, 2016).  The Landowner‘s most forceful argument is 
20 
 
                                                                                                                                                                                           
the one we have addressed above.  Because the rules for arbitration set out in § 7043(c) do not 
afford parties to the arbitral process the ability to use compulsory process to gather evidence, the 
Superior Court‘s gloss on the Act requiring a landowner to prove market rent by use of actual 
rental rates available only in contracts between other landowners and their tenants would raise 
potential due process concerns, as a landowner might be unable to prove that a statutory factor 
justified its requested rent increase.  Because we hold that the Act does not require the 
production of actual lease terms to support the proposition that market rents of comparable 
properties are higher than the landowner‘s proposed terms, the Landowner‘s argument is 
addressed.  Under the Act as written, a landowner may prove market rent using any reliable 
evidence, including advertised rents.  As the Landowner‘s own expert report illustrates, it is 
possible to do this without compulsory process by pointing to advertised rents and other reliable 
sources of market evidence that do not involve the actual leases between landowners of other 
properties and their tenants. 
1 
 
Vaughn, Justice, dissenting: 
Of the four home owners affected by this appeal, three are paying a lot rent 
of $349 per month and one is paying a lot rent of $309 per month.  The community 
owner sought an increase to $399 per month for the three home owners and $379 
per month for the fourth.  It submitted evidence of what it considered comparable 
rent paid by new home owners in four other manufactured home communities.  It 
also submitted evidence that Bon Ayre had one sale and one pending sale for nine 
year leases at a reduced rate of $389 per month in 2015.  The arbitrator concluded 
that one of the four comparables was not, in fact, comparable.  The rent at the 
remaining three ranged from a high of $470 per month to a low of $438.65 per 
month.  After averaging those rents, the arbitrator carefully made adjustments to 
take into account differences in the amenities among the three comparable 
communities and Bon Ayre.  She then concluded that the fair market rent of the 
relevant lots in Bon Ayre was $386.37 per month.  While the community 
association argues that the arbitrator=s decision is not supported by substantial 
evidence because it is not based upon direct evidence of rents set forth in specific 
leases of individual new home owners, an argument rejected by the majority for 
the reasons stated in the majority opinion, it do not seem to offer any evidence that 
the fair market rental of the lots involved here is, in fact, less than $386.37. 
2 
 
Since it is undisputed that the community owner has not been found in 
violation of any statutory provision that persisted for more than 15 days during the 
twelve months preceding the proposal to increase the rent, the community owner 
had the burden of establishing that the proposed increase was ―directly related to 
operating, maintaining, or improving the manufactured home community,‖ and 
justified by market rent.1  The Superior Court ruled that an increase in rent based 
on market rent can be justified only when the community owner can show that it 
has experienced an increase in the expenses of operating the community, apart 
from those expenses specifically recognized in the other subsections of 25 Del. C. 
§ 7042(c), because only then can it be said that the proposed increase is directly 
related to operating, maintaining or improving the community. 
I believe, however, that the community=s expenses and the community 
owners= profit are both directly related to operating the community, one just as 
much as the other.  I think that limiting the phrase ―directly related to operating, 
maintaining or improving the manufactured home community‖2 to expenses, to the 
exclusion of profit, gives the phrase an unduly narrow reading.  Here three of the 
rents are about 10% below what the arbitrator determined to be market rent and the 
fourth is more so.  I think it can be said that the community owner=s desire to bring 
the rents more in line with market rent is directly related to the operation of the 
                                                          
 
1 25 Del. C. § 7042(a)(2). 
2 Id. 
3 
 
community.  I see nothing in this record to suggest that the proposed rent increase 
is influenced by something else, something not related to the operation of the 
community. 
The Superior Court was concerned in part that allowing an increase based on 
market rent without linking in expenses might lead to unreasonable or burdensome 
increases in rent.  One of the purposes of the statute is to protect the home owner 
from unreasonable and burdensome rent increases.3  An example given by the 
Superior Court is that a community owner might offer a lower rate to induce home 
owners to place their homes in the community, and later raise rental rates to the 
―market rate‖ with impunity.  However, I think the statute has adequate protection 
for the home owner.  As the Superior Court mentions, the statute provides that the 
§ 7042(c) factors ―may‖ justify an increase in rent greater than the increase of the 
CPI-U.4  Nothing in the statute seems to entitle a community owner to an increase 
in rent larger than the increase of the CPI-U.  Since market rent ―may‖ justify an 
increase in rent, there can be cases where it may not.  While the statute provides 
that an arbitrator is to employ the standards set forth in § 7042,5 I believe that the 
statute gives an arbitrator the discretion to apply them with a view toward 
satisfying the purposes of the statute.  In my view, an arbitrator can exercise 
                                                          
 
3 Id. § 7040. 
4 Id. § 7042(c). 
5 Id. § 7043(c)(g). 
4 
 
discretion to deny a proposed increase to market rent if, in the particular 
circumstances of the case, doing so would be unreasonable or burdensome to the 
home owners.  The arbitrator made no such finding in this case. 
Another purpose of the statute is to provide ―for the need of manufactured 
home community owners to receive a just, reasonable and fair return on their 
property.‖6  We do not know from this record what a just, reasonable and fair 
return for a manufactured home community owner might be, but I think that where 
a lot=s rent is ten per cent less than market rent, an inference is at least created that 
the community owner is not receiving a just, reasonable and fair return on that lot.  
There is no reason from the record here to believe that the expenses attributable to 
the four lots involved are less than the expenses attributable to the lot which the 
community owner rented to a new tenant for $399 in 2015. 
 
Thus, the Superior Court construes the statute in such a way that the 
community owner=s interest in receiving a fair return on the property is not 
considered under any of the § 7042(c) factors as a matter of law.  The community 
owner=s profit is capped to increases in rent for any twelve month period in an 
amount not greater than the applicable increase of the CPI-U, currently 1.6%, less 
any increase in expenses for that period.  I do not believe that the language of the 
statute leads to this conclusion, and I am not at all certain that it is consistent with 
                                                          
 
6 Id. § 7040. 
5 
 
the purpose of the statute that community owners receive a just, reasonable and fair 
return on their property.  For these reasons, I would reverse the Superior Court and 
remand the case for further proceedings where the Superior Court would review 
the arbitrator=s decision without limiting the market rent factor to a provable 
increase in expenses.