Wild Meadows  HomeOwners Association Inc.

DMHOA/CLASI 10-Year Lease Presentation

From Dave Weglinski et al.

 

On Saturday, August 8, 2026, Fred Neil, Michael Sanocki, Elaine Weglinski and I attended a meeting concerning multi-year leases at the Port Delmarva Clubhouse in Rehoboth hosted by the Rehoboth Bay HOA (“RBHOA”). Home Town America (“HTA”) is the Land Owner of Rehoboth Bay and three other communities in Delaware.

The RBHOA President (Michelle Weeks) started the meeting around 10:05 am. She introduced DMHOA President (Joyce O’Neal) and the quest speaker, CLASI lawyer (John Whitelaw).

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Mr. Whitelaw began by stating the parameters for the meeting.  The law is the law TODAY but is subject to change.  A Land Owner cannot force you to accept a multi-year rent schedule. If you do, you waive your right to arbitration.

He continued with a summary of the Rent Justification laws.  He began with the original rent justification that allowed a 36-month average of CPI-U plus specific increases (e.g. property taxes, insurance, utilities, and employee benefits) OR market rent.  Under either option, it allowed recovery of capital improvements to be added to the base rent.  The inclusion of capital recovery in base rent was subsequently eliminated.

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He moved on to the rent justification changes signed into law on June 30, 2022.  These established a 5-year period providing community owners with a choice of 3 specific methods to calculate rent increases to reduce arbitration and court disputes. Unless new laws were passed, this version of rent justification would revert (“sunset”) to the previous parameters (i.e. the 36-month CPI-U average or market rent) in 2027.  These changes were made permanent during the 2026 legislative session.

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The three specific methods a community owner can increase rent greater than the 36-month CPI-U average are:

1. based upon the increase in the CPI-U for the preceding 24 months,

2.  3.5% of the rent plus 50% of the 24-month CPI-U as calculated by the Delaware State Housing Authority and reported to the Delaware Manufactured Home Relocation Authority (“DEMHRA”).

3. based on market rent, or by agreement with a homeowner for a period of more than 1 year.​

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Mr. Whitelaw then addressed questions concerning RBHOA’s 10-year rent schedule.  There were specific issues related to some bulkhead work considered capital.  He said the definition of a capital improvement was not the typical accounting or IRS definition, but the one contained in Title 25 Chapter 70.  My internet search for the information is summarized as follows:

1. Capital Improvements / Rehabilitation Work: Major investments, structural upgrades, or extraordinary enhancements that add value, prolong the useful life, or adapt community infrastructure (distinguished from routine upkeep).

2. Ordinary Maintenance: Regular, recurring, and routine work needed to keep infrastructure or community grounds in standard working order (such as standard patchwork or minor servicing), which cannot be billed separately as a capital fee.

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The RBHOA asked whether the capital recovery will continue to be recovered if their Land Owner (HTA) offers a new 10-year rent schedule since the current rent schedule will expire before the bulkhead capital expenditure is fully recovered.  Mr. Whitelaw replied that it would depend on the new 10-year rent proposal if offered.  The issue was further complicated by limits to the annual capital assessment included in their 10-year rent schedule to no more than 15% of their current base rent.  This will probably be resolved by arbitration.

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The next item discussed involved the re-titling of their home.  The next item discussed involved the re-titling of their home. Mr. Whitelaw didn't think this was a lease issue.  The RBHOA will follow up with the resident to see if there were other issues that affected the title transfer (e.g. liens or other restrictions).

 

At that point, the RBHOA President announced their Board meeting was to begin at 11 am so there was only time for one more question.  I was finally recognized and asked what protection current multi-year residents had regarding the starting point of their new rent.  Mr. Whitelaw responded that depends.  He would not say if the starting point of the new rent schedule replacing a multi-year one would be subject to the rent increase protections of Chapter 70 or would be treated as a “new” lease agreement. With that, his presentation ended.

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Some (or all) of the four HTA communities (Angola Beach, Barclay Farms, Rehoboth Bay, and the Village of Cool Branch) have multi-year schedules expiring now. HTA management has indicated they will make new multi-year schedules available.  We will try to get information about their starting rents which will give us an idea how the Land Owners interpret the law.  We have one more legislative session to clarify this issue and others before our final 10-year rent schedule ends January 31, 2028.