2026-08-15 · Delaware · Courts

The Delaware Supreme Court has settled what “cost” means when a manufactured home community wants to raise lot rent by more than inflation: the direct cost of the capital improvement, and nothing else. Not a return on investment, not depreciation, not the income tax the owner will owe on the higher rent.

Pot-Nets Lakeside, LLC v. Lakeside Community Homeowners Association, Inc. was affirmed on July 1, 2025 (No. 309, 2024), Justice Abigail M. LeGrow writing, upholding Judge Mark H. Conner's Superior Court decision of July 23, 2024.¹²

What the community asked for

Pot-Nets Lakeside is a 466-lot manufactured home community in Millsboro. It proposed a $7.86 per month increase above the change in CPI-U to pay for a lake-walk boardwalk.

The direct construction cost was $219,752. Beyond that the owner also sought to recover what it called “Indirect Costs”: an 8% return on the investment, depreciation on the new asset, and the income taxes it would owe on the additional rent the project generated. The homeowners association demanded arbitration under 25 Del. C. § 7053.

What the statute permits

Delaware's Rent Increase Justification Act sets out, at § 7052(d), the grounds on which a community owner may justify an increase above the change in CPI-U.³ The court read that list as exhaustive. Return on investment, depreciation and income taxes are not on it.

The owner's argument leaned on the Act's purpose section, § 7050, which speaks of community owners receiving a “fair return on their property.” The court rejected the move in a line worth quoting: “the slender reed that is Section 7050 cannot support the substantial weight of the landlord's argument.” A general purpose provision does not override a specific, and more recently amended, operative one. If the General Assembly wants indirect costs to count, it can amend the Act.

1. Pot-Nets Lakeside, LLC v. Lakeside Community Homeowners Association, Inc., No. 309, 2024 (Del. July 1, 2025) (LeGrow, J.) ↩
2. Pot-Nets Lakeside, LLC v. Lakeside Community Homeowners Association, Inc., C.A. No. S22A-10-001 MHC (Del. Super. July 23, 2024) (Conner, J.) ↩
3. 25 Del. C. ch. 70 — Manufactured Homes and Manufactured Home Communities (§§ 7050–7054, Rent Increase Justification) ↩
4. SB 235, 153rd General Assembly — bill record (signed July 23, 2026; 85 Del. Laws c. 358; repeals the sunset on §§ 7052A–7052B) ↩