PRESS RELEASE FOR IMMEDIATE RELEASE
Contact: Olha Rybakoff, Deputy Attorney General
Director, Consumer Protection Unit
Phone: (302) 577-8513
Date: March 6, 2003
Attorney General Files Enforcement Action Against Owner of Sussex Mobile Home Communities Fictitious "Rental Tax" at Issue
(Georgetown, DE): Late yesterday, Attorney General M. Jane Brady, through her Consumer Protection Unit, filed a lawsuit seeking a preliminary injunction in the Court of Chancery against Tunnell Companies, L.P. and Robert W. Tunnell, Jr., the company’s owner, (hereinafter "Defendants") for charging their mobile home lot tenants a fictitious "rental tax".
The Attorney General's Complaint outlines violations of the Mobile Home Lots and Leases Act, the Uniform Deceptive Trade Practices Act, the Consumer Fraud Act and Deceptive Practices in Consumer Contracts because defendants charged the fictitious "rental tax" at their Pots Nets Communities.
The State alleges that, since at least 1977, defendants collected not only rent from tenants but a "rental tax" in the amount of .384% of the tenants’ annual rent amount. The State Division of Revenue, in correspondence dating from 2000 and 2001, informed defendants that the .384% gross receipts tax cannot be separately stated on the lease agreement, cannot be charged as a separate cost item and cannot be passed on to tenants. Defendants continued to charge the fictitious "tax".
Tunnell is also alleged to have charged tenants a flat fee of up to $250. He represented the fee as a "mandatory" cost for such items as information sheets and copies of the Mobile Home Lots and Leases Act. No state law requires the imposition of those fees.
Attorney General Brady commented, "This park owner was advised previously that these charges were not legal and he continued to collect them. We are seeking restitution for the parties required to pay these unlawful charges."
In addition to restitution for tenants, the State is seeking a preliminary and a permanent injunction barring defendant from charging for or collecting the fictitious "rental tax" from tenants, statutory penalties, and investigative costs and attorney's fees in its Complaint.