Association of Owners Pilot Point Condominiums

Legal Problem
Initially, the Pilot Point plan was to have 32 town homes; one motel of 100 single room units and two five story
high-rises of 100 units. The zoning called for 77,580 square feet of land coverage, with the balance of the land
dedicated as common area. Initially, 32 townhouses (Phase I, Units 1 through 32) were built; sales of these
units were completed in January 1974. Documents filed in the land records at Georgetown, Delaware stated
that no more than three additional buildings could be built at Pilot Point in addition to the 32 townhouses.
However the developer, without signatures of agreement from the original 32 owners, built four more buildings
(current Units 33 through 60) on 29,834 square feet of ground, of which 17,614 square feet was common area
dedicated to open space. This construction was completed in late 1976. Official sales of these units were
completed in 1979. The developer filed an amended Declaration to the Pilot Point condominium to build ten
additional buildings, covering 72,254 square feet of ground coverage, which would be built on 45,054 square
feet of common area. None of the original 32 owners gave their permission to these changes to the common

The term, Common Area, means that portion of the project that belongs to all the people. It includes outside
walls of each unit, walkways and all ground around the units. The Delaware Code specifically states that such
ground shall not be sold, transferred, leased, or built upon, without the signature of all the owners.

The following table shows what was originally dedicated and recorded for land usage and what the Pilot Point
Council of Owners contested in the court for seven years (1977-1984).

Phase I (Units 1 through 32) Phase II (Units 33 through 60) Phase III & IV

Original Land Coverage                                                        Amended Land Coverage
Square feet                                                                                Square feet             
Phase 1 units 1 through 32               38,160                                                    38,160
Phase 2 units 33 through 60            12,220                                                     29,834
Phase 3 & 4                                          
27,200                                                     72,254
Total Square Feet                                77,580                                                   140,248

In the courts, the Pilot Point Council of Owners maintained that the developer had exceeded the number of
buildings allowed and had built on common area, and therefore had no further development rights. The initial
owners of Phase I (Units 1 through 32) conceded that Phase II (Units 33 through 60) was in place and could
not be removed. In 1979, all units’ owners in Phase II (Units 33 through 60) signed an agreement that they
would abide by the rules, regulations, and maintenance policy then in effect for Phase I (Units 1 through 32).

In 1975 there was a credit crunch, which resulted in Anderson-Stokes having to give up its development rights
at Pilot Point as well as its lease agreement to Phase I (Units 1 through 32). Anderson-Stokes sold these to
Reality Growth Investors (aka RGI), an investment firm then located in Baltimore and now in Chicago. As a
result, RGI was the opponent of the Pilot Point Council of Owners in the Delaware Courts. After considerable
time and cost (in excess of $50,000), a summary judgment was handed down by the Delaware Supreme Court
which in essence said, that RGI lost its development rights to add additional units at Pilot Point. While this
case was in court, the Pilot Point Council asked the court to review the percentages of interest in the common
elements. At the time, the Council members felt there were some inequities in the percentages being used In
1975 there was a credit crunch, which resulted in Anderson-Stokes having to give up its development rights
after Phase II joined Phase I. In its final decision, the Court established the following percentages of interest,
effective June 1, 1984:

Units   1 through 11        1.5087%
Units 12 through 32        1.6839%
Units 33 through 46        1.8648%
Units 47 through 60        1.5668&

These percentages are used today in calculating each unit's quarterly assessment.

External Building Appearance
When constructed, all nine buildings and the Community Building at Pilot Point had a siding of T-111 plywood,
which was painted a light brown color; the trim was a dark brown. Painting unfortunately was irregular in time
intervals, and each building appeared to weather differently. As a result, the Council had a great deal of
difficulty in obtaining a good uniform appearance throughout the project. In late 1979, the Council made the
decision to install Canadian cedar shake shingles over the T-111. We were told that the cedar would age to a
nice patina finish. Lakewood Builders installed the cedar shakes in late 1980 and early 1981. Immediately,
Pilot Point looked outstanding! In fact, unit sales prices jumped about $25,000 to $30,000 in a matter of 6
months, an excellent investment for the owners. However, over the next 5 years, a mildew and fungus took over
which changed the color of the cedar siding from a light brown to a mottled black. The Council researched
what to do to improve the appearance. The solution was to power wash out the mildew and fungus with a
special solution, allow the shingles to dry for two weeks and then apply 2 coats of an oil base stain. The 3B's
Painters began the job in Spring of 1987, and was completed in late 1988. The building trim is a Hamilton Blue
color and the shingles are a silver-gray.

Major Fire
Shortly after lunch on Christmas Day in 1983, Dr. Augusta Chiriboga, an anesthesiologist at Beebe Hospital in
Lewes, returned home to his family in unit 30, which he was renting. The outside temperature was 11°F with
winds up to 35 mph out of the west. When he arrived in his rental unit, he started a fire in his fireplace. All of
sudden the fire in the fireplace was blown out onto the floor. He sent his wife and two children out of the unit
while he tried to put out the fire that was spreading in the living room. He went to several other units to try to find
a phone to call the fire company (there was one available on the porch at the Community Building). Fortunately,
Sam Burke, unit 40, called in the fire alarm. At approximately 1 p.m. and for the next fourteen to nineteen hours,
some 200 volunteer fireman from seventeen different fire companies fought bravely to bring the fire under
control before it could spread to adjoining buildings. Ten firemen were injured and required treatment at
various times throughout the fire fighting operation. The strong wind resulted in total destruction of units 30, 31
and 32, and about 75% of unit 29, which was immediately upwind.

The Pilot Point Council awarded the Tower Construction Co. of  Wilmington, Delaware the job of reconstructing
units 29 through 32. Their bid was $319,000. Tower completed 90% of the reconstruction by July 1, 1984; the
remainder was completed by November 1, 1984.

Relationships with city of Lewes
The Pilot Point council of Owners has worked diligently for a good relationship with the city of Lewes. In 1982,
we worked hard with other citizens in Lewes to prevent the use of the land now occupied by Port Lewes and
Cape Shores as a coal port. We have contributed money to the new library, new beach sand cleaning machine
and the new city firehouse. We continue to contribute yearly to the city for fire protection and beach sand

10-Year Plan
Prior to 1989, the Pilot Point council presented only a yearly budget to the owners at the annual meeting. Our
first 10-year plan was presented to the owners at the 1989 June Annual Meeting. This plan provided the
owners with the following information:

Shows how condominium dues may change in the future, it gives a plan to maintain common area assets:
roofing, grounds, electrical, painting of siding, roof, roadways and tennis courts; lays out a plan for a reserve
funding; provides a plan for mortgage companies to review whenever an owner may seek a mortgage.

Reserve Studies
The first reserve study for Pilot Point was completed in the year 2003. This study gave us a comprehensive forty
year plan which helped us to build our reserves for future projects and capital improvements while trying to
avoid assessments. A second Reserve study was completed in the year 2011 and we are in the process of
completing our third forty year year plan for the year 2018.