Challenging an HOA decision: must I pay the attorney fees?

Who pays attorney fees may depend upon who wins the lawsuit!

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Question

I live in a development and my HOA recently made a rule saying guests can’t use the common swimming pool. I totally disagree with this rule, and I don’t think the HOA followed the proper procedures in adopting it. The HOA won’t listen to my complaints, so now I want to sue to get the rule revoked. The problem is, I don’t think I can afford to pay an attorney to do this. Someone told me I can make the HOA pay my attorney’s fees if I win -- is this true?

Answer

Possibly. The answer depends on what your development’s governing documents have to say about the matter.

Look at your development’s Declaration of Covenants, Conditions, Restrictions, and Easements (“CC&Rs”) to see if it contains any provisions relating to homeowner-HOA disputes and attorney’s fees.

You might find an attorney’s fees clause that allows the prevailing party in a lawsuit to recover attorney’s fees from the other party. If so, the HOA must pay your attorney’s fees if you bring your dispute to court and win. Of course, if you lose, you’ll be responsible to pay your own attorney’s fees, plus attorney’s fees incurred by the HOA.

Keep in mind that this is not as black-and-white as it sounds. Legal cases are frequently settled before the court reaches a final judgment. If so, who pays attorney’s fees must be determined by the settlement agreement.

Even in court cases that reach a final judgment, it might be difficult to determine which party “prevailed.” Legal suits often contain a mix of more than one cause of action. For example, you might sue the HOA for both breach of fiduciary duty and breach of contract. The court might rule in your favor on one count, and in favor of the HOA on the other. Since neither party fully “prevailed,” the court would then have to determine who pays attorney’s fees (possibly splitting the fees between you and the HOA).

Sometimes a development’s CC&Rs require that any disputes between a homeowner and the HOA must go to arbitration or mediation. Who pays attorney fees in these situations again depends on the terms of the CC&Rs. If the CC&Rs grant attorney fees to the prevailing party only in “a case at law,” then the provision is will likely be interpreted as inapplicable to fees incurred for arbitration or mediation.

If attorney’s fees are not addressed by the governing documents, check your state’s laws. More and more states are adopting “fee-shifting” provisions for HOA cases, which award fees and costs to the prevailing party in HOA-homeowner lawsuits. If there are no applicable state law provisions, as a general rule, each party is responsible to pay its own fees and costs.

So you see, your question is a bit complicated. When it comes to a dispute with your HOA, your best bet is to work hard to resolve your HOA issues without resorting to the court system.

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