Challenging an HOA Decision: Must I Pay the Attorney Fees?

Let's say you own a house or unit in a development and your HOA recently made a new rule you not only disagree with, but suspect was finalized without the HOA board following proper procedures under its bylaws. Now the board won't listen to your complaints, and you are contemplating filing suit to get the rule revoked. The problem is, paying to hire an attorney could be beyond your means. Can you make the HOA pay your attorney's fees if you win?

The answer depends on what your development's governing documents say about the matter and whether you end up settling out of court, as we'll discuss below.

Start by Reviewing Your HOA's Governing Documents

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. It's a gamble.

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 will likely be interpreted as inapplicable to fees incurred for arbitration or mediation.

What If HOA Governing Documents Say Nothing About Attorney's Fees?

If attorney's fees are not addressed by the governing documents, check your state's laws. More and more states have adopted "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, then each party is probably responsible to pay its own fees and costs.

Why Not All "Wins" Against an HOA Lead to Payment of Attorney's Fees

Keep in mind that, even if you sue, 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.

In court cases that reach a final judgment, it can 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).

As you see, when it comes to a dispute with an HOA, your best bet is typically to work hard to resolve it without resorting to the court system.