Homeowners’ associations (HOAs) play a significant role in maintaining the quality and value of properties within a community. However, disputes between homeowners and HOAs are not uncommon, and these disputes can sometimes escalate to lawsuits. One critical question that often arises in these legal battles is whether homeowners can recover their attorneys’ fees if they win the lawsuit.
In Arizona, A.R.S. § 12-341.01 provides that the successful party in a contract action may be awarded reasonable attorneys’ fees. This is called a “discretionary” fee award because the Court will have the option to either award or not award attorneys’ fees at the end of the lawsuit. This statute has been interpreted to apply to certain HOA disputes, particularly those involving contractual obligations between the homeowner and the HOA. For example, if you successfully sue your HOA because the HOA breached a specific provision of the CC&Rs, you can then ask the Court to also have the HOA pay for your attorneys’ fees.
Many HOA governing documents, such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), include provisions for the recovery of attorneys’ fees. These provisions typically state that the successful party must be awarded the recovery of their attorneys’ fees at the end of the lawsuit. These are commonly known as “mandatory” fee award provisions. Unlike the discretionary fee award discussed above, a mandatory fee award provision requires the successful party to be awarded attorneys’ fees. The court does not have the ability to let the losing party off the hook for the winning party’s attorneys’ fees.
But what happens if the lawsuit against the HOA and/or its board members does not relate specifically to the CC&Rs or some other governing documents? Sometimes a lawsuit may only involve a negligence claim. That is, a claim that the HOA/board breached some duty that is present in the common law, but not necessarily the CC&Rs. Even if you win such a lawsuit, the HOA would probably argue that your lawsuit does not “arise out of contract”, and thus you cannot recover your attorneys’ fees.
In Arizona, courts can still award attorneys’ fees to the successful party in this situation. In Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 13 (App. 2000), the court of appeals expanded the scope of § 12-341.01, and held that a negligence claim can sometimes “arise out of contract” for purposes of an award of attorneys’ fees. In order to recover attorneys’ fees in a negligence lawsuit, the cause or origin of the dispute must relate to a contract. A dispute involving an HOA or board member breaching their duties will likely relate to the original CC&Rs, even if the breached duty is not specifically called out in the governing documents. So, if you successfully sue your HOA for negligence only, you may be able to recover your attorneys’ fees at the end of the lawsuit.
Whether you can recover attorneys’ fees in an HOA lawsuits depends on various factors, including Arizona’s statutes/common law, the specific terms of the HOA’s governing documents, and the circumstances of the case. If you are involved in a dispute with your HOA, you can consult with an experienced attorney at Lubin Pham + Caplin, LLC to understand their rights and potential for fee recovery. By being informed and prepared, you can better navigate the complexities of HOA litigation and protect your interests.
