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Recoverability of Attorney’s Fees in Homeowner Association Disputes

Show me the Money!

A man walked into a lawyer’s office and inquired about the lawyer’s rates.  “$50 for 3 questions,” replied the lawyer.  “Isn’t that awfully steep?” asked the man.  “Yes,” the lawyer replied.  “And what was your third question?”

            Lawyers generally have a negative reputation in society.  Unfortunately, many people believe lawyers are all about the money.  While that certainly might be true for some lawyers, most of us never pursued a legal career to chase the almighty buck.  It’s like my father used to say about money and marriage.  “Son, there are two ways to make money in this world.  You can marry it or you can earn it; and if you marry it, you more than earn it.”  Sage advice, and it applies to lawyering as well.  Lawyers who are in it only for the money are usually unhappy and most of them don’t last very long.

            But we lawyers do have to make a living, and that means we have to get paid by someone.  That someone is usually the client.  But unfortunately in many instances the nature of the matter is such that it simply makes no sense to hire a lawyer, especially if the benefit to be gained does not outweigh the cost of obtaining it.  Why hire a lawyer to pursue a negligence claim that might be worth only $5,000, if it will cost $10,000 or more in fees to get a judgment?  I was liberal arts major in college, but even I can do that math.

            Fortunately in most actions involving homeowners associations, there exist mechanisms in the law to recover attorney’s fees from the losing party, whether that party be the HOA or the homeowner.   This often makes it worth the fight to pursue a claim that might not otherwise justify the hiring of a lawyer.

            One means of obtaining an award of fees against the opposing party is by requesting a declaratory judgment from the court.  Under the Texas Uniform Declaratory Judgments Act, a court is authorized to award reasonable and necessary attorney’s fees as are “equitable and just.” Under this Act, a court is not required to award fees, but it has the discretion to do so.  You often can enhance your chances of obtaining such an award if you can show that your client attempted to resolve the issue without having to file suit.

            Another method for obtaining fees can be found in the Texas Property Code.  In an action based on breach of a restrictive covenant pertaining to real property, the court “shall” allow to a “prevailing party” who asserted the action reasonable attorney’s fees.  The code’s use of the word “shall” means that an award of fees is mandatory.  The factors a court considers in determining the reasonableness of the fee include (1) the time and labor required, (2) the novelty and difficulty of the questions, (3) the expertise, reputation, and ability of the attorney, and (4) any other factor.

            Restrictive covenants are considered contracts, and as such they often contain provisions which authorize recovery of fees (at least for the HOA).  But even as to homeowners, fees can be awarded pursuant to Section 38.001(8) of the Texas Civil Practice and Remedies Code, which authorizes recovery of fees in actions founded on oral or written contracts.

            There exist other mechanisms in the law for recovering attorney’s fees, but those mentioned above are the ones most often relied upon by litigants in HOA matters.   If you’ve ever been successful in obtaining a fee award in an HOA matter using some other mechanism, I hope you will share it with me (the method, not the fee).  I’ll save for another day my thoughts on fee splitting among lawyers.