Our HOA sued a homebuyer and won. Can we recover legal fees?
Question: We live in a beautiful community of about two dozen homes. Our community's covenants, conditions and restrictions require any amendment of these rules to have the approval of the majority of the homeowners. Everyone in our community has always been opposed to short-term rentals. Therefore, when someone bought a home in our community last year with the intention of using it as a short-term rental, we hired a lawyer and filed a lawsuit. Immediately after the lawsuit was filed, the owner who wanted to use the house as a short-term rental sold it to a family and didn't respond to the lawsuit. Only three homeowners in our community paid our attorney’s fees of $8,500. Can we recover that money from the homeowner we sued?
Answer: Probably not. The community's covenants, conditions and restrictions are a contract among all of the homeowners. Under Arizona law, the winning party in a contract dispute that is a “contested action” is entitled to reasonable attorney’s fees. The prospective short-term rental owner, however, never answered the lawsuit. Therefore, there was no “contested action," and you three homeowners probably have no claim against the former homeowner for the recovery of your $8,500.
Note: Even in a “contested action,” the amount of attorney’s fees awarded to the winning party has to be “reasonable” and is at the “discretion” of the judge.