By: David Ludwig  [11/18/22]

The first step in challenging any homeowners association should be to carefully review their governing documents in the Declaration of Covenants, Conditions, Restrictions, and Easements (CC&Rs) to determine if there are any pre-established stipulations regarding disputes between homeowners and their HOAs. There may be a specific clause that addresses who will be responsible for paying attorney fees. Georgia law upholds the Declaration of a homeowners association as a binding contract that cannot be altered by a trial court award unless prohibited by a statute according to the precedent set in Summit at Scarborough Homeowners Association v. Williams807 S.E.2d 63 (Ga. Ct. App. 2017)

If the declaration of covenants does not contain any clauses that address recovering attorney fees then the next authority to observe is the state of Georgia and its laws governing HOA disputes. Unfortunately, there is no statutory provision or constitutional requirement that mandates attorney’s fees be awarded to the winning plaintiff in any case in the state of Georgia—including disputes with an HOA.

Attorney fees in Georgia are only recoverable when authorized in a contract such as the CC&R or when they meet exceptional circumstances under O.C.G.A. § 9-11-68 and § 9-15-14 for bringing a substantially frivolous claim or unjustifiable defense. Requests made under this code must be made within 45 days of receiving the final disposition of the action. Rather than relying on these limited statutes, it is far better to establish the nature of disputes and recover legal fees through the CC&R.

If attorney fees are awarded, then the determination of the amount must be reasonable and cannot be based on guesswork. Most determinations for attorney fees require expert testimony to demonstrate to the court that their legal charges are reasonable and customary. Using hourly statements is usually the most effective process for quantifying the value of work performed, but it is not always sufficient to pass the burden of proof in a court of law.

Insufficient evidence or analysis of findings regarding the allocation of funds for unrelated types of work is often cited as one of the largest causes for the reversal of legal fee awards. Attorney fees must also be limited to sanctionable conduct since lump sum or unapportioned attorney fee awards are not allowed in Georgia. In the event of a reversal of the award on these grounds, the result would be an entirely new hearing.

Sometimes there are even requirements in a CC&R to resolve disputes without going to court at all and to instead come to an agreement through arbitration which still comes with attorney fees. In situations that require arbitration or mediation outside of court, however, those fees may not be covered for the prevailing party if the provision in the CC&Rs only applies to cases that go to court.

For the same reason, cases that are settled before they go to court present a gray area of who is responsible for paying attorney fees and therefore must also be established as a part of the settlement. When a case reaches a final judgment it can be challenging to determine which party prevailed especially when some legal suits contain more than one cause of action. If the court rules in favor of one count, but not another, then it becomes less clear which party prevailed and requires further calculations that can potentially result in having to share attorney fees.

Overall, the best way to guarantee legal compensation in a dispute between an owner and their community association is to establish the responsibility for paying legal fees in a contract like the CC&R. For help with determining the strength of your CC&R and whether it provides sufficient financial protection of legal services for prevailing parties, contact us today at Dunlap Bennett & Ludwig by calling 800-747-9354 or emailing clientservices@dbllawyers.com.


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Posted in: Litigation & Disputes, Real Estate

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