A common question asked of me in my practice of community association law is the right of the association to demand attorneys’ fees from members. The law is the same for homeowner associations (HOAs) and condo associations (COAs).
There are three types of situations in which an association will incur legal fees and attempt to pass them on to the owner of property:
1. Past due assessment collection
2. Covenant enforcement
3. Foreclosure litigation
By state law associations are allowed to reimbursement for attorneys’ fees incurred to collect past due assessments even if no litigation is filed in court. The law, in fact, provides any payments tendered will be applied to attorneys’ fees first, interest and late fees next, and assessments last. This means the owner is always past due in the payment of assessments unless the amount demanded is paid in full. Attorneys are paid for every minute of time they spend assisting a client, including telephone calls, emails and faxes. Every attempt to argue the validity of the amount incurs more fees. It’s a no-win situation for the owners, so the best option is to pay the bill in full and then demand a refund if you think the fees are excessive.
There is no state law allowing associations to demand reimbursement of attorneys’ fees for addressing covenant violations. The governing documents of the association may have a provision for this and in such an instance the association can pass the fees on to the owner. The governing documents of an association are a contract between you and the association. You can contract away your constitutional rights. An association cannot; however, engage in any conduct not authorized by its governing documents. Many associations, in response to the repeal of the statute authorizing lien and foreclosure for unpaid fines, amended the governing documents, often illegally, to state any attorneys’ fees for covenant violations would be an individual assessment against the property subject to lien and foreclosure. While I believe this could be defeated in court, I do not recommend clients risking the loss of their home over this and the cost of litigating the issue far exceeds any amount demanded. The associations tend to get their way with their illegal demands simply because the owners cannot afford to litigate. Sooner or later someone will litigate the issue and the associations will suffer the consequences of bad legal advice.
The final category is foreclosure litigation. The associations are named as defendants in a mortgage foreclosure by the banks. This is done to clear title to the property. The associations need to file an answer and affirmative defenses to preserve their right to collect the debt. Often the property is sold at auction by the courts. Any buyer of a property is liable for the past due assessments of the previous owner. The statute does not authorize the association to pass on legal fees, interest or late charges to the new owner. Industry practice is to pass on all the fees and charges. There is no Florida Statute or Rule of Civil Procedure allowing a defendant to pass on the costs of the litigation to another party without a court order. Yet the association attorneys continue this practice and get away with it. Rather than fight with the association on this, a complaint against the attorney is more appropriate.