QUESTION: We have a qualified board who seeks guidance from attorneys and experts when needed. Like most CIDs we have a small faction of owners who claim that almost every act by the board is illegal. They forced us into mediation, which cost us $28,000 in legal fees. There was no resolution and they walked away. Can we go after them for the legal costs or do we need to special assess our membership?
ANSWER: Under the circumstances you described, you need to special assess your membership. For better or worse, legal fees are part of an association's "cost of doing business." Only under limited circumstances can you recoup legal expenses.
Statutory Provisions. If the matter involving your problem homeowner had gone to court or to binding arbitration, there are statutory provisions for the award of attorneys' fees. Even then, the association must be deemed the prevailing party and the judge must award fees and costs to the association before the association can collect them.
Pre-Litigation ADR. In the 2012 case of Grossman v. Park Fort Washington Assn, the court, changed the starting point for the award of attorneys' fees. Normally, any attorneys' fees incurred prior to the filing of the complaint are not awarded. Here, the court concluded that the pre-litigation ADR process mandated by the Davis-Stirling Act is the actual start of litigation. Accordingly, it awarded attorneys' fees expended by the homeowner expended in pre-litigation ADR.
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