CAN I RECOVER MY LEGAL FEES IF I SUE MY HOA IN CALIFORNIA?
OVERVIEW
Under what’s called the “American Rule,” California’s Davis-Stirling Act awards the winning party in most HOA-related lawsuits their reasonable attorney’s fees and costs. This means that if you (or your HOA) wins the lawsuit, the court will award you not only your reasonable attorney’s fees incurred throughout the lawsuit, but also any legal fees that you may have incurred participating in any pre-lawsuit alternative dispute resolution (ADR).
This article is a follow-up to my original article published on this subject in 2019. You can read that article by clicking here. And if you’d like to see a quick reference guide, then click on my “Can California Homeowners Recover Attorney’s Fees in HOA Lawsuits?” Fact Sheet.
If you’d like to watch an episode of my podcast where I address this issue fully, then click the episode title (“If I Sue My HOA Will I Get My Attorney’s Fees Back?“). You can also find that episode on Amazon, Apple, and iHeart podcast platforms.
THE AMERICAN RULE
Like all of the other states, the State of California operates under a rule called the “American Rule.” Under the American Rule, a winning party (more called the “prevailing party”) will only be entitled to an award of of their attorney’s fees and costs in two situations: (1) there is a contract between the parties that explicitly awards the prevailing party with their reasonable attorney’s fees; or (2) there is an applicable statute (i.e., law) that explicitly awards the prevailing part with their reasonable attorney’s fees. That’s it. If neither of those conditions exist—i.e., if there is neither an applicable contract provision awarding the prevailing party their legal fees nor an applicable statute doing the same, then even if you win, you won’t be reimbursed for your reasonable attorney’s fees.
Most HOA-related lawsuits meet one or both of the conditions described in the American Rule, which means that the prevailing party in most HOA-related lawsuits will be entitled to reimbursement of their attorney’s fees and costs.
CC&RS ARE TREATED LIKE CONTRACTS IN CALIFORNIA HOA LAWSUITS
For the most part, each HOA in California is governed by a document typically referred to as the CC&Rs, and as a matter of law, each HOA’s CC&Rs is considered a binding and enforceable contract between the HOA and the homeowners who own property in the association. And, as it so happens, most CC&Rs contain a provision awarding attorneys’ fees to the prevailing party in a lawsuit involving the CC&Rs.
If your HOA’s CC&Rs contain an attorneys’ fees provision, and most CC&Rs in California do contain such a provision, then upon winning your lawsuit, the court will order your HOA (or neighbor if they are the losing party) to reimburse you for your reasonable attorneys’ fees.
THE DAVIS-STIRLING ACT AWARDS PREVAILING PARTIES THEIR ATTORNEY’S FEES
Under Civil Code section 5975(c), which is part of the Davis-Stirling Act—the set of laws located in the Civil Code that govern the creation, operation, and dissolution of most HOAs in California—in a lawsuit “to enforce the governing documents, the prevailing party shall be awarded their reasonable attorney’s fees and costs.” In other words, under California law, the prevailing party in an enforcement action between a member of an HOA and the HOA or another member, will be awarded their reasonable attorney’s fees and costs.
That brief provision of the Civil Code, though simple to understand once you know the legal meaning of certain words, requires a bit of unpacking to get there.
Who is the “Prevailing Party”?
In HOA-related litigation, the determination of a “prevailing party” for purposes of awarding attorney fees often hinges on a pragmatic assessment of which party achieved its main litigation objectives. California courts have consistently emphasized that this determination is not solely dependent on procedural outcomes, but rather on the practical results of the litigation. (Haidet v. Del Mar Woods Homeowners Assn. (2024) 106 Cal.App.5th 530 [Interpreting Civil Code § 5975, court reasoned that the HOA achieved its litigation objectives by succeeding in its demurrer, which led to the plaintiffs omitting the HOA from their amended complaint and the subsequent judgment of dismissal. The court emphasized that even in cases of voluntary dismissal, the trial court has discretion to determine the prevailing party based on the extent to which litigation objectives were realized]; Champir, LLC v. Fairbanks Ranch Assn. (2021) 66 Cal.App.5th 583 [Also interpreting Civil Code § 5975, this court ruled that the plaintiff had prevailed on a practical level. According to the court, the plaintiffs’ main litigation objective was to compel the HOA to comply with the CC&Rs by obtaining majority approval before installing a traffic light. Once the HOA complied, the plaintiffs voluntarily dismissed their action as moot because the HOA had done what the plaintiffs had sued them to do.]
Ultimately, identifying the prevailing party is only part of the attorney’s fees analysis under Civil Code section 5975. The statute applies specifically to “actions to enforce the governing documents,” which means the court must also determine whether the lawsuit itself qualifies as an enforcement action. Understanding what falls within that category is critical, because even a clear litigation victory will not trigger a fee award if the underlying case is outside the statute’s scope.
What is an “Enforcement Action”?
Under the Davis-Stirling Act, the court must award reasonable attorneys’ fees to the prevailing party in an enforcement action. Generally speaking an enforcement action is one involving the enforcement of an HOA’s governing documents (e.g., CC&Rs, Rules, etc.). For example, a lawsuit aimed at forcing your HOA to maintain the common areas, hold required open meetings, provide proper notice of meetings, enforce the governing documents, or repair damage to your property (where the CC&Rs hold the HOA responsible for such repairs) would all certainly be deemed actions to enforce your HOA’s governing documents. Likewise, “enforcing the governing documents” might also include challenging an unfair decision by the board (e.g., where your HOA prevents you from making an improvement to your property), stopping the board from treating you differently from other homeowners, forcing your HOA to stop another homeowner from being a nuisance, stopping a board member from misusing HOA assets/resources, or otherwise wrongfully using community funds. The thing to remember is that the term “enforcement action” is broad and therefore often encompasses almost any issue that may arise due to the conduct (or, more likely, misconduct) of an individual homeowner, an HOA’s board of directors, or an HOA’s property management company.
Because the term “enforcement action” is interpreted so broadly, it often includes disputes that began well before a lawsuit is filed. In fact, under California law, attorney’s fee awards in enforcement actions can sometimes reach back into the pre-lawsuit stage.
ATTORNEY’S FEES INCURRED DURING ADR (PRIOR TO THE LAWSUIT)
Although the Davis–Stirling Act does not grant a party the right to recover attorney’s fees in disputes that never result in a lawsuit, California courts have made it clear that once litigation is filed, a prevailing party may, in some circumstances, recover fees incurred during the pre-lawsuit ADR process. Under Civil Code section 5930, many HOA disputes cannot be filed in court until the parties have offered or agreed to participate in pre-litigation ADR. When ADR is mandatory under section 5930, the California Court of Appeal has held that those pre-litigation fees are recoverable as part of the prevailing party’s fee award in the enforcement action. (Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal.App.5th 252). In that decision, the court explained that mandatory pre-filing ADR under section 5930 is “necessarily part of the litigation,” and therefore that fees reasonably incurred in that ADR could be included in the award under Civil Code section 5975(c).
The Rancho Mirage court, however, did not decide whether the same rule applies when ADR was not technically required under section 5930 but the parties nevertheless participated in good faith in an effort to resolve the dispute without litigation. As a result, the law remains unsettled as to whether voluntary pre-lawsuit ADR in an enforcement action, where section 5930’s requirements technically do not apply, can also support a fee award. In my opinion, the reasoning and public policy underlying Rancho Mirage strongly support such an extension. According to the court in the Rancho Mirage case, the Davis–Stirling Act’s ADR provisions are designed to encourage resolution of disputes without resorting to litigation and to prevent gamesmanship. If those statutory principles truly guide the courts, there is little reason to deny recovery of reasonable fees to a party who engaged in voluntary ADR in good faith, prevailed in the subsequent enforcement action, and thereby accomplished precisely what the statute was meant to promote. In other words, penalizing parties who attempt to resolve their disputes early, simply because ADR was not mandatory, would directly undermine that policy.
Thus, homeowners may also be entitled to recover attorney’s fees for pre-lawsuit ADR if they offered or agreed to participate in ADR even though not technically required under section 5930, and then prosecuted or defended an enforcement action and prevailed . While current appellate precedent has recognized this right only in the context of mandatory ADR, the statutory purpose and reasoning in Rancho Mirage provide a strong foundation for extending fee awards to parties who engage in voluntary ADR in enforcement actions and subsequently achieve prevailing party status.
CONCLUDING THOUGHT
Attorney’s fee awards in HOA disputes can be substantia, and in some cases, exceed the underlying damages at issue. For homeowners, understanding the scope of the Davis–Stirling Act’s fee-shifting provisions, including what qualifies as an “enforcement action,” how courts determine the “prevailing party,” and when pre-lawsuit ADR fees may be recoverable, is essential to making informed litigation decisions. While California appellate courts have so far confirmed fee recovery for ADR that is mandatory under Civil Code section 5930, the public policy articulated in Rancho Mirage supports extending that right to voluntary ADR in future cases.
By approaching disputes strategically, complying with ADR requirements, and keeping the statute’s purposes in mind, homeowners can not only strengthen their position in the underlying case, but also maximize their ability to recover the full measure of their reasonable attorney’s fees if they prevail.