Recovery of Attorney’s Fees in CC&R Disputes

Question: We live in a beautiful community of 27 homes in Litchfield Park near the Wigwam Country Club. There is no HOA. Our CC&Rs require any amendment of the CC&Rs to have the approval of the majority of the homeowners. Everyone in our community has always been opposed to short-term rentals (“STR”). Therefore, when a STR owner bought a home in our community last year, we had to hire a lawyer to write letters back and forth with the lawyer for the STR owner. We finally had to file a lawsuit, and the STR owner immediately sold the home to a family with four children. Although we “won,” three of us were the only homeowners that paid our attorney’s fees of $8,500. Can we recover our attorney’s fees of $8,500 from the former STR owner?

Answer: Probably not. The CC&Rs 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 STR owner, however, never answered the lawsuit, but just sold the STR. Therefore, there was no “contested action”, and you three homeowners probably have no claim against the former STR owner for the recovery of your $8,500 attorney’s fees.

Note: Even in a “contested action,” the amount of attorney’s fees awarded to the winning party has to be “reasonable,” and is in the “discretion” of the judge.