The CC&Rs are the central ingredient of what makes a Common Interest Development tick. Homeowners and associations alike use the CC&Rs as both a sword and a shield. If you have ever asked, “can Jon Doe or Mary Anne do this,” the CC&Rs were likely the first place you went in search of the answer!
The CC&Rs have an additional function that makes them that much more powerful: the prevailing party of a legal action taken to enforce the CC&Rs may be awarded attorneys’ fees. This particular prowess comes not from the CC&Rs, but from the Civil Code.1 Essentially, it means all those invoices from your attorney will be paid for by the party that lost.
There are three requirements that must be met to be awarded attorneys’ fees:
(1) the action taken must be to enforce governing documents;
(2) the governing documents must be for a Common Interest Development; and
(3) the party seeking attorneys’ fees must be the prevailing party.2
Sounds easy, right?
In the 2015 case of Patterson v. Sherwood Valley Homeowners Association, we learn, however, that it is not always so cut and dry. In this case, the development happened to be located next to a park, and both the development and the park had their own sets of CC&Rs.3 The association was given authority to manage both the park and the development, and in doing so, the association planted trees that eventually obstructed Patterson’s view of the lake.4 Patterson sought to have the CC&Rs enforced, and alleged, among other things, that the association created a nuisance by “‘extensively over-planting’” the park “‘with a variety of rapidly growing trees.’”5 The trial court eventually determined that Patterson “did not have a right to an unobstructed view of the lake,” and that she could not actually seek to enforce the park CC&Rs.6 The association, therefore, prevailed in the action and sought attorneys’ fees.7
The association was not, however, awarded the attorneys’ fees, which may seem to go against what has been stated above. So, why did this happen?
The answer: the park, while it had CC&Rs, was not a Common Interest Development as defined by the Civil Code, and the plaintiff sought enforcement of the park’s CC&Rs, not the development’s CC&Rs. Therefore, there was:
(1) an action to enforce governing documents; and
(3) a prevailing party;
but there were no (2) governing documents from a Common Interest Development being enforced, since the CC&Rs being referenced were that of the park.
Thus, while requirements 1 and 3 were met, requirement 2 was not and the prevailing party could not, therefore, be awarded attorneys’ fees.8
Associations should take caution to ensure that the documents being enforced are those of the Common Interest Development and not a different neighboring entity. While the association may still have to enforce the neighboring entity’s governing documents as in Patterson, it should be aware that there may not be a right to recover attorneys’ fees.