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By: Cheryl H. Shaw
Community associations are funded through assessments paid by property owners. When owners fail to pay, the association’s ability to meet financial obligations and provide for upkeep of the community is diminished. Common area repairs and replacements don’t go away just because the association’s bank account is lean, and maintenance projects get more expensive when delayed. Owners who pay their assessments end up subsidizing those who do not, while delinquent owners continue to enjoy the benefits of the association. Pursuing delinquent property owners in court can be a long, arduous, and expensive process. However, the Georgia Court of Appeals recently affirmed an association’s right to recover attorney fees incurred in that effort, making the process a little less painful.
In Summit at Scarborough Homeowners Ass’n v. Williams, 343 Ga. App. 343 (2017), an HOA sought to recover its court costs and attorney fees after obtaining judgment against a property owner for unpaid annual assessments. The trial court denied the motion and the HOA appealed, asserting it was entitled to the fees under a provision of the recorded Declaration of Covenants, Conditions, Restrictions and Easements which stated:
The annual and special assessments [imposed by the Declaration], together with late charges, simple interest at the rate of twelve percent (12%) per annum, court costs, and attorneys’ fees incurred to enforce or collect such assessments, shall be an equitable charge and a continuing lien upon the property against which each such assessment is made and shall also be the personal obligation of the person who is the record owner of the property at the time the assessment fell due.
Siding with the HOA and reversing the trial court’s order, the Court of Appeals reiterated that under Georgia law, the Declaration of a homeowners’ association is considered a binding contract: “Where parties contract for the recovery of attorney fees, a trial court does not have the authority to alter that arrangement unless it is prohibited by statute.” Finding no statute that prohibited recovery of fees in this context, the Court held the Declaration obligated the property owner to pay the HOA the reasonable attorney fees incurred in its collection efforts. The Court reversed the trial court’s order and remanded the case with instructions to enter an award of costs and fees consistent with the Declaration. Id.
The Williams case confirms Georgia courts will enforce an HOA’s right to recover attorney fees if clearly set forth in the recorded declaration. Making sure your association has the right language in its governing documents is critical. Cheryl H. Shaw is licensed in Georgia and has successfully represented community associations and property management companies in all manner of claims, including consultation concerning governing documents and daily business operations. If you have questions or would like more information, please contact Ms. Shaw at [email protected].