The former instance, enforcing covenants without filing a lawsuit, includes the violation letter(s) to the owner from the attorney and any other communications during this process to enforce the covenants, prior to filing a lawsuit. In that instance Section 123 provides that the Association can be reimbursed for the attorney’s fees. It is proper, therefore, to add those attorney’s fees to the owner’s ledger and collect them just like the association would collect normal assessments, as provided by CCIOA at Section 316.

When the association takes the next step, however, and files a lawsuit against the owner for the covenant violation, the association is no longer entitled to be automatically reimbursed for attorney’s fees that are incurred. Section 123 provides that when a lawsuit has been filed, it is only the prevailing party that shall be awarded the attorney’s fees. Therefore, the association must actually be the prevailing party in the litigation and obtain an award of attorney’s fees from the court before it can rightfully collect those fees from the owner.

Because of that provision, it is important that once litigation starts against an owner for a covenant violation, the association (itself) or its management company, if there is one, must no longer add the attorney’s fees to the owner’s ledger. It is permissible, and recommended, to still keep track of the fees, as your attorney will do, of course, but the association has no right to those fees unless and until it prevails in the litigation or there is a settlement in which the owner agrees to pay this fee.

One further note: even though associations cannot collect the attorney’s fees from the owner during the course of the litigation before an association prevails, associations are still responsible for paying the attorney’s fees as they are billed.