Legal Question in Real Estate Law in California

Re: HOA Dispute

Absent a contract provision to the contrary, all parties to contract disputes pay their own lawyers, irrespective of outcome. However, it is fairly common for more detailed contracts to contain attorney-fee provisions, and probably rightly so; why should the winner be forced to cough up big legal fees to prove her entitlement to be the winner?

OK, enough editorializing and down to the nuts and bolts. You really have to read the words of the attorney-fee clause rather carefully. If the clause says the prevailing party is entitled to recover legal fees from the loser in any lawsuit, that probably rules out a recovery if the matter is arbitrated. If the contract says "any dispute" or "lawsuit or arbitration" or "proceeding," these terms are probably broad enough to reallocate attorney fees in an arbitration as well as in a lawsuit in court. If the operative term is "litigation," I don't know the answer off the top of my head and would have to research it, but my hunch is that "litigation" is a broad-enough term to include both a suit in court and arbitration. Don't count on it.

Anyway, here's another angle. Since the HOA has sent a demand for arbitration, one must assume that the HOA agreements make arbitration rather than lawsuit mandatory (unless the parties waive arbitration and agree to go to court). If so, there would be little sense in including an attorney-fee clause that applied only to lawsuits, since they would be rare. Therefore, one might conclude any attorney-fee clause in your HOA contract certainly must apply to arbitration; otherwise, it would be meaningless, and every clause of a contract is presumed to have some meaning or purpose. So, very likely whomever prevails in the arbitration will indeed be able to collect attorney fees from the loser - if there is an attorney-fee clause at all.