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Perspectives

Condominium That Prevailed in Litigation May Not Recover Legal Fees Under Narrow By-Law Provision

A cooperative or condominium board that prevails in litigation against a tenant-shareholder or unit owner will often seek to recover its attorneys’ fees.  However, the general rule in the United States is that the parties to a litigation are each responsible for their own attorneys’ fees, regardless of the outcome of the litigation, unless a specific statute, court rule, or contract provision provides otherwise.

In Board of Managers of 207-209 East 120th Street Condominium v. Dougan, 2022 N.Y. Misc. LEXIS 2392, 2022 N.Y. Slip Op. 31491(Sup. Ct. N.Y. Co. May 4, 2022), the condominium sued one of its unit owners alleging that the unit owner was not using his condo unit as a residence, but was renting it out on a short-term basis on websites such as Airbnb, in breach of the by-laws and house rules.  The court granted the board a preliminary injunction prohibiting the unit owner from any further short-term rentals of the unit, and thereafter the unit owner defaulted by failing to answer the board’s complaint.  The board then sought relief including an award of the attorneys’ fees it had incurred in the litigation.

The board relied on by-law provisions that empowered the board to commence litigation to enjoin violations of the by-laws and house rules, and required unit owners to comply with governmental requirements for lawful uses of their units.  Neither provision mentioned the recovery of attorneys’ fees.  The court stated that if the by-laws had contained a section providing for the board to recover attorneys’ fees if it prevailed in litigation – as many sets of coop and condo by-laws do – the court would have enforced it.  However, in the absence of a specific provision allowing the board to recover attorneys’ fees, the court lacked authority to award them.  Boards may wish to review their governing documents and consider whether to seek to amend them, if possible, to include a legal fee provision if there is none currently, and to maximize the scope of any legal fee provision that already exists.