Recovering Legal Fees May Be Harder Than You Think

Stewart Wurtzel, Partner, Tane Waterman & Wurtzel

Fat fees. We always advise our boards that if you’re thinking about going to court, don’t base the decision on whether or not you’re going to recover legal fees, because even if you’re entitled, there are a lot of questions. And the fight over legal fees often can overtake what the underlying dispute is, because sometimes it’s a much bigger number. So you need to check your proprietary lease or bylaws, which spell out the circumstances when you are authorized to recover legal fees.

When winners lose. There was a case recently where a condo unit-owner was renting his apartment as an Airbnb, which is illegal. The board won an injunction, and he was ordered to stop. When the board tried to recover its legal fees, the court said the condominium documents did not provide for recovery of attorney’s fees in a non-monetary default situation — meaning the condo couldn’t recoup the legal fees if it wasn’t recovering common charges. The board won in court to get the conduct stopped, but it was still out about $37,000 in legal fees because the condo’s bylaws did not provide for recovery of these.

Time to revise? The lesson here is to check your documents before you do anything. Know going into the fight what the rules of the game are, and what your chances are. If, like many co-ops and condominiums, you do not have the appropriate language in your governing documents, we strongly recommend that there be a revision to the proprietary lease or bylaws.