Generally, attorney fees are not recoverable by the other side in a dispute unless expressly allowed by statute, court rule, or contract. However, as the co-owner found out in Stadler V Fontainebleau Condominiums Association, unpublished decision of the Court of Appeals, Case Number 343303 (Decided April 11, 2019), a condominium association’s bylaws are a binding contractual agreement between the association and its members that likely provides for the recovery of the association’s attorney fees in a dispute with a co-owner.
Stadler involved a dispute between an owner of a condominium unit and the condominium association. The co-owner attempted to rent her unit, but the association was untimely in its approval of the proposed tenancy as required under the applicable bylaws. Due in part to the association’s approval delay, the proposed tenant decided not to rent from the co-owner. The co-owner then proceeded to rent the unit to another person without first getting approval from the association and also filed a small claims action against the association seeking to collect the lost rent from the first proposed lease. The parties eventually agreed to dismiss the matter and the association subsequently filed a lien against the co-owner’s property for attorney fees in defending the action. In response, the co-owner filed suit seeking to declare the lien invalid.
Like most association bylaws, the bylaws at issue in Stadler provided that “[t]he Association, if successful, also shall be entitled to recoup the costs and attorney fees incurred in defending any claim, counterclaim or other matter asserted against the Association from the [co-owner] asserting the claim, counterclaim or other matter[.]” The co-owner argued in part that this bylaw provision was unenforceable because it conflicted with the Michigan Condominium Act.
The Michigan Condominium Act provides that “In a proceeding arising because of an alleged default by a co-owner, the association of co-owners or the co-owner, if successful, shall recover the costs of the proceeding and reasonable attorney fees…to the extent the condominium documents expressly so provide.” MCL 559.206(b). The court found that the bylaws did not conflict with condominium act as the bylaws simply “provide[ ] for the recovery of attorney fees by defendant in additional circumstances.” As such, the co-owner was found to be liable for the association’s attorney fees so long as the contractual requirements of the bylaws were satisfied.
In disputes between co-owners and associations, a thorough review and understanding of the applicable statute and bylaws is critical to ensure that all parties’ rights and responsibilities are known and exercised.
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