[§421J-10]  Attorneys' fees and expenses ofenforcement.  (a)  All costs and expenses, including reasonable attorneys'fees, incurred by or on behalf of the association for:

(1)  Collecting any delinquent assessments against anyunit or the owner of any unit;

(2)  Foreclosing any lien on any unit; or

(3)  Enforcing any provision of the associationdocuments or this chapter;

against a member, occupant, tenant, employee of amember, or any other person who in any manner may use the property, shall bepromptly paid on demand to the association by such person or persons; providedthat if the association is not the prevailing party, all costs and expenses,including reasonable attorneys' fees, incurred by any such person or persons asa result of the action of the association, shall be promptly paid on demand tothe person by the association.  The reasonableness of any attorney's fees paidby a person or by an association as a result of an action pursuant to paragraph(2) shall be determined by the court.

(b)  If any member is the prevailing party inany action against an association, any of its officers or directors, or itsboard of directors to enforce any provision of the association documents orthis chapter, then all reasonable and necessary expenses, costs, and attorneys'fees incurred by the member shall be awarded to the member; provided that nosuch award shall be made in any derivative action unless:

(1)  The member first shall have demanded and allowedreasonable time for the board of directors to pursue an enforcement action; or

(2)  The member demonstrates to the satisfaction ofthe court that a demand for enforcement made to the board of directors wouldhave been fruitless.

If a member is not the prevailing party in anycourt action against an association, any of its officers or directors, or itsboard of directors, to enforce any provision of the association documents orthis chapter, then all reasonable and necessary expenses, costs, and attorneys'fees incurred by the association shall be awarded to the association, unlessthe action was filed in small claims court, or, prior to filing the action in ahigher court, the owner has first submitted the claim to mediation pursuant tosection 421J-13, and made a good faith effort to resolve the dispute under anyof those procedures.

(c)  Nothing in this section shall be construedto prohibit the board of directors from authorizing the use of a collectionagency. [L 1997, c 132, pt of §1]

 

Case Notes

 

  Where charter was not recorded, and because homeownerassociation's first amended declaration could not reasonably be interpreted ascreating the requisite authority in the association to impose a mandatorypayment of money for maintenance or services, the association was not an"association" under the plain meaning of §421J-2; thus, associationwas not entitled to fees and costs pursuant to this section.  114 H. 361, 162P.3d 1277.

  Where homeowners' association did not qualify as anassociation because it was not granted authority in a declaration satisfyingthe statutory definition of "association" in §421J-2, trial courterred in awarding attorney's fees and costs pursuant to this section.  112 H.356 (App.), 145 P.3d 899.