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

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

(2) Foreclosing any lien on any unit; or

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

against a member, occupant, tenant, employee of a member, or any other person who in any manner may use the property, shall be promptly paid on demand to the association by such person or persons; provided that if the association is not the prevailing party, all costs and expenses, including reasonable attorneys' fees, incurred by any such person or persons as a result of the action of the association, shall be promptly paid on demand to the person by the association. The reasonableness of any attorney's fees paid by 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 in any action against an association, any of its officers or directors, or its board of directors to enforce any provision of the association documents or this chapter, then all reasonable and necessary expenses, costs, and attorneys' fees incurred by the member shall be awarded to the member; provided that no such award shall be made in any derivative action unless:

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

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

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

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

Case Notes

Where charter was not recorded, and because homeowner association's first amended declaration could not reasonably be interpreted as creating the requisite authority in the association to impose a mandatory payment of money for maintenance or services, the association was not an "association" under the plain meaning of §421J-2; thus, association was not entitled to fees and costs pursuant to this section. 114 H. 361, 162 P.3d 1277 (2007).

Where homeowners' association did not qualify as an association because it was not granted authority in a declaration satisfying the statutory definition of "association" in §421J-2, trial court erred in awarding attorney's fees and costs pursuant to this section. 112 H. 356 (App.), 145 P.3d 899 (2006).