Recovery of Attorneys Fees in Texas Cases Alleging Breaches of Restrictive Covenants

Did you know that the Texas Property Code provides that the "prevailing party" who brings a legal action or lawsuit "based on" breach of a restrictive covenant, sometimes referred to as a "CCR," may recover their costs and attorneys' fees?

More particularly, Section 5.006 of the Texas Property Code provides as follows:

ATTORNEY'S FEES IN BREACH OF RESTRICTIVE COVENANT ACTION. (a) In an action based on breach of a restrictive covenant pertaining to real property, the court shall allow to a prevailing party who asserted the action reasonable attorney's fees in addition to the party's costs and claim.

(b) To determine reasonable attorney's fees, the court shall consider:

(1) the time and labor required;

(2) the novelty and difficulty of the questions;

(3) the expertise, reputation, and ability of the attorney; and

(4) any other factor.

It should be noted that recovery of fees is not limited to a Homeowners Association. In that regard, a party who successfully challenges an HOA's enforcement of a particular covenant, and even an individual homeowner seeking to enforce the CCRs could recover the fees and expenses. This statute, which is often overlooked, has tremendous "loser pays" implications.

Often times, however, a particular set of CCRs will precribe that the HOA for a given development can recover its fees from a homeowner against whom enforcement is sought. Frequently, there is no reciprocal clause. Thus, it is important to check the language of your particlaur HOA's restrictive covenants and By-laws to consider whether such documents conflict with Section 5.006.

In any event, litigation concerning the enforcement of CCRs is complex and frequently turns on minute legal nuances. Accordingly, any person or entity should seek experienced legal counsel when contemplating litigation based on breach of a restrictive covenant related to real estate.