This case involved a dispute between a condominium owner (Owner) and his owners association (Association) over Owners right to be reimbursed for HOA litigation expenses that he incurred in a dispute with neighboring developments over the ownership of a sewer system that Association believed was part of its common area components.
In 2013, the president of one of the neighboring associations informed Association that the neighboring association owned a portion of the sewer system and that it intended to charge Association a fee for use of the sewer system. Owner and Association disagreed over how to handle the claimed ownership of the sewer system. Association wanted to resolve the matter without HOA litigation expenses by agreeing to shared ownership and some payment by Association to the neighboring association. Owner wanted to litigate the issue with the neighboring association, but he was unable to persuade Association to take that course of action so he took it upon himself to commence an action against the neighboring association to establish that Association was the sole owner of the subject sewer system. Owner prevailed in that litigation and obtained a declaration from the court that Association was in fact the sole owner of the sewer system. It followed that the sewer system was a common element of Association.
After prevailing in the litigation with the neighboring association, Owner sought reimbursement of the HOA litigation expenses that he incurred in the litigation from Association based on his contention that all unit owners are responsible for the expenses relating to Associations common elements. Owner reasoned that through his efforts in taking on the litigation in which he prevailed, Association was benefited by the declaratory judgment that established Association as the owner of the sewer system and accordingly, all of the owners constituting the members of Association should share in the expense. The trial court ruled that Owner was not entitled to reimbursement for the litigation costs that he incurred and Owner appealed.
The appellate court determined that Owners argument that all of the owners were responsible for the common area expenditures made by Owner was flawed because it did not take into consideration the circumstances leading to the expenditures. The facts showed that Association was in favor of pursuing a negotiated agreement that Association deemed affordable and which would have avoided the delay, risk, and expense of the litigation. Because Associations governing body made a decision not to pursue litigation over the issue of ownership of the sewer system, owner did not have a right to expend funds on his own, against the wishes of Association, and then force all owners to reimburse him. The appellate court further stated that the statute requiring all owners to share in common area expenses empowered only condominium associations, and not individual owners, the power to make financial decisions regarding common elements and then assess owners to cover those expenses. In affirming the trial courts judgment, the appellate court stated, We discern no reason to suppose that the legislature intended to give individual owners or subsets of owners the authority to incur expenses preserving or improving common elements and then, in the event of favorable outcomes, force other owners to provide reimbursement.
Wisconsin Appellate Court decision (October 25 2018).
See case decision: Larson_v._Castle_At_the_Bay_LLC_(Wis._App._2018)1