J. Patrick Sutton Cases & Issues Blog

Unfair Attorney Fee Recovery Statute - Tex. Prop. Code § 5.006

Texas has a special law devoted to the recovery of attorney's fees in deed restriction litigation, and it is deeply flawed, unfair, and in my view, unconstitutional. The law, at Tex. Prop. Code § 5.006, states that the party who brings a lawsuit for breach of restrictive covenant can recover attorney's fees. The courts have interpreted this to mean that the homeowner who gets sued for breach of restrictive covenant (deed restriction) cannot recover attorney's fees even if he or she defeats the lawsuit. Unfair? You bet. What it does, in practice, is force someone who thinks they might get sued for breach of restrictive covenant to race to the courthouse and sue first. In that way, the person who thinks he or she may be a target can preserve an attorney-fee claim by using a special procedure (called "declaratory judgment").

But what if you never saw it coming? I represented the Boatners a few years ago, and they were sued for renting for short terms after the Austin Court of Appeals had already held, in the Zgabay case I litigated a couple of years before, held that STR's are allowed under common deed restrictions. The plaintiff who sued my clients presumably knew the law very well but, apparently, decided to spend whatever it took to make renting for short terms painful and expensive for my clients. They were sitting ducks; they had no warning that one of their neighbors would sue them for what the Austin Court of Appeals had just held was perfectly legal and allowable. No amount of effort on my part was able to convince the Austin Court of Appeals that my clients could recover their attorney's fees, even though they won a complete vindication on appeal of their right to rent out their home for short terms.

I still deal with cases where neighbors with money launch sneak attack lawsuits asserting breach of restrictive covenant for short-term renting, even though now even the Texas Supreme Court has held STR's allowable under most deed restrictions (as a "residential use"). All my clients can do is spend gobs of money to defend without much hope of getting fees after they win. There may be other avenues, like bringing a motion for bad faith, but that is not nearly so direct or easy.

I think § 5.006 is flatly unconstitutional. It makes ordinary people sitting ducks for vengeful HOA's and neighbors. In these times of heightened animosity, angry people who want to build walls around their homes and subdivisions, and assaults on all kinds of basic freedoms, to say nothing of huge disparities in wealth that allow some property owners to target others with ruinous lawsuits, § 5.006 has to go. I think it violates equal protection and due process because ANY completely innocent homeowner exercising basic property rights allowed under deed restrictions can be targeted by a vengeful, angry neighbor with money to burn.
J. Patrick Sutton Cases & Issues Blog