"Paid in Full"

Watch Out For These Dangerous And Costly Words

What does your association do when an owner sends the association their assessment payment for less than full amount due? Say the owner owes $1,000.00, and only sends in $100.00 and on their check writes “paid in full.” Do you deposit the check and bill the owner for the difference? If you answered yes, then you are likely in the majority. But, given Florida’s Second District Court of Appeal, August 8, 2014, opinion in St. Croix Lane Trust (the “St. Croix Trust”) & M.L. Shapiro, Trustee (the “St. Croix Trustee”) v. St. Croix at Pelican Marsh Condominium Association, Inc. (the “Association”), you might seriously reconsider depositing that check in favor of sending it back to the owner and demanding full payment, instead. The answer will depend on whether the owner disputed the amount due.

In this case, the St. Croix Trust acquired its unit as a result of a foreclosure. Upon talking title, the Association demanded $38,586.11 as the assessments that remained due and owing. The St. Croix Trustee disputed the assessment amount and argued to the Association that it only owed $840.00. The St. Croix Trustee then sent its check in the amount of $840.00 to the Association and in so doing, wrote a restrictive endorsement on their check, “paid in full.” While the Association continued to seek the difference from the St. Croix Trustee, the attorney handling this collection matter for the Association deposited the $840.00 check. The Court held that the St. Croix Trust did not owe the balance due because the restrictive endorsement written on its check combined with the Association’s lawyer’s act of depositing the check was a de facto acceptance of the St. Croix Trust’s $840.00, a process in legal terms referred to as an “accord and satisfaction.”

An “accord and satisfaction” is discussed in section 673.111, Florida Statutes, more commonly known as the “Condominium Act.” This section provides, in relevant part, that:

“(1) If a person against whom a claim is asserted proves that that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, that the amount of the claim was unliquidated or subject to a bona fide dispute, and that the claimant obtained payment of the instrument, the following subsections apply.

(2)…[T]he claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.”

While there are a few exceptions to subsection (2), above, the Court found that none of them applied to this situation. The Court also held that none of the stated exceptions to the application of subsection (2) applied and thus, “[i]f the Association did not wish to accept the $840 check in full settlement of its claims in accordance with the [St. Croix] Trust’s tender, then it should have returned the check instead of negotiating [depositing] it.”

Being an astute reader of this column, you are already aware that that section 718.116(3) of the Condominium Act (as well as a similar provision set out in the Chapter 720, also known as the “Homeowners’ Association Act”) provides, in relevant part, that:

“…. Any payment received by an association must be applied first to any interest accrued by the association, then to any administrative late fee, then to any costs and reasonable attorney’s fees incurred in collection, and then to the delinquent assessment. The foregoing is applicable notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment.”[emphasis added]

The Court looked to the legislative history and staff analysis of the legislation and found that it meant that, even if a check contained a restrictive endorsement which provided some other formula for the application of a payment, that nevertheless the monies were to be applied first to the accumulated interest, followed by late fees, attorney’s fees and costs and then to the delinquent assessment. In the Court’s opinion, the staff analyses confirmed that the pertinent language was added to invalidate restrictive endorsements that provide a formula for the application of payments other than as set forth in the statute. The Court found “nothing in the staff analyses suggesting that the amendment was intended to make section 673.3111 [the accord and satisfaction statute, above] inapplicable to condominium associations or that the amendment would otherwise alter Florida law concerning accord and satisfaction solely for the benefit of condominium associations.”

The key to understanding this outcome is that the St. Croix Trustee, an association member, had first disputed the assessment amount due, and then sent in the St. Croix Trust’s $840.00 check that contained the restrictive endorsement, “paid in full” which was deposited by the Association (or in this case, its attorney). With this in mind:

1)    If the debt is disputed and less than the full amount due is provided with the written endorsement “paid in full,” do not deposit the check. Instead, send it back to the debtor and demand that the full amount past due be remitted.

2)    If there is no dispute and less then the full amount due is sent in by the debtor and the check provided by the debtor contains written endorsement “paid in full,” then if the association deposits the check, it can argue that there was no “accord and satisfaction.” However, it may not be worth the risk, which leaves us with the safest alternative set out in No. 3 below.

3)    Any time the association receives a check containing the written endorsement “paid in full,” then, unless the check actually represents the full amount due, do not deposit it but rather send it back and demand the debtor resubmit their check, this time in full.

With this newest wrinkle to association assessment collections, the Florida legislature should come to the aid of associations and clarify that if a debtor writes “paid in full” on their check, it is fully and unequivocally meaningless.

COURSE INFORMATION FOLLOWS

Board Member Certification Courses

FREE Board Certification Courses for Homeowners' and Condominium Board Members and Managers

PALM BEACH COUNTY

Our Homeowners' Association Board Member Certification course will be offered in our Palm Beach Gardens office located at 9121 North Military Trail, Suite 200, Palm Beach Gardens, FL 33410 on:

Tuesday, September 9, 6:00-8:30 p.m.

Tuesday, October 14, 6:00-8:30 p.m.

Tuesday, November 11, 6:00-8:30 p.m.

Our Condominium Association Board Member Certification course will be offered in our Palm Beach Gardens office located at 9121 North Military Trail, Suite 200, Palm Beach Gardens, FL 33410 on:

Tuesday, September 16, 6:00-8:30 p.m.

Tuesday, October 21, 6:00-8:30 p.m.

Tuesday, November 18, 6:00-8:30 p.m.

Please register for our Palm Beach Gardens courses by sending an e-mail to trisha@kbrlegal.com or by calling (561) 241-4462.

BROWARD COUNTY

Our Homeowners' Association Board Member Certification course will be offered in our Pompano Beach office located at 1200 Park Central Boulevard South, Pompano Beach, FL 33064 on:

Tuesday, September 30, 6:30-8:30 p.m.

Tuesday, October 21, 6:30-8:30 p.m.

Our Condominium Association Board Member Certification course will be offered in our Pompano Beach office located at 1200 Park Central Boulevard South, Pompano Beach, FL 33064 on:

Tuesday, September 18, 6:30-8:30 p.m.

Tuesday, October 7, 6:30-8:30 p.m.

Please register for our Pompano Beach courses by sending an e-mail to odalis@kbrlegal.com or by calling (954) 928-0680.

For more information regarding our board member certification courses and our law firm, please click here to visit our website.

Fair Housing Courses

Kaye Bender Rembaum is proud to present two exciting courses discussing the Federal Fair Housing Act

Our Navigating the Federal Fair Housing Act: Assistance Animal or Pet? is a one (1) hour, CEU approved course (Course No. 9627147) that focuses on assistance animals, what can be asked, what can't be asked, rules governing assistance animals, how to avoid being sued, what to do if you are, and so much more!!!

This course will be offered in Palm Beach Gardens office located at 9121 North Military Trail, Suite 200, Palm Beach Gardens, FL 33410 on:

Tuesday, August 26 (FULL) 6:30-7:30 p.m.

Tuesday, September 23, 6:00-7:00 p.m.

Tuesday, October 22, 6:00-7:00 p.m.

This course is also being offered in Pompano Beach located at 1200 Park Central Boulevard South, Pompano Beach, FL 33064 on:

Tuesday, September 16, 6:45-7:45 p.m.

Tuesday, October 14, 6:45-7:45 p.m.

In addition, if your management company or community would like to host this complimentary seminar or our more expansive two hour Navigating the Federal Fair Housing Act (Course No. 9627146) seminar, please contact us by sending an e-mail to trisha@kbrlegal.com or by calling (561) 241-4462.

For more information regarding our Fair Housing courses and our law firm, please click here to visit our website.

2015 Legal Update

2014 Legislative Changes Affecting Community Associations

Kaye Bender Rembaum is proud to introduce its newest course offered in our Palm Beach Gardens office located at 9121 North Military Trail, Suite 200, Palm Beach Gardens, FL 33410 on:

Tuesday, September 2, 6:00-7:00 p.m.

This is a one (1) hour course discussing the changes made by the 2014 Legislative Session to laws affecting community associations.

Please register for this course by sending an e-mail to trisha@kbrlegal.com or by calling (561) 241-4462.

If your community would like to host this course for groups of 20 or more, please contact us by sending an e-mail to trisha@kbrlegal.com or by calling (561) 241-4462.

In This Issue:

Featured Article

Paid in Full: Watch Out For These Dangerous And Costly Words

COURSE INFORMATION:

Board Member Certification Courses

Kaye Bender Rembaum offers free certification courses for homeowners' and condominium association board members. Please click here for more information!

Federal Fair Housing Courses

Kaye Bender Rembaum is proud to present two exciting free courses discussing the Federal Fair Housing Act. Please click here for more information!

2015 Legal Update Course

Our Palm Beach Gardens office is now offering a free 2015 Legal Update course for board members and managers (credit pending) which discusses the changes made by the 2014 Legislative Session to the laws affecting community associations. Please click here for more information!

Contact Us:

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Palm Beach Gardens, FL 33410

Phone: (561) 241-4462

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1200 Park Central Blvd. S.

Pompano Beach, FL 33064

Phone: (954) 928-0680

Fax: (954) 772-0319

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Kaye Bender Rembaum, Attorneys at Law

The law firm of Kaye Bender Rembaum, with its 13 lawyers and offices in Broward and Palm Beach Counties, is a full service law firm devoted to the representation of more than 800 community and commercial associations, developers, and their members throughout the State of Florida. Under the direction of attorneys Robert L. Kaye, Michael S. Bender and Jeffrey A. Rembaum, the law firm of Kaye Bender Rembaum strives to provide its clients with an unparalleled level of personalized and professional service that takes into account their clients’ individual needs and financial concerns.
 

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About the Editor:

Jeffrey Rembaum, Esq.

Jeffrey Rembaum, Esq.'s law practice consists of representation of condominium, homeowner, commercial  and mobile home park associations, as well as exclusive country club communities and the developers who build them.  He is a regular columnist for The Condo News, a biweekly publication.

Inducted into the 2012 2013 & 2014 Florida Super Lawers

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