Many condominium, cooperative and homeowner associations have accepted partial payments for delinquent accounts under the premise that receiving some money is better than receiving no money at all.  However, a recent Florida 2nd District Court of Appeal Case should give associations pause before they make the decision to accept a partial payment.

On August 8, 2014, the 2nd District Court of Appeal for Florida issued its decision in the case of St. Croix Lane Trust, Et Al v. St. Croix at Pelican Marsh Condominium Association, Inc., 144 So.3d 639 (Fla. 2 DCA 2014).  In this case, the owner of a condominium unit appealed a final summary judgment declaring that no accord and satisfaction occurred when the condominium association accepted a check that the unit owner tendered in full satisfaction of the association’s disputed claim for past due assessments and other charges.  The Plaintiff was the successful bidder at a foreclosure sale which occurred as a result of the association foreclosing its lien on the condominium unit for past due assessments and other charges against the previous owner.  The association elected not to bid at the foreclosure sale and the Plaintiff was the successful bidder for $100.00.  The association’s attorney wrote the Plaintiff a letter demanding payment of the full amount of the assessments and other charges due.  The trust took the position that only the first quarterly assessment of $840.00 was due.  The trust attorney responded to the association attorney’s demand by enclosing a check for $840.00 to settle the matter and indicated in the cover letter that the check was tendered as full and final satisfaction of all claims made against the trust and the property for the amounts demanded in the association attorney’s letter.  The trust attorney’s letter stated that negotiation of the enclosed check shall be deemed an acceptance of the offer of settlement and shall be a full and final satisfaction of all claims against the trust and the property.  The association elected to apply the payment as a partial payment pursuant to Florida Statute §718.116(3).  The Circuit Court determined that the trust was jointly and severally liable with the previous owner for all amounts claimed by the association through the date of the foreclosure sale, less the $840.00 payment rejecting the trust’s argument that Florida Statute §673.311 relating to accord and satisfaction applied.

However, on appeal, the 2nd District Court of Appeal found that §673.311 applied rather than Florida Statute §718.116(3).  The Appellate Court found that under §673.311(2), the claim is discharged if the person 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.  Subsection 3 of that statute provides certain exceptions and the Appellate Court found that none of the exceptions provided for in the statute were applicable in this case.

The lesson for this case is that associations should be careful in accepting payments for less than the full amount of the claimed debt.  Any tender of payment for less than the full amount of the debt which contains any type of restrictive language or is accompanied by a letter containing any type of restrictive language should be carefully reviewed to determine if the St. Croix case would be applicable.  Caution should be exercised by associations in acceptance of partial payment without a carefully drafted payment plan agreement prepared by the association’s counsel.  Any question whatsoever regarding the acceptance of partial payment should be directed to the association’s attorney.

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