Reasonable to require that property manager refuse checks marked "Paid in Full"?

ChrisE8
Posts: 454

Posted:

If your property manager is the one who collects payments from owners each month for dues and the like, is it reasonable to require, as part of the management contract, that the property manager reject all checks marked "Paid in Full"?

I've seen a situation in which a property manager managed a HOA where an owner and the board were having a dispute. The board had placed thousands of dollars of charges on the owner's account, and the owner disputed them. The owner strictly followed the relevant "accord and satisfaction" statute, including by notifying the property manager of the dispute and sending checks for monthly dues to the property manager, marked "Paid in Full". Due to an "accord and satisfaction" (and other things), the HOA was unable to collect thousands of dollars from the owner.

If your property manager did this, how would you handle it; would you seek reimbursement of those amounts by the property manager? And do you require that your property manager reject checks marked "Paid in Full"?

Thanks.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisE8 on 01/03/2021 9:32 AM

Due to an "accord and satisfaction" (and other things), the HOA was unable to collect thousands of dollars from the owner.

1. Accord and Satisfaction varies by State.

2. I strongly suspect that it's the "and other things" that caused the HOA to be unable to collect.

3. Are we back to hypothetical questions?

ChrisE8
Posts: 454

Posted:

Thanks- are you thinking I'm NpB, who asks hypothetical questions?

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By ChrisE8 on 01/03/2021 9:32 AM
If your property manager is the one who collects payments from owners each month for dues and the like, is it reasonable to require, as part of the management contract, that the property manager reject all checks marked "Paid in Full"?

In my layperson's opinion, based on my reading about the law of contracts, such a term in a contract is reasonable and so enforceable.

I do think it would be best to ensure another clause appeared, explaining that any damages the HOA suffers, due to any mistake by the property manager in depositing a check marked "paid in full," shall be paid by the manager or his/her insurance.

If the state's statutes are clear that depositing checks marked "paid in full" nullifies any prior debts allegedly owed, I think the above two clauses are even more reasonable.

Of course, if one is in litigation over whether checks marked "paid in full" translate to no further debt being owed, then as is common, I doubt I'd be interested in giving years of my life, and likely much money in attorney's fees, to the battle.

Far worse clauses in contracts exist and are lawful in many or all states. For example, a unilateral attorney's fees clause. Where this occurs in a HOA's Declaration, it typically means that the HOA can sue an Owner with little risk of a judge ordering the HOA to pay the Owner's attorney's fees (regardless of who prevails in the litigation), but on the flip side, an Owner suing the HOA, or even merely counterclaiming, will be required (under the covenant) to pay the HOA's attorney fees if the Owner does not prevail. (Some state legislatures, like California's IIRC, have outlawed unilateral attorney fees clauses in contracts.)

From prior posts by the OP, I am a bit concerned the OP is stewing over a situation he remains personally involved in, and the litigation is not over.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

The BOD had placed charges on the owners account. For sake of conversation, I will assume fines. If the PM accepts a check marked paid in full for a lesser amount than owed, it would be wiping the debt out. I say the PM should not accept the check.

The argument is between the BOD and the owner. The PM is an innocent party.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JohnC46 on 01/03/2021 10:39 AM
The BOD had placed charges on the owners account. For sake of conversation, I will assume fines. If the PM accepts a check marked paid in full for a lesser amount than owed, it would be wiping the debt out. I say the PM should not accept the check.

The argument is between the BOD and the owner. The PM is an innocent party.

ADD ON

If it were me, I would stay current with my dues by writing on the check for So and So Month's Dues Only. This way I am curent in my dues while I dispute/fight the additional charges.

SheliaH (Indiana)
Posts: 6,964

Posted:

I can't tell if this is the community Chris used to be in or the one he's in now.

If this the old community Chris, you need to get these people and that community out of your head and move on. What that property manager does or doesn't do it ain't your business anymore.

If its the latter, it's interesting that you're right back in the poop with property managers and the board (they're the ones who are supposed to be overseeing the manager, remember?). If you're on the board This is a question you should run by your colleagues and your association attorney.

That said, if this money was central to a legal dispute, I would have gone to the attorney first to address the check and then taken action. To wit, if writing "paid in full" would have prevented further collection, I would have returned the check or put it in trust until a judge sorted it out. Thus, I'm inclined to agree with AugustinD - this smells like you're involved with some sort of lawsuit, so some of these questions need to be put to your attorney.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By ChrisE8 on 01/03/2021 10:22 AM
Thanks- are you thinking I'm NpB, who asks hypothetical questions?

Yep

JohnC77 (California)
Posts: 562

Posted:

I may see two physical checks in a month, maybe. All others will go through LOCKBOX.

If this is a HOA you live in, WHY aren't you on the board instead of discussing this nonsense here. If it's an HOA you don't live in, why are we losing sleep over?

ChrisE8
Posts: 454

Posted:

Quote:

Posted By AugustinD on 01/03/2021 10:27 AM

Posted By ChrisE8 on 01/03/2021 9:32 AM

From prior posts by the OP, I am a bit concerned the OP is stewing over a situation he remains personally involved in, and the litigation is not over.

I am not involved in litigation. Nor do I plan to be. I'm just trying to help out a HOA avoid this kind of situation.

FloridaC1 (Florida)
Posts: 27

Posted:

First of all, the property manager is a community association manger, not a "property manager." Learn the difference between the two.
Next, the community association manager does not collect payment from owners; owners send their payments either to lockbox or the management firm who delivers the payments to the association accountant. Late fees and interest are added to a ledger by the accountant for the association. The owner's ledger tells the whole story of payments received and applied to outstanding balances. Neither accounting nor the association manager is liable for reimbursement.

ChrisE8
Posts: 454

Posted:

Quote:

Posted By FloridaC1 on 01/03/2021 2:43 PM
First of all, the property manager is a community association manger, not a "property manager." Learn the difference between the two.
Next, the community association manager does not collect payment from owners; owners send their payments either to lockbox or the management firm who delivers the payments to the association accountant. Late fees and interest are added to a ledger by the accountant for the association. The owner's ledger tells the whole story of payments received and applied to outstanding balances. Neither accounting nor the association manager is liable for reimbursement.

The property manager refers to himself as the property manager, in this case.

The property manager receives checks from owners and deposits them into the HOA's account, in this case. The property manager's company also handles accounting, in this case.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By FloridaC1 on 01/03/2021 2:43 PM
First of all, the property manager is a community association manger, not a "property manager." Learn the difference between the two.
Next, the community association manager does not collect payment from owners; owners send their payments either to lockbox or the management firm who delivers the payments to the association accountant. Late fees and interest are added to a ledger by the accountant for the association. The owner's ledger tells the whole story of payments received and applied to outstanding balances. Neither accounting nor the association manager is liable for reimbursement.

Interesting. Our dues payment go to a bank lockbox (checks, credit card, E-payments, and even cash). They will process any payment as long as valid regardless of what is written on say a check. They then forward the money to our MC so our MC would have no record of anything written on a check.

Now our MC does keep a ledger and that is where payments, non-payments, overdue dues, and fines showup.

An aside. Years back my wife and I got into a discussion about filling a check out properly. To show her, I wrote out a personal check to pay a bill. I sent it in the bill and the check but I signed the check Santa S Claus. It went through. She was upset no one paid attention.

KerryL1 (California)
Posts: 14,550

Posted:

I have to agree with those who hint that Chris is overly obsessed with her/his former PM either in in NC or in his former HOA in NY. Maybe enuff, already!!??

ChrisE8
Posts: 454

Posted:

Quote:

Posted By KerryL1 on 01/03/2021 4:58 PM
I have to agree with those who hint that Chris is overly obsessed with her/his former PM either in in NC or in his former HOA in NY. Maybe enuff, already!!??

Understood but this is not about a former PM; it's a desire to avoid it from happening in the future.

ChrisE8
Posts: 454

Posted:

Quote:

Posted By KerryL1 on 01/03/2021 4:58 PM
I have to agree with those who hint that Chris is overly obsessed with her/his former PM either in in NC or in his former HOA in NY. Maybe enuff, already!!??

Understood but this is not about a former PM; it's a desire to avoid it from happening in the future.

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By FloridaC1 on 01/03/2021 2:43 PM
First of all, the property manager is a community association manger, not a "property manager." Learn the difference between the two.
Next, the community association manager does not collect payment from owners; owners send their payments either to lockbox or the management firm who delivers the payments to the association accountant. Late fees and interest are added to a ledger by the accountant for the association. The owner's ledger tells the whole story of payments received and applied to outstanding balances. Neither accounting nor the association manager is liable for reimbursement.

Wow....I know you live in Florida and that is what they call them THERE, but do you have any idea what they are called in other parts of the country?

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Weird stuff.

Good stuff to consider hitting the IGNORE button.

FloridaC1 (Florida)
Posts: 27

Posted:

Yes, a property manager manages apartments and a community association manager manages Condominiums, Homeowner Associations, Co-ops and Mobile Home parks as well as Property Owner Associations.

A property manager is usually licensed as a realtor so they can write a lease for an apartment.

KerryL1 (California)
Posts: 14,550

Posted:

Our Mgmt. Co calls their employees General Managers, but accrediting agencies call them different titles, yes?

On this forum, posters have typically referred to managers of any kinds of HOAs as Property managers. They are distinct, of course from the agent, usually realtor, who managers individual homes or unit.

GenoS (Florida)
Posts: 4,276

Posted:

In Florida someone paying an HOA debt can write "paid in full" all they want on their checks and it means nothing.

FS 720.3085 (HOA statute) says in section (3)(b):

"Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment."

In other words, "Paid In Full? I don't think so."

Other states probably do it differently.

ChrisE8
Posts: 454

Posted:

Quote:

Posted By GenoS on 01/04/2021 10:19 PM
In Florida someone paying an HOA debt can write "paid in full" all they want on their checks and it means nothing.

FS 720.3085 (HOA statute) says in section (3)(b):

"Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment."

In other words, "Paid In Full? I don't think so."

Other states probably do it differently.

You are 100% correct.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By GenoS on 01/04/2021 10:19 PM
In Florida someone paying an HOA debt can write "paid in full" all they want on their checks and it means nothing.

FS 720.3085 (HOA statute) says in section (3)(b):

"Any payment received by an association and accepted shall be applied first to any interest accrued, then to any administrative late fee, then to any costs and reasonable attorney fees incurred in collection, and then to the delinquent assessment. This paragraph applies notwithstanding any restrictive endorsement, designation, or instruction placed on or accompanying a payment."

In other words, "Paid In Full? I don't think so."

Other states probably do it differently.

I like the above bold statement.