Homeowner did “accord and satisfaction” instead of paying assessment

Started by JohnS111 • 30 replies • 507 views

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JohnS111 (New York)
Posts: 228

Posted:

In a state where I have a vacation home, you can wipe out a debt by doing an “accord and satisfaction”. If a creditor claims that you owe a debt, you can notify the creditor that you dispute the debt and send a check, for part of the debt, to the creditor, marked “paid in full”. If the creditor accepts the check and doesn’t return the money in 90 days, the debt is wiped out.

The HOA imposed an assessment on each owner. But a neighbor of mine disputed the debt, claiming that the assessment hadn’t been properly approved by a properly-elected board. The owner notified the HOA (by sending a notice to the HOA’s address, which was the property manager’s office) that he didn’t owe anything. He then sent checks each month for 9 months for monthly dues and some repairs. He marked all checks “paid in full” and sent multiple notices to the HOA (all to its address, which was the property manager’s office).

The HOA then imposed a lien on his property. He filed a lawsuit against the HOA, claiming that the lien was illegal because the debt wasn’t due due to the “accord and satisfaction”.

The board president has been telling other owners that the neighbor is “crooked” and “a thief”.

It seems like the board ought to be mad at the property manager for accepting the checks and notices and not returning the funds that the neighbor paid.

Thoughts? I’m not involved in this but figure that the neighbor simply outsmarted the HOA.

CathyA3 (Ohio)
Posts: 6,299

Posted:

You may want to search this site for "foreclosure" to see some of the discussions we've had. Collection of delinquent assessments is not a black-and-white issue.

Some reasons for accepting a partial payment include the legal costs of pursuing other collection actions such as foreclosure. Many CC&Rs allow the association to pass on the legal costs to the delinquent homeowner - but this does no good if the homeowner just doesn't have the money. Foreclosure in particular is not a slam-dunk, and the HOA may see no money out of it.

Sometimes it's better to accept what you can get before the debtor files for bankruptcy and you get nothing.

Also, any collector acting as the HOA's agent has to comply with Fair Debt Collection laws, so there are limits on what the HOA can lawfully do.

You seem to be assuming that the manager made a mistake in accepting the checks, which absolutely could be the case. On the other hand, the manager may also have been acting on the board's instructions, which the board president did not agree with - and now he's venting his spleen. Also possible.

Regardless of how the delinquent homeowner behaved, the board president is out of line for publicly calling him a thief and is asking for another lawsuit IMHO. I get it, dealing with delinquent homeowners is aggravating as heck, particularly the ones who have an attitude about it. But skilled board members learn how to control their emotions and make rational decisions, even if they'd like to rip someone a new one. The best way to lose a collections fight is to not follow proper procedures to the letter, and proper procedures include zipping lip when appropriate.

SheliaH (Indiana)
Posts: 6,964

Posted:

I suspect everyone is to blame in this situation. First of all, what do the documents say about all this? There's a legal obligation to pay assessments, there are protocols regarding the election and there are protocols regarding the budget. Have you read the documents for any of this information? Just because you're mad at the board that doesn't relieve you of the obligation to pay assessments. If you really feel that way, take legal action and put the money in a special account - if you win, pay whatever assessments the judge says you're obligated to pay (and if you're smart, you would also ask for your legal expenses to be reimbursed by the association if you win your case). Of course, if you lose or refuse to pay at all, the association might take its own legal action and this may wind up a long court battle where the only winners are the attorneys.

All of that said, the property manager should have notified the board of the first letter, after which it was the board's responsibility to refer the matter to the association attorney, especially if the homeowner told them at the start he was going to pay X amount instead of the new one. By the way, if the guy paid for 9 months, was this last year's assessment or the one approved by the board (even though it didn't think it was properly approved?) If it was based on the current year's budget, why stop after 9 months?

There's probably more to this story and may all wind up in court - if so, let us know of the outcome. Accord and satisfaction works differently by state, so you might want to let us know which one you're talking about.

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

SheliaH (Indiana)
Posts: 6,964

Posted:

By the way, when I said "you", I meant the person you were discussing, not you.

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

CathyA3 (Ohio)
Posts: 6,299

Posted:

I think that most experienced board members and community managers are well aware of the "accord and satisfaction" dodge. Either this was a genuine mistake (in which case, more training needed) or else there is a lot more to this story.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Not to play lawyer, but as I understand both parties must agree to "accord and satisfaction". Thus the main question is:

1. Does the MC have the right to agree to enter into an accord and satisfaction?

My leaning is the BOD would have to agree to an accord and satisfaction and they did not.

The BOD should get their attorney involved ASAP.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Time to consult with an attorney and not the internet.

JohnS111 (New York)
Posts: 228

Posted:

The neighbor and I are both lawyers. He specializes in debt matters, so accord and satisfaction is something that he is an expert on. The accord and satisfaction that he did seems fully compliant with state law.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It should be noted there are different kinds of debts. Not all would pass the mustard of what the accord and satisfaction applies to. My guess is that a HOA debt would not fall into that definition. It falls more under mortgage and utilities.

Example: if I bought a car then accord and satisfaction would apply. The seller has a set debt that may be negotiable and acceptable terms.

A debt like a house payment do not think bank is going to say hey you stopped paying at $500 but house is $500K. We will accept your $500 and forgive the rest. No. They can foreclose for non payment. The HOA would also be on the same level. They have power to foreclose for non payment of dues. Do not need to accept that accord condition. Plus are your payments yearly or monthly?

The person is in the wrong and the HOA is right. Best they pay the money they owe to stop the foreclosure. That is how foreclosure does stop.

Former HOA President

JohnS111 (New York)
Posts: 228

Posted:

Thanks, everyone.

I am pretty confident that the “accord and satisfaction” is valid and wiped out the HOA’s ability to collect the debt (around $4500). The neighbor is a lawyer and has won victories in court over “accord and satisfaction” disputes involving large debts, much larger than this (in work for his clients).

I don’t know if the property manager informed the board or not.

The HOA president has called the neighbor a “thief” and a “cheat” and a “gangster” at HOA meetings. That’s not good.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JohnS111 on 02/22/2023 5:31 AM

claiming that the assessment hadn’t been properly approved by a properly-elected board.

Care to verbose on this?

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JohnS111 on 02/22/2023 5:31 AM
Thoughts? I’m not involved in this but figure that the neighbor simply outsmarted the HOA.

The neighbor and you are both lawyers. You added that the neighbor, "specializes in debt matters, so accord and satisfaction is something that he is an expert on." I figure the best that total strangers (who are not expert in the relevant statutes and case law) can offer is a reality check. Such as:

-- If the HOA takes your neighbor to court to collect, then how much time and money is he willing to spend to fight this? If this goes to court, what does the law say about awards of attorney fees? I know the American rule (for attorney's fees). Is there a statute section or covenant pertaining to awards of attorneys fees for a dispute like this?

-- One day when the neighbor puts his unit on the market, is he ready to pay an enormous bill (typically including interest and late payment fees) from the HOA in order to complete the sale?

-- The President's reference to the neighbor as a "crook" and a "thief" may or may not be defamation. How much does the neighbor wants to spend to find out? Given the neighbor's beliefs about his being in the right here, it sounds like he might want to send a letter to the Board ordering it to cease and desist assertions that he is committing a crime, or else he will make trouble. The HOA is presumably insured, and this could be the path to a payout by the insurance company, if the neighbor wishes for this aspect to get more attention. I do not like the neighbor's chances. "Crook" and "thief" are generalized hyperbole.

-- Expect the retaliation to continue.

-- HOAs being run by unskilled, unpaid amateurs is ridiculous. However your neighbor and you bought these units with eyes wide open. I believe there is a logical inconsistency (or pure naivete) in believing things like this would not happen. Even a Yale Law School graduate would know this, granted it would probably have to be a seasoned Yale Law School graduate specialized in PI or HOA/COA law.

-- The least burdensome path to resolving this is likely getting on the board with others who feel as you do and removing the assessment, refunding as needed. This path is still incredibly hard.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

If I recall John here is a questionable lawyer at best...

Also this Accord and satisfaction is BS the lawyer is trying to play against their HOA. IF I was on the board, I would also follow up with criminal charges of "theft of services" in additional to every and all collection options available.

Oh and in case the "experts" of law here over look any "small detail" on why this would not apply... The Rule of the HOA state that you MUST pay dues. Sending your HOA a notice that you are going to pay X amount and be clear of it doesn't apply. It is known you owe this money to cover the services of the HOA expenses. The HOA is a corporation.

This such a BS move that it should be blown out of the water by any judge.

Former HOA President

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By MelissaP1 on 02/22/2023 3:31 PM
If I recall John here is a questionable lawyer at best...

Also this Accord and satisfaction is BS the lawyer is trying to play against their HOA. IF I was on the board, I would also follow up with criminal charges of "theft of services" in additional to every and all collection options available.

Oh and in case the "experts" of law here over look any "small detail" on why this would not apply... The Rule of the HOA state that you MUST pay dues. Sending your HOA a notice that you are going to pay X amount and be clear of it doesn't apply. It is known you owe this money to cover the services of the HOA expenses. The HOA is a corporation.

This such a BS move that it should be blown out of the water by any judge.

UPDATE

The neighbor settled with the HOA. The lien was removed, the fines and assessments were removed and he received $3,000 from the HOA.

He is a litigator so he spent $0 in legal fees.

My evidence? He showed me the signed settlement agreement, which did not have a confidentiality provision.

TimB4 (Tennessee)
Posts: 21,059

Posted:

John,

Thanks for the update

JohnS111 (New York)
Posts: 228

Posted:

Certainly an interesting outcome. (I guess I shouldn’t have posted the exact terms online but the neighbor has been telling people and they aren’t confidential.).

Thanks to everyone for the advice in all of the posts above.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JohnS111 on 02/22/2023 4:12 PM

UPDATE

The neighbor settled with the HOA. The lien was removed, the fines and assessments were removed and he received $3,000 from the HOA.

He is a litigator so he spent $0 in legal fees.

My evidence? He showed me the signed settlement agreement, which did not have a confidentiality provision.

Are you saying that within 12 hours of your first posting that a lawsuit was underway, the lawsuit suddenly was settled?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

This is why people hate lawyers. This "lawyer" member clearly used their "profession" as legal intimidation against the HOA. If it was me, I'd report this to the Bar. It has never been known here for John here to post "ethical lawyer" behavior.

Let's really see what happened... The "lawyer member" told their HOA to settle with them because hiring a lawyer to fight them would be more expensive than paying them the $3K. Which is probably true because if they used their insurance they'd have to pay the deductible. If they paid out of pocket could have been around $5K or more. Just paying off this scumsucking landshark of a selfish lawyer was the better option.

Just to put it in perspective the Lawyer member wasn't paying their dues. Decided to use some legal out of left field claim to intimidate their HOA. Which means ALL the neighbors just had to use part of their dues money to pay off this scumbag's bill.

Sorry I am not of the opinion this was a "win" and a "smart move". Think it is a clear example of someone with a specific set of skills using them for personal gain. So unethical and scuzzy.

Former HOA President

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By ElleN on 02/23/2023 4:02 AM

Are you saying that within 12 hours of your first posting that a lawsuit was underway, the lawsuit suddenly was settled?

It was settled before I made my original post. I was unaware.

ElleN (Idaho)
Posts: 4,420

Posted:

I suspect that this dispute and the alleged accompanying pro se litigation took years. See below.

Any suggestion that "accord and satisfaction" is an easy way to extract a pound of flesh from a HOA seems misplaced. The years of conflict appear to have cost the owner here his own pound of flesh.

Some New York HOA "accord and satisfaction" threads from the last three years:

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/272856/view/topic/Default.aspx (Nov 2019)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/275131/view/topic/Default.aspx (Dec 2019)

https://www.hoatalk.com/Search/ForumSearch/tabid/87/forumid/1/postid/275131/view/topic/tpage/4/Default.aspx (Mar 2020)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/286901/view/topic/Default.aspx (Dec 2020)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/296884/view/topic/Default.aspx (Jan 2021)

Threads where an alleged attorney in New York advises filing a derivative suit and talks about how he did so and won:

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/262355/view/topic/Default.aspx (Apr 2019)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/272968/view/topic/Default.aspx (Nov 2019)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/279882/view/topic/Default.aspx (Mar 2020)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/295734/view/topic/Default.aspx (Dec 2020)

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By ElleN on 02/23/2023 6:09 AM
I suspect that this dispute and the alleged accompanying pro se litigation took years. See below.

Any suggestion that "accord and satisfaction" is an easy way to extract a pound of flesh from a HOA seems misplaced. The years of conflict appear to have cost the owner here his own pound of flesh.

Some New York HOA "accord and satisfaction" threads from the last three years:

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/272856/view/topic/Default.aspx (Nov 2019)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/275131/view/topic/Default.aspx (Dec 2019)

https://www.hoatalk.com/Search/ForumSearch/tabid/87/forumid/1/postid/275131/view/topic/tpage/4/Default.aspx (Mar 2020)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/286901/view/topic/Default.aspx (Dec 2020)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/296884/view/topic/Default.aspx (Jan 2021)

Threads where an alleged attorney in New York advises filing a derivative suit and talks about how he did so and won:

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/262355/view/topic/Default.aspx (Apr 2019)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/272968/view/topic/Default.aspx (Nov 2019)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/279882/view/topic/Default.aspx (Mar 2020)

https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/295734/view/topic/Default.aspx (Dec 2020)

Thanks, that’s very helpful.

In this case, the suit was filed in December 2022 and was settled in February 2022. This issue is not in New York.

JohnS111 (New York)
Posts: 228

Posted:

To add:

The neighbor told me this morning that when he served process on the HOA, he included a Christmas card along with the summons, with “Here’s my Christmas present to you” written inside the card. I can easily see why the board president hates him.

ElleN (Idaho)
Posts: 4,420

Posted:

I get that you want to promote "accord and satisfaction" as a way to "get back" at all volunteer boards. But the inconsistencies in the telling and re-telling of this account over the years add up to "too high." Plus there is not one owner posting at this forum that I think is qualified to file a suit pro se and not get buried by the discovery process and other rules of civil procedure.

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By ElleN on 02/23/2023 6:38 AM
I get that you want to promote "accord and satisfaction" as a way to "get back" at all volunteer boards. But the inconsistencies in the telling and re-telling of this account over the years add up to "too high." Plus there is not one owner posting at this forum that I think is qualified to file a suit pro se and not get buried by the discovery process and other rules of civil procedure.

I bought the home in this HOA in early 2022.

The suit was filed in December 2022.

You’re welcome to say whatever you want; that’s fine, but please be aware of the facts.

SheliaH (Indiana)
Posts: 6,964

Posted:

So what happened to the part concerning the homeowner not paying because he felt the board wasn't elected properly and therefore the assessment for the new budget was improper? That's what started this entire mess and I still say this could have all been avoided on all sides if the homeowner tackled that part of the dispute first.

I realize there are times where legal action is needed and we all know boards and property managers do crazy things, but I hate "whose kahunas are bigger" arguments and I think that's what this case boiled down to.

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

ElleN (Idaho)
Posts: 4,420

Posted:

It's an internet forum where people post in anonymity. Nothing you asserted in this thread or the many other threads on the subject of your personal experience with using "accord and satisfaction" can be proven.

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By ElleN on 02/23/2023 7:04 AM
It's an internet forum where people post in anonymity. Nothing you asserted in this thread or the many other threads on the subject of your personal experience with using "accord and satisfaction" can be proven.

The same applies to every single poster. We have to just assume that posts are true. If people spend time posting untrue things online, they have too much free time (and too few other interests).

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I can also see why the rest of the members would hate him too. He did a theft of services and sent them the bill to pay. What a stand up human being that should be applauded for screwing over their neighbors.

If this was me, just understand I would have played the game toe to toe with this lawyer if it did not hurt others. I am sure it was out of concern of the rest of the members they settled.

However, if I was given the free range ability to defend my HOA against this scumbag. They would not intimidated me. Would have reported to the BAR for the sleezeball move for personal gain. A tight rope this lawyer was walking on. There would have been the proper blood spilt on both sides. I would stop the gauging and make it a flesh wound.

Unfortunately playing with other people's money and hard work would had to be negotiated to protect them. Shame on this lawyer and their games. This is unethical IMO.

Former HOA President

JohnS111 (New York)
Posts: 228

Posted:

Quote:

Posted By MelissaP1 on 02/23/2023 8:12 AM
I can also see why the rest of the members would hate him too. He did a theft of services and sent them the bill to pay. What a stand up human being that should be applauded for screwing over their neighbors.

If this was me, just understand I would have played the game toe to toe with this lawyer if it did not hurt others. I am sure it was out of concern of the rest of the members they settled.

However, if I was given the free range ability to defend my HOA against this scumbag. They would not intimidated me. Would have reported to the BAR for the sleezeball move for personal gain. A tight rope this lawyer was walking on. There would have been the proper blood spilt on both sides. I would stop the gauging and make it a flesh wound.

Unfortunately playing with other people's money and hard work would had to be negotiated to protect them. Shame on this lawyer and their games. This is unethical IMO.

Understood, thanks; I appreciate your perspective. Thanks, everyone!

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

hire an outside lawyer to collect the money and/or start foreclosure. Also dd on lawyer fees to that account as money also owed. right now he is just messing with you for free, when he sees its going to cost real money in attorney’s fees, he will smarten up and pay

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JohnS111 on 02/22/2023 5:31 AM

The HOA imposed an assessment on each owner. But a neighbor of mine disputed the debt, claiming that the assessment hadn’t been properly approved by a properly-elected board. ...
Thoughts? I’m not involved in this but figure that the neighbor simply outsmarted the HOA.

I think the failure to speak of any budgetary problems the HOA may be having (resulting in the need for a special assessment) is the tip-off here.

The owner did not want to pay his fair share. I suspect he deserves all the wrath the Board and his neighbors can legally inflict on him. Does he have a problem with this? Then sure he can go ahead and keep right on suing. But I expect it will not win him friends or respect.

One can argue all they want about how laws are written, and courts exist, to ensure justice. But that is cr-p. There is no question that the legal system does not in fact dispense justice. Justice may be bought, in this case by paying for a law degree and practicing in debt collection for some years.

A real man (or woman) pays for his or her slice of the pie.

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