Treasurer deposited check

Started by CraigB2 • 16 replies • 1466 views

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CraigB2 (Virginia)
Posts: 5

Posted:

Hello, I am president of a 45 member POA in VA. We placed 6 liens last year ($100 annual assessment) with additional legal fees and collection adding another $150 for a total of $250 to payoff and file lien release. 2008 annual assessments were due May 1st and one of the previously liened members gave the treasurer a $200 check and said it was for 2007 and 2008. I told the tresurer to hold the check and let me write a letter asking how the $200 was to be applied. The treasurer stalled for two weeks and finally stated he deposited the check which had written on it "For 2007 and 2008 dues". Treasurer stated "we need the money". I said that one other of the original six had just paid the entire amount and we would eventually collect from the remiaining five even if we had to do the courthouse sale proceeding/tactic. We do not have an association attorney. I would like one but the members will not approve the expense. Any thoughts on the legal aspects of accepting payment and comments on the treasurer?
PS 3 person board: myself, treasurer, one other board member

MicheleD (Kentucky)
Posts: 4,491

Posted:

I'm not quite sure what you are asking?

How much was the person supposed to pay?

If the homeowner gave $200, and you have a lien that required $250 for payoff, and an additional $100 required for this year (which is really just added to the lien payoff amount, which means you need to receive $350 from the homeowner to release the lien), then you still require $150 from the homeowner BEFORE you can release the lien.

I would simply send the homeowner a statement to that affect:

$100 - 2007 Dues Outstanding
$150 - Penalties and Lien fees
+$100 - 2008 Dues Outstanding
_____

$350 - Amount required to release lien filed on XX/XX/XXXX

-$200 - Received from homeowner on XX/XX/XXXX
_____

$150 - Total amount remaining to release lien

KathyT2 (Florida)
Posts: 22

Posted:

Our docs clearly state that when a check is received it will be applied to the oldest bills first including late fees, interest, penalties and attorney fees.

I always think to myself what is fair to everyone. If 5 people end up paying the late fees and penalties how can you justify the one guy getting away with paying his dues 12 months late. He gets the discount because hes nervy enough to ask.

What he writes on the check is usually not binding but to be sure you should be checking with an attorney. Actually you should have had liens on all these late payers by now, the expense is the owners, not the HOA.

KathyT2 (Florida)
Posts: 22

Posted:

Sorry, I forgot you had liens in place when I replied. How did you record liens if you don't have an attorney?

MicheleD (Kentucky)
Posts: 4,491

Posted:

Kathy,

we don't need attorneys to file our liens, either.

And what one writes on the check, memo portion, is meaningless.

GlenL (Ohio)
Posts: 5,491

Posted:

As Michele said what is written in the memo line is meaningless however if it is written on the back at the top of the check (in the endorsement area) and the HOA endorses under that then you're accepting the amount.

Studies show that 5 out of 4 people have problems with fractions

MaryN (Virginia)
Posts: 125

Posted:

I was told by an attorney friend..if you write paid in full on the check..and it is cashed..it is considered paid in full
MaryN

BruceD (Ohio)
Posts: 9

Posted:

From my 30 plus years in banking I do not believe that writing paid in full on a check means that an obligation has been satisfied. I have checked the Uniform Commercial Code and Regulation J from the Federal Reserve, both are silent on that subject. However, common sense would tell you that writing paid in full on the first payment on a car loan, does not satisfy that obligation. I am sure there is case law concerning this, I have not researched at that level.

HaroldS (Arizona)
Posts: 906

Posted:

Here's an interesting site - with three different answers. Still as clear as mud.
http://wiki.answers.com/Q/If_you_write_Account_paid_in_full_on_a_check_doesn't_the_creditor_accept_this_amount_when_signing_and_cashing

However, OP didn't say anything was written on the check - but "was told" that is what the check was for.

In Arizona we would be required to apply any payment received to assessments first. But strangely enough, if 2007 had been delinquent for 12 months, we could have begun foreclosure proceeding for $100.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Craig,

IMO, there is nothing illegal about accepting a partial payment. As Michelle suggested, I would send a statement showing the amount due, the amount paid and the balance and also request an immediate payment. If your docs do not state how the payment should be applied, and there is no state law addressing this, I would apply the payment to the assessments and leave the legal fees outstanding.

As a former assn treas, I'm of the opinion that some people think if they don't pay the late payment (in this case the legal fee) it will be written off because, after all they are paying the assessment! I had that happen on a number of occasions.

I wouldn't fault the treasurer for depositing the check. I would have done the same as I never liked to have checks on hand for more than a few days when I was treas.

Incidentally, there was thread on this forum about a week ago discussing partial payments. A partial payment is an indication of the individual wanting to settle the account. IMO, the assn should never refuse a partial payment and I believe that was the consensus of opinion of the majority who responded to the previous thread.

SusanW1 (Michigan)
Posts: 5,202

Posted:

I agree with Mary about working with people who can make partial payments.

On the other hand, the BOARD should have developed a Policy Statement about all this a long time ago, and the fact that it was not clear WHERE the money was to be applied tells me that the Board needs to hammer out its policy ASAP.

The treasurer did his/her part, but if the Treasurer does not know the "procedures" for handling late payments, that is the Board's fault.

I have a feeling, with the economy the way it is, that procedures need to be in writing ASAP, so there's no further confusion.

CraigB2 (Virginia)
Posts: 5

Posted:

Thank you for your inputs, we do have a regulation that covers collection procedures with a requirement to deposit checks within 10 business days and send written receipts. One concern was that the treasurer and I had this discussion the day he got the check and he left stating he would return the check to me. My other concern is that the treasurer told the individual this would be accepted and he played ignorant that there were extra fees. I wanted to write a letter and insure they were aware this was a partial payment, and would not release the lien. Now I have to deal with someone who is twice as angry and feels they were lied to. There were two foreclosure warning letters over the last three months and now the next one will be the official notice that follows all the requirements of the VA POA to start foreclosure proceedings.

GlenL (Ohio)
Posts: 5,491

Posted:

Craig it's unfortunate that the treasurer spoke out of turn and the BOD as a group should speak to him/her and advise them never to do that again. We had an ex-BOD member who was like that, he had such a deep seated need to be liked he would tell people what they wanted to hear whether it violated the CC&R's or not. It is in our Declarations exactly how funds that are received are applied which complies with state law on the matter:

Section 8.13. Application of Assessments
The Association shall credit payments made by a Unit Owner in the following order of priority:

(A) First, to interest owed to the Association;

(B) Second, to administrative late fees owed to the Association;

(C) Third, to collection costs, attorney’s fees, and paralegal fees incurred by the Association; and

(D) Fourth, to the principal amounts the Unit Owner owes to the Association for the common expenses or Enforcement Assessments chargeable against the Unit.

Studies show that 5 out of 4 people have problems with fractions

SusanW1 (Michigan)
Posts: 5,202

Posted:

All this over $250?

Why is the president having checks "turned over" to him/her? Why is the president talking to homeowners about financial matters?

Let your treasurer send them a statement, as per your policies, and all inter-officer/homeowner talking can stop.

KathyT2 (Florida)
Posts: 22

Posted:

This is FL Statute 720.3085, possibly Va also has a statute to address this issue:

(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's 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. A late fee is not subject to the provisions of chapter 687 and is not a fine.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Quote:

Posted By CraigB2 on 06/01/2008 6:21 PM
Thank you for your inputs, we do have a regulation that covers collection procedures with a requirement to deposit checks within 10 business days and send written receipts. One concern was that the treasurer and I had this discussion the day he got the check and he left stating he would return the check to me. My other concern is that the treasurer told the individual this would be accepted and he played ignorant that there were extra fees. I wanted to write a letter and insure they were aware this was a partial payment, and would not release the lien. Now I have to deal with someone who is twice as angry and feels they were lied to. There were two foreclosure warning letters over the last three months and now the next one will be the official notice that follows all the requirements of the VA POA to start foreclosure proceedings.

Craig,

If you have a collection policy in place why were you asking the treas. to give you the check instead of depositing it? Perhaps the treas. told the member his partial payment would be accepted because that is IAW the collection policy. THe fact that he didn't mention the outstanding balance is moot. Perhaps he wanted to prevent a confrontational situation and just let you take care of that in your letter. A letter which you can still write giving an accounting of his partial payment and letting him know the lien is still in place! You don't need his check in your hands to write a letter, do you? But, why are you even writing the letter; isn't that the duty of the treasurer?

Two last questions, if I may.

1) Why are you going to foreclose over an outstanding balance of $150? Why not wait to see what happens after your letter goes out?

2) Who is this person who is "twice as angry and feels they were lied to?

Sorry, Craig, but it just appears you're making mountains out of molehills here.

CraigB2 (Virginia)
Posts: 5

Posted:

Thanks again for all your replies. Great information/opinions to keep me thinking straight and be patient. Small rural POA with limited member involvement.

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