BOD Not Cashing Dues Checks

Started by DarleneL1 • 25 replies • 2212 views

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DarleneL1 (Florida)
Posts: 97

Posted:

Does anyone know what right the BOD or HOA has with regard to declining to cash homeowner's checks based on what is written in the Memo Line?

Our BOD has been in conflict with the homeowners for over 4 years regarding the validity of the CC&Rs and many homeowners have paid the needed assessments and dues (in full) writing in the Memo Portion of their check that it is for Donation. These owners do not claim it on taxes or anything else, they just want the HOA to know that they consider the HOA a voluntary HOA and give the money with the understanding that they know the HOA is not legally in good standing.

This year, the BOD is saying they are going to return all checks and not cash them unless the checks indicate what the BOD wants the checks to say in the Memo Portion. If the homeowners don't put what they want in the Memo Portion, they will put a lien on their property. Do the homeowners have a recourse without spending money on a lawyer? Understand that in the past, the BOD accepted these checks with no problem and have been told that many owners do not mind paying the money because there are upkeep fees to the common areas including the roads and front entrance without a guard, gate, etc.

It seems petty to continue to send these checks back and forth wasting the community money that is already close to being in the "red".

SusanW1 (Michigan)
Posts: 5,202

Posted:

Whether or not it is a voluntary or mandatory HOA, the "dues" are not considered "donations."

I have heard that writing "Paid in full" on the memo line does affect the check's value, but I doubt if writing the word "donation" in the memo line has any legal power.

Why don't you just ask the Treasurer why they don't cash the check? (what they base this on)

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Susan is right on the money about all this foolishness.

I am free to make a donation to the local for-profit grocery store, and they are free to accept it or not, but that does not substitute in any way whatsoever for me paying for groceries I purchase.

The association may reject a check marked as a "donation" if there is a policy (or even if there is not) that the association does not accept donations. The association is under no obligation to accept donations.

It looks like this situation may be headed toward litigation. It is not about payments, but about the voluntary/non-voluntary nature of the association.

DJ1 (Ontario)
Posts: 798

Posted:

The memo section of a check has no bearing on whether the payment to the Association has been made or not. I can write whatever I want in the memo section but its purpose is for the writer of the cheque NOT the payee. If the payee rejects it because of what is written it is their problem. imo They'll lose if they lien for non-payment.

DarleneL1 (Florida)
Posts: 97

Posted:

There is no policy regarding checks and payments. The HOA has accepted and cashed these checks for over 20 years.

It seems like that is the major problem with associations and HOA's, there is no recourse for the homeowners other than lining the pockets of lawyers to resolve problems.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By DJ1 on 03/02/2009 6:35 AM
The memo section of a check has no bearing on whether the payment to the Association has been made or not. I can write whatever I want in the memo section but its purpose is for the writer of the cheque NOT the payee. If the payee rejects it because of what is written it is their problem. imo They'll lose if they lien for non-payment.

That is an absolutely false assertion under the Uniform Commercial Code negotiable instruments section.

KevinK7 (Florida)
Posts: 1,343

Posted:

If there is a question as to the validity of the CC&Rs and in regards to the membership requirements, what exactly do the CC&Rs state?

Why have the CC&Rs been questioned?

I have had this situation occurring to my association and some homeowners in my neighborhood had also felt that their payments in the past were donations... the situation was that the Association had a membership fee of $100. Those who did not want to join but agreed with the HOA had sent payments of $100, but not for the purpose of voluntarily joining, but as a donation to help the Association continue.

I personally think that if it is a voluntary association and you do not agree to join but instead send a check that is clearly marked as donation, then your payment would be considered a donation...

I would think that unless the homeowner had held onto the checks in the past where the memo line states donation and the HOA's membership rolls had indicated that such donation was a membership fee, then you could argue that they had mislabeled your previous payments... but then the HOA could argue that you did not pay your previous years assessments too.

When my Association had told my family to pay, but we questioned the validity of the CC&Rs, we had gone to an attorney for legal advice. We were advised to send a payment to the HOA with a letter stating we were paying under protest. We were not agreeing to the terms of the HOA or membership, but we would avoid fines while we researched the legality of the documents.

DarleneL1 (Florida)
Posts: 97

Posted:

The validity of the CC&Rs have and are being questioned for two reasons. One a judge had already ruled that the developer didn't turn over the authority of the administration of the CC&Rs prior to going bankrupt. Read the decision below:

>> *Dismissal is that the purported assignment of the developers rights to enforce the current deed restrictions running with the property owned by defendants is ineffective because that assignment was executed by a dissolved corporation. A bankrupt corporation cannot assign authority after it has been dissolved.
>> Judgement by W. Lowell Bray, Jr.

Two, many owners have researched their titles and have found that the CC&Rs have expired due to MRTA. The BOD fails to recognize either of these issues and feels that the Florida Statutes don't apply to them because they must only adhere to the Sunshine Laws????

With only about 65 homeowners some of which are in foreclosure, most homeowners allow these few people to sit on the BOD of the HOA and do whatever they want as long as it doesn't impact them.

Since a few homeowners have been targeted by the BOD for what they perceive to be violations of the CC&Rs, it is just a matter of time before the association wastes our money once again by going to court. Many owners feel that if they just put Donation in the memo portion with a letter stating they don't recognize that the CC&Rs are in force or that the BOD can administer them, but give the BOD the money to keep up the common areas.

I hope this helps to clarify only some of the issues in our community.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

The advice you received was good advice.

When my Association had told my family to pay, but we questioned the validity of the CC&Rs, we had gone to an attorney for legal advice. We were advised to send a payment to the HOA with a letter stating we were paying under protest. We were not agreeing to the terms of the HOA or membership, but we would avoid fines while we researched the legality of the documents.That is the proper way to handle similar situations in which the validity of a debt/payment is questioned. By making payment under protest, the payor has the upper hand in any litigation that may follow. The payee may not refuse a payment made under protest without placing itself in a prejudicial legal position. However, it may, if it so chooses, decline to accept a donation.

KevinK7 (Florida)
Posts: 1,343

Posted:

I would think that if the judge had ruled the transfer of authority from the developer to the HOA was invalid, then your HOA is just another corporation without a neighborhood to run... Judge Bray seemed pretty clear!

Since your covenants have expired and the HOA failed to legitimize their authority, I would think that the homeowners would have to follow state statutes regarding covenant revitalization.

DarleneL1 (Florida)
Posts: 97

Posted:

That's exactly the way we see it, however, since the BOD has no authority to revitalize as ruled by Judge Bray, then they would only be able to begin a voluntary association.

Unfortunately, this BOD doesn't believe anything including Judge Bray's decision. We are really trying to avoid litigation and spending more community money that has been sent to the BOD to keep up our common areas. It's only $250.00 per year, but that's enough to keep are grass cut and other maintainence costs.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By DarleneL1 on 03/02/2009 7:15 AM
George, you seem very knowledgeable about HOA's. We have been trying to avoid a lawsuit in our HOA for sometime because as you know, it's really our money. I have another posting on this board regarding our yearly fees and expenses. So maybe you can help.....

Our BOD continues to operate as though the judgement was never made by Judge Bray. They try to bully neighbors into changing what they feel are CC&R restrictions and make new ones at their leisure. No bad enough, our CC&Rs have expired due to MRTA since 2006 on almost all 86 properties. Many homeowners feel that they don't want to get involved, so they just go along with the fraud until it affects their homes.

The problem is, as stated in a previous board posting, they want to return any check that was sent in with Donation written in the Memo Portion of the check (again this has been done for over 30 years). This seems childish and a waste of money again using the member's money.

What's your thoughts on this? Thanks for ANY insight you can provide.

Florida laws, particularly those regarding homeowners association are unique and specific to the state. I claim absolute ignorance of Florida statutes.

From a bankruptcy law perspective, it is unlikely that a federal bankruptcy court has jurisdiction to invalidate the covenants. So if the covenants state that the affairs of the community are to be vested in an association, then there is some legitimacy for an association to exist. Just because control of the association was not turned over to the owners before dissolution of the declarant, may not, under Florida statutes and case law mean it is either (1) non existent or (2) voluntary. The association need not have been dissolved along with the declarant.

This is a situation that seems to demand judicial adjudication, reviewing Florida statutes, case law and the covenants. I would suspect that the current governing board has had this situation researched by competent legal counsel and, therefore, believes it stands on reasonably firm ground. Until a legal challenge is filed to determine the status of the association as it is currently constituted, it would be advisable to consider it as legitimate.

Complicating this situation is the 30 years of precedent. That is a powerful argument for the legitimacy of the association.

As far as the checks go, the association has, apparently, clearly stated that it is making a change in policy, not to accept donations and/or not to accept donations in lieu of fee payments. That, in effect is a new policy, and it appears to be clearly stated in advance.

Keep in mind that the courts look beyond the law and the documents to make decisions that are reasonable and in the spirit of the intentions of the original parties to a contract.

DarleneL1 (Florida)
Posts: 97

Posted:

Thanks George, your view helps. It wouldn't be a problem for most, but a rogue board has caused so many problems that many owners are anxious to "get out" so to speak. With MRTA expiring the CC&Rs and the BOD not following any of the statutes (because they feel they don't need to adhere to them) it gets more difficult every day to be objective. The BOD clearly doesn't care about the legalities and doesn't give the minutes of their meetings to anyone even with a written request. With the economy today, it is not easy to get anyone to want to involve a lawyer to get it resolved. Thanks though...

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Quote:

Posted By GeorgerwilliamsW on 03/02/2009 6:52 AM

That is an absolutely false assertion under the Uniform Commercial Code negotiable instruments section.

Counselor,

Which is false? What DJ opined or what is written on the check?

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

What DJ stated as fact (not as opinion).

SusanW1 (Michigan)
Posts: 5,202

Posted:

Ha - there have been many "memo messages" on checks written by taxpayers. That never stopped the IRS from cashing them.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Finished reading all the posts and like the lessons learned. Hope I can retain them.

But, the problem remains how do these folks live their lives regards the HOA? Still seems to me the donation check writers and the present BOD have to sit down at the table. If they don't sure as shooting there is going to come a time some little incident is going to cause a big war. Who needs that? We are not talking a huge sum of money and if all that is maintained is some landscaping, why not sit down with the board and discuss the Landscaping and the check writers ask for inclusions on those decisions. Why not a BOD/writers 50/50 split on a landscaping committee and let them work out the budget. In fact, if the writers got enough votes they can demand this happens or vote in new BOD. Don't live your life not waving to your neighbor because you have a misunderstanding about something so solvable. Come on people, be the first one to put your hand out and sit down and settle this and then go have a party and jump in the pool with your clothes on.

DarleneL1 (Florida)
Posts: 97

Posted:

That would be great in a perfect society.

The BOD has caused so many problems over the years that many neighbors don't wave, much less talk to one another. The same men have been on the BOD for over 20 years and whenever someone else tries to run for the BOD, they get write in votes for themselves and lie about the votes. No votes have ever been witnessed or had a notary present at the meeting. The last vote in January was supposed to be at a meeting and the meeting place was filled, so the meeting didn't happen. However, the BOD told everyone in the community with their dues notice that the vote was done and counted at the meeting (that didn't occur). No one attends the meetings, so no one is the wiser. As previously mentioned, this is a very rogue BOD who doesn't believe the Florida laws apply to them.

Without involving a lawyer, none of this would be resolved and then they would possibly still run a rogue BOD. There has been a judgement from a Judge that states that they don't have the right to administer the CC&Rs and still no one even knows about the judgement because the BOD lied and said that they settled the case as "good neighbors". The case is public record and online for all to view. When a letter informing the community came from one of the neighbors, the BOD sent another letter around stating that the first letter was due to an agenda and to ignore it. Many neighbors being new, don't know or care to get involved.

Unfortunately, most people don't have the time or care about getting involved and just go along with whatever the BOD decides.

KevinK7 (Florida)
Posts: 1,343

Posted:

You could notify every homeowner as to what has occurred in a concise and honest manner... if you do not have the time or money to create a mailing, you could have postcards that explain the court ruling, the votes, or whatever else may be pertinent aand ship them to every homeowner.

This approach may seem a little radical but if the homeowners are not aware of what is occurring, chances are the problems will persist.

On some websites offering sales, you could purchase 2000 postcards for less than $100... postage for postcards is $0.27... a total cost of around $700... if you and a couple other homeowners are willing to make the investment, or if you have the time, you can hand deliver the cards on peoples door steps.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Darlene,
No, I differ, that is what occurs in an inperfect society that we live in. People solve their differences, you have to solve yours.

Lets stop for a moment and take a diffirent tack. You want a new Board, you can want that, it is your right. Everything thing you have tried has failed to oust the Board. And you still feel you have been wronged.

Nothing has been said that I recall about a website. Have you thought of putting up a website to reach your people? You can put all this factual judges rulings on a webh site.

What do you gain? If done right and there is fertile ground you can identify your supporters and detractors. You will have given your members a place to go to vent, if they so desire. But more importantly, if you don't do anything foolish you will capture the Boards attention. Anything the Board puts out in the written form becomes the property of the sendee. You can print that, you and your neighbors can argue that and voice opinions. You can put out notice of Board meetings, you can publish minutes, you can propose candidates for the Board, you can question money expenditures.
Just be sure you don't cross the line, do not identify your site as an association sponsored site and with a hour or two a day, slowly build your support if it is there. Always offer the open hand to the Board and if they make a move you approve of, be honest, print it. It will capture your interest, it will be good for the community in the long run and you will begin to know your neighbors.
Think about it.

DarleneL1 (Florida)
Posts: 97

Posted:

We have tried a website, a notice of meetings with newsletters, letters, etc. We've even sent copies of the Florida Statutes with the MRTA information and most don't understand it and say that they want to keep the CC&RS just in case. Not really understanding that it isn't a matter of choice. The BOD then goes back and informs them that there is no such thing as MRTA and the CC&Rs are in good standing just as Judge Bray's determination was settled out of court. Lies, but the community trusts them because they have been here for 20+ years.

The only thing we haven't tried is a letter from a lawyer stating the determination of Judge Bray. Nothing seems to get the neighbors interested. We have even sent out letters that explain the CC&Rs are expired and need revitalizaton before someone reallly does do something egregious. We have 10 acre lots, so you can't see most of what people have around their properties and or what they do. We have been told to our faces that if it doesn't affect them or the BOD leaves them alone, they simply don't care and don't want any part of the BOD or the association.

This is only a problem when the BOD decides to target one of the neighbors for one of their new rules or regulations that they decide. Remember, we are talking about only 50-60 people, if that because some owners have more than one lot, and there are 6-7 members on the BOD. One of the members of the BOD doesn't even live here and just sends his votes to comply with whatever the others decide.

The BOD has gone so far as to sent out new CC&Rs without a vote and without community involvement. Since it doesn't affect the neighbors who have been here, they don't care. The only neighbors who care are the ones that the BOD decides that they don't like something on their lawns or around their homes and they begin to send them letters and confront them. At that point, these neighbors will come back to us for help since they know that we haven't allowed them to "bully" us.

Unfortunately, it seems to be about money. No one wants to spend the money for a lawyer to get an injunction, so most just allow the BOD to "bully" them and then they acquiesce to their demands.

At this point, we are waiting for someone to get mad enough to bring a lawsuit against them AND end up in court. Then and only then, will the neighborhood believe that what we have told them all along is true. This will be extremely difficult because the BOD backs down on the court house steps and tells everyone that they don't want to sue anyone because they are trying to be "good neighbors." Which is what has happened in every other situation here for the last 20+ years where a neighbor has sought the help of a lawyer.

As you can tell, this has been going on for quite some time.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

This thread has gone significantly off topic of the board not cashing checks. My instincts tell me that something is not all that it seems. There about 65 unit owners with 10 acre lots. There is something about a bankrupt developer, a previous court case, some units in foreclosure and a board that has changed little in membership over 20 years. Yet, it doesn't seem that more than a few owners are bothered. And none seem interested in taking legal action.

I don't think all of the relevant facts have been disclosed here. If what we read is true, there is some indication that this situation has elements that could trigger a criminal investigation. There may be even some RICO issues.

Let's be cautious.

DarleneL1 (Florida)
Posts: 97

Posted:

There are many issues, and I don't know what RICO issues are, but again when no one wants to get involved a BOD can run amuck. That being said, nothing can ever change until legal action is taken. With the economy, no one wants to involve a lawyer which they have been advised could cost upward of $10,000 or more. Most don't care enough to spend a dime, especially when the dues only amount to $275.00 per year (which is not even legitimate because the CC&Rs state $250.00).

I appreciate all of your input and if you want to know more, you can e-mail me in private. At this point, the lawyer that represents the BOD is also one that it is extremely difficult to find a lawyer to go up against here in the Tampa area. This lawyer has even told the BOD that they SHOULD get their CC&Rs redone "just to put suspenders on them, only as a precautionary measure." He won't even admit to the 5 people who showed up at the meeting that they are expired by MRTA and/or the meaning of the judgement by Judge Bray regarding his dismissal (read my posting in Developer Problems).

Thanks for listening.....and trying to offer some help.

KirkW1 (Texas)
Posts: 1,665

Posted:

I would drop any and all talk of RICO as it will not get you anywhere. From what I can tell you have a few choices:

Pay your dues and live with it.

Pay your dues and run for the board.

Lawyer up and fight it.

Between what you have and have not said I am sure that no magical answers will come from here. You have stated that the BOD claims legitimacy and that the HOA is mandatory. Some people have paid their dues writing donation on them. Now the BOD is saying they won't accept such a check and will file a lien.

Now if you really truly believe that they have no just cause of action then get a lawyer and take action. Or, if you are very certain then simply don't pay the dues and wait for them to take the first step. They may know full well they can't file a lien and are bluffing. In the end you have a choices: you can try calling their bluff. (Be aware they may really file a lien. But when you file suit you can also file for an injunction to keep any further action from occurring while the case is settled. I would expect to have to put up a bond to cover yourself if you lose. But if your case would appear strong enough the judge should grant the injunction. A lawyer can give you more complete advice.)

At any rate, your best bet is to pay a lawyer to ensure you really stand where you do. Then stand your ground. But there are some theories that if you accept a liability long enough it becomes your liability even if it didn't originally apply to you. I can't vouch for their soundness. I can only say: seek a lawyer.

As a note, many lawyers really are personable people and will look things over for either free or a very low price. Now once a real case gets started, then you should expect that you could have a real bill.

DarleneL1 (Florida)
Posts: 97

Posted:

THANKS!! We've begun the process with several of our neighbors, utilizing the same lawyer who got the first decision from Judge Bray. He seems to have a handle on it, but we were just trying to resolve the check issue during the process. My original question about the checks was to get some clarification for others who have asked us, since the BOD has threatened to return their checks since they had also written "Donation" in the memo portion, without calling our lawyer. It seems this process will take longer than getting the funds to them for the expenses. No one has a problem giving money for the common areas, it's the way they handle selectively go after various neighbors that is the problem. I won't go into all of it, but you can imagine from the previous postings, there are many inequities.

I appreciate everyone's input and advice.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Darlene, you may have stated this before, but what exactly are your Commons Areas that would make this either a voluntary or mandatory HOA?

Sounds like your group is so consumed with in-fighting that a dissolution should be considered.

Sometimes ya gotta be careful what you ask for . . .

A survey needs to be done. Do these residents REALLY want an HOA? Why or Why not?

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