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MORE ABOUT COLLECTIONS
By
Eric Glazer, Esq.
Published August 3, 2020
As promised
a few weeks back, we need to discuss some very interesting
pitfalls associations sometimes fall into in the area of
collections. In light of the fact that mortgage delinquencies
are at an all-time high, rest assured that owners will in a
short while begin falling behind on condo and HOA assessments as
well.
The
association must accept even partial payments.
Suppose the
assessments are $300.00 per month. An owner has not paid in 3
months and owes $900.00 plus late fees and interest. The owner
sends in a payment for $300.00. Must the association accept the
$300.00 payment? YES.
In Ocean
Two Condominium Ass'n, Inc. v. Kliger, 983 So.2d 739 (Fla.App.
3 Dist.,2008) the court held that the refusal of a condominium
association and its management company of tendered payments of
undisputed maintenance fees by condominium unit owners was
improper and rendered premature the association's lien
foreclosure action involving owners' units.. The condominium
statute provided that such payments were to be applied on
account, without prejudice to association's and unit owners'
respective positions. In this case, the dispute would have been
reduced to an inconsequential amount, and association's
attorneys could not in good faith have filed to foreclose the
miniscule claim remaining. West's F.S.A. § 718.116(3).
The
association should not worry about restrictive endorsements.
Same
scenario as above, but this time, the owner writes “paid in
full” on the $300.00 check. Should the association deposit the
check? If they do, are they now prevented from suing for the
$600.00 balance?
The condo
and HOA statutes each provide the methods by which to apply
assessments that are paid. Each statute makes it clear that
they are to be applied in accordance with the statute, and any
purported accord and satisfaction, or any restrictive
endorsement, designation, or instruction placed on or
accompanying a payment. In simple terms, after applying the
payment, the balance is still owed despite the words “paid in
full” or similar words being placed on the check.
The
association must apply the monies in accordance with the
statute.
Same
scenario as above, but the owner has also incurred $200.00 in
attorney’s fees, $10.00 in interest and $75.00 in late fees.
How much does the owner owe to the association after making the
$300.00 payment?
The statute
says……….Assessments and installments on assessments which are
not paid when due bear interest at the rate provided in the
declaration, from the due date until paid. The rate may not
exceed the rate allowed by law, and, if no rate is provided in
the declaration, interest accrues at the rate of 18 percent per
year. If provided by the declaration or bylaws, the association
may, in addition to such interest, charge an administrative late
fee of up to the greater of $25 or 5 percent of each delinquent
installment for which the payment is late. Any payment received
by an association must be applied first to any interest accrued
by the association, then to any administrative late fee, then to
any costs and reasonable attorney fees incurred in collection,
and then to the delinquent assessment.
LEAVE YOUR ANSWER IN THE COMMENTS SECTION
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About
HOA & Condo Blog
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Eric Glazer graduated from
the University of Miami School of Law in 1992 after
receiving a B.A. from NYU. He has practiced community
association law for more than 2
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decades and is the owner of Glazer
and Sachs, P.A. a seven attorney law firm with offices in
Fort Lauderdale and Orlando and satellite offices in Naples,
Fort Myers and Tampa.
Since 2009, Eric has been the host
of Condo Craze and HOAs, a weekly one hour radio show that airs
at noon each Sunday on 850 WFTL.
See:
www.condocrazeandhoas.com.
He is the first attorney in the
State of Florida that designed a course that certifies
condominium residents as eligible to serve on a condominium
Board of Directors and has now certified more than 10,000
Floridians all across the state. He is certified as a Circuit
Court Mediator by The Florida Supreme Court and has mediated
dozens of disputes between associations and unit owners. Eric
also devotes significant time to advancing legislation in the
best interest of Florida community association members.
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