By Ronald Scott Kaniuk, Esq.

The collection of regular assessments is the lifeblood of a vibrant homeowners or condominium association and the association is always happy to receive monies from its constituent members. When a homeowner is current and pays the current assessments, the payment is applied to the monies due and the homeowner has a resulting zero balance. When a homeowner is delinquent, the statutes allow both the homeowners and condominium associations to apply the monies to interest, late fees and attorneys’ fees and costs, and then to the most delinquent maintenance payments until all monies are received to reduce the amounts owed to a zero balance. These payment application rules were enacted in 1991 (for condominiums) and 2007 (for homeowners associations) and provide authority for the collection of interest, late fees, attorneys’ fees and costs and give them priority over the actual assessments sought to be collected.

However, a recent decision by Florida’s Second District Court of Appeal has put this legislatively-endorsed payment schedule into question and created

The case in question is St. Croix Lane Trust & M.L. Shapiro, Trustee v. St. Croix at Pelican Marsh Condominium Association, Inc. (Case No: 2D13-3636, August 8, 2014). In that case, association commenced a foreclosure against a delinquent homeowner, and the Trust was the successful bidder. However, their bid did not satisfy the association’s judgment, and a subsequent demand letter was sent. The parties went back-and-forth with additional correspondence, and the Trust ultimately sent a payment of $840.00 as a purported full and final payment to satisfy the $38,500.00 claim made by the association.

The trial court found for the association, but on appeal, the Court engaged in a lengthy analysis not of the relevant condominium statutes governing collection and application of payments, but rather Section 673.3111 F.S., involving negotiable instruments. Section 673.31111 F.S. describes what is referred to as “accord and satisfaction” whereby the obligor can offer a lower amount in full and final settlement of the disputed debt. In reaching its decision, the Appellate Court found that these provisions trump those contained in Chapters 718 and 720 regarding collection and application of payments to homeowner and condominium associations.

The decision in St. Croix seems to be in conflict with a 2008 decision by the Third District Court of Appeal in Ocean Two Condominium Association v. Kliger, 983 So. 2d 739 (Fla. 3d DCA 2008). However, replying on this older case can be risky. Our advice is that payments should be rejected if there is any indication that the association’s claim is disputed or that payment is intended to be payment in full or contains other words to indicate such intent.