Accord and Satisfaction eliminated for condominium assessments

On August 24, 2016, the Florida 2d District Court of Appeal decided a significant case that benefits condominium associations.

In Madison at Soho II Condominium Association vs Devo Acquisitions, the association demanded approximately $28,000, plus costs and attorney fees, for 6 years of unpaid assessments from Devo after it acquired title to a Unit. Under 718.116 of the condo statute, a buyer is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title.  In response, Devo sent a proposed offer for an “accord and satisfaction” along with a check for $2412.  Soon after, the condo’s attorney notified the owner that the offer was rejected, but unbeknownst to the attorney, the condo deposited the check (which even Devo did not know until 8-9 months later).  After a foreclosure suit was filed and the deposit of the check was learned, the owner argued that acceptance of the offer by negotiating and depositing the check effected a satisfaction of the debt.  During the pendency of the case, the Legislature amended 718.116(3) of the condo statute that provides for the “order of priority” of payments received and clarified that the statute applies notwithstanding the law of accord and satisfaction.

… “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. The foregoing is applicable notwithstanding s. 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation, or instruction placed on or accompanying a payment. The preceding sentence is intended to clarify existing law.”

(Note: the underlined language are the words added in 2015).  Concluding that the legislative change/clarification applied even after the facts that occurred in this case, the Court held that the negotiation/deposit of the check did not constitute an accord and satisfaction and the association was not barred from seeking to recover the balance of its money.

Thus, the lesson for condominium associations is that an expressed offer of an “accord and satisfaction” is not enforceable and does not bar the association from seeking to collect the remainder it is due.  The statute already provided that other types of a “restrictive endorsement” do not bar such further recovery.

Please note that this decision is clearly based on the change to the condo statute made in 2015.  Curiously, no similar change has been made to date to Chapter 720, the HOA statute.

September 8, 2016